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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (49437)12/20/2000 7:00:56 AM
From: Earlie  Read Replies (1) of 436258
 
Heinz:

Good comments as always.

Many folks just don't seem to understand that sooner or later, this staggering run-up in both the U.S. trade deficit and the current account deficit must and will be paid for, probably through a smashing of the currency. I have taken plenty of heat for my views about the coming U.S. dollar debacle, but it is inevitable, especially in the current environment. The acceptance of the Euro as a second reserve currency, (one that does not hump the massive global debt baggage, as does the dollar) just acts as an impetus to the whole move.

Already, there is plenty of pressure on the various mountains of U.S. debt around the globe. So far, the Fed has managed to keep it from rolling back home through a large interest rate differential. Also, the "safe haven" myth has not yet been placed in its grave. There is plenty of evidence around that this is starting to change.

Greenspan is in a rock/hardplace situation and is being forced into triage decisions. Does he lower rates to "save" the market? If he does, then the bond market takes it in the throat. Since he is well aware of the degree to which U.S. corporations depend on the debt markets for their continued survival, this is unlikely. Personally, I think he is trapped, but time will tell.

What I do know is that gold's day in the sun is coming up very quickly now. The world's best "currency collapse insurance" will not remain cheap as the pressures mount. (g)

Best, Earlie
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