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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (75259)12/12/2006 12:31:09 AM
From: daveinmarinca  Read Replies (2) of 110194
 
Seems to me Kasrial's statement, "Alternatively, if there were a run on the dollar in the foreign exchange market, price inflation could spike up and the Fed would have no choice but to raise interest rates aggressively. Given the record leverage in the U.S. economy, the rise in interest rates would prompt large scale bankruptcies." the run on the dollar has begun. The BIS reports that OPEC and Russia have been shifting $US reserves to Euros <http://www.ft.com/cms/s/277471c2-8889-11db-b485-0000779e2340.html>. Tom Whipple summarizes the situation in Iraq <http://www.energybulletin.net/23410.html> ....some of the folks holding $US reserves are requiring the US to stay the course in Iraq worsening the federal deficit and further weakening the $US. We are in the interesting position of concurrent Catch 22s....worsening $US situation and worsening war in Iraq, neither of which we seem to be able (or willing) to resolve. The US population is addicted to oil and addicted to credit. One familiar with interventions in addiction can speculate that the addict's forced withdrawl of either could trigger Mish's scenario. But, IMHO, not without massive injections of cash, the "dropping of dollars from helicopters" first.
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