The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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From: Real Man	4/29/2008 1:10:30 AM
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The 7 stages of a dollar crisis By Bill Fleckenstein (2004) moneycentral.msn.com Step 1. Nobody notices or pays attention that the dollar is falling. Step 2. Folks wake up, but they either don't care or rationalize dollar weakness as a good thing. Step 3. The central banks now know they have a problem, but the bankers think the market will obey them. It will, for a while. (This is the step we have now reached and what emerged at the G7 meeting.) Step 4. The dollar now tests everyone's resolve by resuming its decline. The currency markets will not respond to jawboning by finance ministers. Step 5. In this step, the finance ministers are forced to take action. (Think about it. Even if they'd stated that they wanted the dollar to go up, nothing either explicit or implied indicates they'll do anything about what's happening. That will come next.) When they do take action, the market will do what they want -- but only for a while. Step 6. The ministers take some additional action, but it won't be enough, and the currency markets won't do what the ministers want. Step 7. Finally, we'll have a full-blown crisis, and that will be the end game.

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