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

To: SeaViewer who wrote (15283)	6/15/2004 2:16:56 PM
From: ild	Respond to of 110194

Date: Tue Jun 15 2004 12:12 trotsky (Hambone @ debt/dollar) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the purveyors of this theory completely forgot that the domestic US debt bubble's likely demise can have no effect on the dollar's external value. that depends entirely on foreign dollar holder's willingness to continue to hang on to their truly massive pile of IOU's. since it becomes less and less likely that the perceived 'value' of said IOU's can actually be realized the bigger the pile grows, a denouement becomes more and more likely as time passes. Date: Tue Jun 15 2004 11:41 trotsky (Hambone@universal bearishness) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i note that the very same guys who are now bearish were to a man wildly bullish right at the top. at the time, the record speculative net long position at the COMEX should have raised a red flag, but was roundly ignored. recently, this net long position has shrunk to its lowest level in over 2 years. no-one mentions this of course. the dollar, which imo looks more endangered than ever, is widely hailed for its bullish possibilities ( in spite of the fact that there is zero technical or fundamental confirmation to support such a view ) . note the most pertinent fact relayed in Noland's recent credit bubble watch: "ROW began 1998 with a net exposure to U.S. assets of about $2.1 Trillion ( assets of $4.63TN and liabilities of $2.56TN ) . Foreign holdings of dollar assets - our net foreign liabilities - amounted to 25% of GDP. By the end of 2001, ROW net exposure had increased to almost $3.2 Trillion ( assets of $6.75TN and liabilities of $3.57TN ) - almost 32% of GDP. But with dollar holdings surging ( the accumulation of massive Current Account deficits ) and liabilities declining, the ROW net dollar position has mushroomed. At the end of the first quarter, the Net foreign position in U.S. assets had increased to $5.17 Trillion. With asset holdings up $3.8 Trillion ( 82% ) in 25 quarters and Liabilities up $696 billion ( 27% ) , the ROW net position in dollar assets has exploded by $3.1 Trillion, or 150%. Our net foreign liabilities have quickly jumped to 45% of GDP." in short, the foreign NET LONG position in the dollar is the biggest ever, and at $5,17 trillion really the elephant in the room. how anyone can conclude that this is even remotely bullish ( this is the most over-owned financial asset in mankind's history ) is truly a mystery. it seems in fact likely that the dollar will really get whacked badly in coming years. the 'big story' that the parabolic dollar based debt bubble must somehow be bullish for the dollar ( picked up even by Richard Russell ) makes no sense whatsoever...with foreign dollar liabilities having declined recently, while foreign dollar denominated securities holdings have exploded, there's a massive overhang just waiting for a trigger to unleash the flood.