Old Fleck article. We are past Stage 5, which was last year.
The joint G7 action to shore up the dollar was taken in
the Spring and Summer 2008, and I think
that may have been what blew up the markets, or they
were blown up on purpose by GS. <G>
The 7 stages of a dollar crisis
moneycentral.msn.com
7 small steps to crisis
Here, then, is my outline of a 7-step process of creating a full-blown crisis.
* 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. |
