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

To: russwinter who wrote (22844)	12/5/2004 10:02:42 AM
From: Tommaso	Read Replies (2) \| Respond to of 110194

>>>Fleckenstein's recent piece<<, In fact, posted 2/16/2004. But still relevant, of course. Has he had anything additional to say in the last few weeks?

To: russwinter who wrote (22844)	12/5/2004 10:09:30 AM
From: Tommaso	Respond to of 110194

OK, I guess this is what you meant (summary of current views): I can't provide URL because it appears as a popup. Contrarian Chronicles Dollar's plunge is a blight, not a benefit advertisement I don’t buy the idea that the falling dollar will fix our trade deficit. It will cause a lot more trouble, and even Chinese peasants understand the problem. By Bill Fleckenstein This week's column is devoted to the dollar, and it begins with a sobering vignette from Shanghai: "The long lunch-hour lines at this city's downtown Bank of China are filled with people who not long ago stuffed their accounts with U.S. currency. Now they are dumping dollars. . . . The customers lining up to change dollars are young and old, Chinese as well as foreign." That comes from a recent Wall Street Journal story called "Chinese Are Losing Dollar Faith," and I'm sure it's a story that's being played out all over the world. This is what Alan Greenspan's stewardship of the dollar has wrought. It has become confetti to the point where it depreciates against virtually every currency on the planet -- something that would have been unthinkable under former Fed Chairman Paul Volcker (who has said that there is a 75% chance of a dollar crisis in the next five years). Banks and insurers check your credit. So should you. As I have been saying for more than a year now (see "The dollar is on borrowed time,” written in May 2003; and "The sliding dollar is already costing you," written this past February), a train wreck is coming in the currency. It will have serious ramifications. I wish I could time it exactly, but I can't. However, I continue to look for clues that suggest a further acceleration of the trend. Curiously, it seems to me that the No. 1 battle cry is not "I'm bearish on the dollar" (though lots of people are bearish), but "There are too many dollar bears, and therefore the dollar is going to bounce." I think that is the consensus, not that the dollar will be weak. Certainly in America, that is the consensus. On a similar note, I am often asked: "Isn't the dollar's decline going to be bullish because so many people tout it as such?" As I stated in my column, "The 7 stages of a dollar crisis,” the bullish argument is always made in the early stages of a currency decline, because the ugly ramifications often have a long gestation period. It's like the way that every slowdown in a business cycle is at first always deemed to be a soft landing.

To: russwinter who wrote (22844)	12/5/2004 10:28:55 AM
From: loantech	Read Replies (2) \| Respond to of 110194

Good post Russ I think you hit the nail on the head. Here is something I pasted together but not nearly as well though out or as eloquent: We got the gold price. We got the dollar fall. Only thing is is a lot of gold shares did not follow. A lot of reasons for that. 1.Stock market has rallied to give investors a good place to bet. 2.Gold stock investors are scared to death because every time their shares go up they get beat down bad. 3.It is tax selling season. 4.Gold shares are being sold and $$ put into the new GLD.5.There is a ton of money that has gone into PP's this past 6-18 months and all the houses are selling the shares down to hold the warrants or vice versus.6.There is a conspiracy.<g> 7.The shares actually lag the metal in price increases. 8.No mergers and only Linear has hit a glory hole. 9.Costs have risen for producers so their net is not as large as it may have been with lower energy prices. 10. Oil has fallen while POG has risen so people think there is no inflation to worry about so the public is not buying gold shares. Who knows I don't. Tom

To: russwinter who wrote (22844)	12/5/2004 12:26:17 PM
From: Carlos Blanco	Read Replies (1) \| Respond to of 110194

() 7 small steps to crisis* the modification that i would make to his single straight line is that it's more likely to be an ongoing series of repeating loops around 3-7, some big, others small, culminating in at least one truly huge crisis/panic with political implications & shakeouts. this is a subjective judgement based on how i've seen currency crises evolve in the past. i'm assuming that human nature and history tend to repeat, which i think is a very safe assumption. bottom line: it'll be very important to not get faked out by mistaking the end of a loop iteration for the end of the major trend. in other words, there will be ongoing waves of official "false fixes" & intervention, each having less and less effect and reducing government credibility, over the course a declining trend in the value of the dollar. the trend could conceivably take many many years (decades?) to play out, although with the instantaneous spread of information and twitchy fingers that exist nowadays it's also possible everything could unfold in 12 months. the very first time that mr. snow said that the US had a "strong dollar policy", it had an effect on the forex markets. each subsequent utterance of that phrase has been less and less effective to the point where today it's viewed as pathetic. before this all ends, i expect a similar discrediting of the entire political establishment (and the fed in particular) as they try to "fix" the dollar problems via misdiagnoses, populist/easy answers, manipulated statistics, and blame-shifting. not too differnent from the US in the 30s and 70s. to the extent that one of the crisis loops becomes explosive politically and no longer addressable by empty talk and fake solutions, there will finally be some kind of "real" action that will halt the dollar decline and give people hope that fundamental things are in fact going to change going forward. possibilities include: letting interest rates rise to their natural level; withdrawal from the middle east and/or reversal of the world policeman policy; money supply taregetting; the president and congress saying that this time they really really really mean it when they say they will reduce the budget deficit; partial gold backing or explicit gold price targetting; fixing/privatizing/abandoning social security; radically simplifying the tax code; dismantling the federal reserve; and so on. any combination of these would in my opinion be dollar-constructive and a potential longer-term turning point.