This is a CVS, I on the world. I'm John Bachelor. To London. To my colleague Joseph Sternberg,

member of the editor board of the Wall Street Journal, he writes

political economics and he's done us all the favor of writing about what happened in Japan

several days ago, it seemed to have crashed all the markets that I follow closely.

See if the American technology market, the best stuff in the world. Yes, it's overpriced

but so what it keeps going up until... Joe a very good evening to you thank you very much in order to understand

What happened in Japan I follow your column we need to understand something called the carry trade Joe what is the carry trade. Joe, what is the carry trade?

How does it work?

Good evening to you.

Hey John, well, I mean, as with anything that creates financial problems for anyone,

what we're really talking about here is borrowed money. it creates financial problems for anyone.

What we're really talking about here is borrowed money.

So the phenomenon we've all come to hear so much

about involving the yen carry trade.

You describe the situation, the background here. the

end carry trade. You describe the situation, the background here.

Interest rates have been extraordinarily low in Japan for many years and

have stayed quite low even as other economies, especially the US,

have been increasing interest rates.

And you also had a yen that seemed to be losing value against other currencies, including the US dollar.

So what you can do if you're a savvy trader in that kind of situation, go to Japan, borrow

a yen at the extremely low interest rate, convert that

...