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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: mishedlo who wrote (209613)12/14/2002 11:52:27 AM
From: Haim R. Branisteanu  Read Replies (2) of 436258
 
The issue of gold has several valid points as the rescue for many economies is inflation. In the US the FED will need to inflate to avoid the collapse of the mortgage based securities. The CRB is predicting inflation.

As to the EUR, Europe is in worse shape than the US and the change there must be structural, not fiscal.

Unemployment around 9% v 6% (as reported by governments) East Europe which will join are in worse shape.

As to the debt load and budget deficits both Europe and the US are in the same boat only other sectors of the economy are in debt over their ears. The other problem in Europe are the commercial banks who hold most of the debt similar to Japan as they do not have a active junk bond market or securitization. Therefore the debt burden is more dangerous there than in the US as it may prompt the failure of a major EZ bank with substantial financial implication, very different than lets say an Enron or Worldcom implosion.

IMHO the EUR may rise some more under current circumstances but not sure about the 15% in a year. 5% from today's level are more realistic. Keep in mind that the UDX is already down 14% from January last year.

The prediction will be right if we achieve also unemployment parity which is not likely IMHO

Further all bets are off if we enter Iraq. A success action in Iraq and it's democratization will reverse the trend in the USD and the UDX may go back to it's high
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