investment ideas 2: dominoes.....

In Barron's Marketplace, Konrad Kuhn say "the dominoes are falling". What Konrad means is that the coming end of the yen carry trade has claimed its first two victims: Iceland and New Zealand.

Here's how the carry trade works. You borrow (sell short) yen at 100:1 leverage and pay 0% interest. Then you take the yen and buy high yield Icelandic thingamjigs or New Zealand bonds.

The Icelandic Krona and New Zealand Dollar have fallen 19% and 12% respectively since Jan. first. Pretty good at 100:1 leverage.

If the pattern continues, we need to find a first world country with a high interest rate.

When the Japan Central Bank raises rates, the carry trade will end. Borrowers will sell these currencies to buy back yen.

So where are the good rates nowadays? Australia's paying 5.75%.