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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (3375)	12/14/2003 6:57:33 PM
From: Alias Shrugged	Read Replies (1) \| Respond to of 110194

Rarebird What do you think of Marc Faber's comments regarding the possibility of a huge rally in stocks as the currency is destroyed? from the Mogambo Guru dailyreckoning.com - Marc Faber, one of the more clued-in dudes on the economics scene, writes on AMEinfo dot com, "If central bankers around the world are prepared to print money and to flood the system with unlimited liquidity at the first sign of weakness in the asset markets, then it is difficult to make a very bearish case for either US real estate or US equities in dollar terms." Because all that lovely money has to go somewhere, and where else can it go? In short, whatever is ridiculously expensive today can be more ridiculously expensive tomorrow if the government keeps printing up money to buy them with. The only crucial question is, can things get more ridiculously expensive forever? He continues, "We know Mr. Bush wants to be re-elected at any cost, and that therefore, over the next 12 months, he and his lackeys at the Fed and the Treasury will only take economic policy measures that are designed to keep the American public happy...and keep the lower classes of society in good spirits and obedient." Then he hits on the nub of the whole thing, "The US Federal Reserve Bank can, if it continuously floods the system with liquidity, keep asset markets up, but what it cannot do when it follows such policies is control the value of the US dollar against foreign currencies and its purchasing power." So, if a share of Cisco stock and a barrel of oil each go to a thousand dollars in price, are you REALLY that much better off? I say no. You, if you had any sense at all, and I think you do, or else you wouldn't be here reading this, probably also say no. He goes on to say, "Examples of such stock price increases, which were based purely on monetary easing moves by central banks, can be found in the German hyperinflation period of the early 1920s, in Latin America in the 1980s, and, more recently, in Zimbabwe. In all these cases, stocks and real estate rose sharply in nominal terms, while economic conditions remained largely depressed or even deteriorated." Ooohh! How embarrassing for the Fed! To be equated with German hyperinflation, which ushered in the utter devastation of Germany and the rise of Hitler and WWII, '80's-style Latin American idiocies which turned practically that whole continent into a basket case and impoverished half the people in Argentina, and now the filthy thuggery in Zimbabwe, which has turned Zimbabwe into a hellhole of starvation and misery. How special for Alan Greenspan and the Federal Reserve, and all the other little central bank people around the world who participated in the thing. They must be very proud. Ugh.

To: Rarebird who wrote (3375)	12/15/2003 8:33:47 AM
From: Wyätt Gwyön	Respond to of 110194

Dollar's Saddam-based gains short-lived The dollar jumped in Asian trade following the capture of Saddam Hussein, but the US currency drifted lower in European trade as the fundamentals behind the dollar's slide returned to the fore. news.ft.com

To: Rarebird who wrote (3375)	12/15/2003 8:41:08 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

gold may continue up, but the gold stocks are already priced for MUCH higher gold. the stocks could sell off even if gold goes to 420-450. If this carry trade unravels, and all carry trades of this nature unravel eventually, these other currencies will correct, possibly violently, against the $US. i agree, this is a real concern to me as well. however, we do not know if such a correction will occur soon or from MUCH higher levels. but the prospect for a correction is tempering my enthusiasm for unhedged foreign bonds. in this respect, at some point i will prefer bullion, but not the miners at these levels.

To: Rarebird who wrote (3375)	12/15/2003 9:11:02 AM
From: Haim R. Branisteanu	Respond to of 110194

Tend to agree with you to much bearishness toward the USD, J6P sudden discovered last year the "miracle" of selling USD and buying high yield currencies