Well, you can see what happened to British Pound in the past
few days on their Nothern Rock banking troubles. Looks like
US mortgages were conveniently shipped to Europe, so all
this looks really strange: US mortgage debt is sinking, yet
it's European banks that are collapsing.
northernrock.co.uk
"Let me now reassure you. Your money is safe with us and if
you want some, or all of it back, then you are perfectly
entitled to it. Whilst you may have to wait a little longer
than usual to receive it, you will get it. However, your
savings are secure and there is no need for you to withdraw
your money based on our recent announcement, and the
widespread media coverage that has ensued."
I do think the washout in USD is about to happen no matter
what the Fed does. So far it's confusion, which should give
way to real selling of US debt securities, especially if
the market receives a 50 bp. cut. Personally, I don't think
50 bp. or no cut is coming. 25 bp. will be it, but even if
the Fed does not cut, the perceptions regarding US mortgage
and corporate debt have clearly changed.
I think the prevailing opinion is that USD will rise as USD
debt collapses due to "deflation". However, how can USD
rise when all the foreigners will be selling USD securities?
I have a hard time comprehending the strong dollar during
USD-based debt collapse. I'd say no way, it's gonna be the
other way around. |
