Quote:
Originally posted by directfiesta
Wrong, it is worse.
Example:
Let's say the US owes 100 Euros.
At today's rates, the US wpuld need 127.706 USD to repay.
If the US dollar goes lower ( looses value), it would take more$$$ to obtain the same amount in Euros ( ie 135.00US$ to repay 100 Euros ).
You can also look at the fact that the percentage of US production to repay the debts would grow ( needing more) to repay that fixed amount.
Many economists forecast i, in the case of the Canadian dolar, par in about 18 months.
This because the Can$ is also very strong ( winning value also against the Euro ...).
Back to selling ....
|
They borrowed something highly valuable and now they will pay it back when its value has droped.
So basically they profited the difference in value. Like selling a stock short and buying to cover.