Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: bull_derrick who wrote (22494)	11/28/2004 12:50:06 PM
From: Sun Tzu	Respond to of 23153

Actually the issue is not so much the actual dollar level but the market belief in the future of USD and therefore the foreign demand for US debt (including corporate debt). A 40% drop in USD means that anyone who bought US debt has felt a very painful pinch (as was the stock market crash for most investors). The question then becomes is it now the time to buy the dollar or to cut losses. Despite the rhetoric, this administration does not have a strong dollar policy (which is highly misunderstood subject to begin with). That combined with a growing deficit, can make most buyers squeamish to finance US debts, which in turn can lead to a meltdown. On the other hand, if you believe that over the next 5-10 years US finances are going to be much better than they are today (despite Iraq, terrorism, oil, etc, etc) then you can look like a genius by shorting Euro and buying USD. Sun Tzu

To: bull_derrick who wrote (22494)	11/28/2004 1:39:47 PM
From: Rarebird	Respond to of 23153

<The labor utilization rate is the one thing GREENSPAN has consistently worried about in terms of fighting inflation, much more so than commodity prices.> Greenspan is a farce. Greenspan has now joined the chorus of concerns of the past three plus years that the US current account deficits are simply unviable. But current account deficits don't just happen, they are caused. They are always caused by artificially lowered internal rates of interest which generate in their turn much higher rates of accelerating borrowing (and climbing debts). Then, as this new stream of borrowed purchasing power joins the already existing quantities of cash money and deposits in banks, it leads to increased internal purchases (increased consumption) followed by climbing purchases of foreign economic goods (climbing imports). The trade balance swings into deficit, followed by a climbing current account deficit as external debts start piling up ever higher. The wonder of it all is that Greenspan now stands forth in Frankfurt and clearly identifies the assured OUTCOME of precisely the monetary and credit policies which he himself has been the initiator and sustainer of for so long! How Greenspan will be greeted after having said the above when he returns to the USA is anybody's guess. If there is any justice, he ought to be arrested upon arrival based upon Patriot Acts I and II as a financial terrorist. Greenspan has, by deceit, placed the US in a position where the credit expansions he has originated have left the US exposed to a "debt maelstrom" which can arrive at anytime the rest of the world simply decides not to lend anymore.