some basement shelters are appealing during tornadoes
Art, you have consistently underestimated the potential trouble for our economy and our financial markets from the falling dollar
it is not so much the lower dollar that is at issue
it is the declining dollar
with it comes a flight of necessary capital
the actual exodus of capital causes an airpocket in US markets
our economy requires large supplies of capital to feed its twin deficits:
federal debt, trade gap
in April we discussed this whole issue
you dismissed any big negatives with a falling dollar
now we see the major stock averages teetering near the precipice
AND YOU STILL MINIMIZE THE DOLLAR'S EFFECTS !!!
you are incredible, but typical among American investors
I mean bright, well-read, not naive
but far too immersed in American Arrogance
next up:
- rising interest rates WITHOUT economic recovery
from USTBond selling by foreigners
we are seeing a blowoff top in longbonds now
from a return of price inflation next year
- a return of inflation from falling dollar
import prices will be rising from both finished goods and components
we sent 60% of our mfg base to Asia during the 1980-2000 years
the rest went to Mexico, taking advantage of NAFTA
either foreigners allow prices to rise, or else suffer wiped out profit margins
they have no alternative
this concept is nowhere in our financial press now !!!
- the falling dollar will accelerate downward via dollar carry trade
short the dollar, buy either euros or gold (or 1/2 each)
this will effectively reverse the 1990's two carry trades
the yen carry trade and the gold carry trade
futures contracts provides hyper-leverage to the process
it is already increasing in usage
- an acceleration of the DEFLATION process
this will hit the financial markets relentlessly
it will result in a major currency hotpotato effect
nobody will want a strong currency during deflationary times
this will lead ultimately to a currency crisis
since the USdollar will gradually enter a FREEFALL
- real estate has begun to show cracks, which will widen
with more layoffs and higher interest rates come selling
right now we are seeing the ultimate top effects in RE
"lock in those low rates, and at any price"
this will not last long
and with it goes all manner of purchasing power
instead of 2ndMortgage Equity Lines, we will see foreclosures
- the benefits from a lower dollar will be TOTALLY vacant
our customers abroad who we EXPECT to purchase our cheaper goods will be experiencing extreme economic duress
the only place that might thrive is Europe
but Europe is badly inefficient in converting capital to wealth
their complexity might lead to distrust of stocks (e.g. Vivendi)
Asia will enter a depression by next year
who will purchase our computer systems?
they are our biggest export
do you see rosey forward guidance from...
IBM, SUNW, CSCO, INTC, EMC, EXTR, etc ???
- the trade gap will NOT narrow from the lower dollar
- the federal debt WILL widen from recession, wartime stance
Slider suggests you think outside the box
I suggest you take off the blinders
you are not only caught in the box, but you are not looking forward, not assessing the dollar effect correctly
the pablum fed by the US press is utter horseshit these days
CPI, Productivity, Unemployment are all distorted figures now
what we believe to be the world perception of the USA is widely different from how foreigners really perceive us
and it is not flattering
I expect the mutual fund industry to experience chaos
I expect most safe havens to be attacked
I expect FannyMae and FreddyMac to both go bankrupt
and of course, the nobrainer, JPMorganChase will go bankrupt
but most importantly, I expect a near dollar freefall
but you probably would think a dollar freefall is good
/ jim |
