for many years, investors had borrowed huge amounts of money from the bank of japan (i.e us fed east) at near-zero percent interest rates. they then invested the proceeds abroad, whether in australian bonds at 6%, or around the world in foreign stock markets. this deal made sense as long as the yen was stable or declining against other currencies.

that was then, and this is now. today virtually every currency is declining sharply against the us dollar, which itself is off more than 4% against the japanese yen, which has nearly broken through parity (100 yen = 1 dollar.) the australian dollar is down nearly 10% against the dollar, more than that against the yen. accordingly, these deals have blown up, and the money is going home to the land of the rising sun.

stock markets around the world are now feeling the fallout as money returns to japan. once again, with fear the dominant emotion, resource stocks are behaving like stocks, and not like commodities, and they are being liquidated like everything else.

currently the us dollar is showing more strength then the other currencies (ex-japan) only off 4+%, but the dollar won't last for long as a safe haven. it's just a matter of which paper currency is weaker than the others. unlike the banks, resource companies have real assets and real balance sheets, and won't go bankrupt. margin calls and panic selling can depress the price of sso for a while, but not forever.