The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: ggersh who wrote (19904)	4/23/2009 12:07:05 PM
From: LTK007	Read Replies (1) of 71454

Big Picture: excerpted from TSR <<On the wider stage, the International Monetary Fund predicts that the world economy will decline this year for the first time in more than six decades. The IMF notes in its recent report that recoveries following financial crises tend to be slow. Research we have previously cited in TSR Pro suggests a 4-6 year timeframe before a bottom is reached. The typical post-crisis scenario implies an ‘L’ shaped recovery, rather than a ‘V’ or a ‘U’. L-shaped recoveries refer to an extended period of flatlined GDP growth such as Japan had in the Lost Decade, with a light at the end of the tunnel. Treasury Secretary Geithner acknowledged yesterday that the U.S. must take primary responsibility for the global crisis. Interestingly, he added that a sustainable global economic recovery will also require a shift away from excessive dependence on U.S. consumption. We call this shift “the Sunset of the West,” a term that is designed to name a sea change in the macro-economic balance of power. It implies that the aging American consumer, who has become known in the last two decades for his/her tenacious ability to continue to spend in the face of all adversities, will reverse course in order to prepare for a retirement that is plagued by declining equity holdings, shrinking home values, diminished 401(k) accounts and the export of jobs overseas. A survey of 500 large U.S. companies indicates about 25% are contemplating layoffs or other cost cutting measures such as salary reductions, benefit cuts and changes in 401(k) matching. Belt- tightening is the order of the day and we don’t think it will be temporary. Rather, we think it makes sense to prepare for an Age of Austerity in the West. This theme will have immense implications for long-term capital allocation strategies.>>

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