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

To: orkrious who wrote (23277)	12/12/2004 11:33:17 PM
From: Rarebird	Read Replies (2) \| Respond to of 110194

<is there any reason other than diversification you're not going to have a higher allocation?> Yes, it's called humility, the fact that I could be wrong.... There is also some tremendous risk here, which is not be taken lightly. The Bush Administration is playing chicken with all the rest of the world. If, through joint actions, the West's other Central Banks - the ECB, the BOJ, the Bank of China, the BOE and most of the lesser ones - suddenly began a global operation to buy-up enormous quantities of US Dollars to support its international value, the US gets yet another free ride. If that happens, the real costs will be paid - yet again - by the nations which bailed the US Dollar out. The cost would be the expansion of the quantities of their own national currencies - to be seen inside these nations about a year later in the form of inflation. To be sure, if the Bush Administration does NOT do the things necessary to support the Dollar (lower spending, lower budget deficits, lower trade deficits, higher interest rates), it is only a matter of time before a large number of the foreign holders of US paper and financial assets panic and start a cascade sell-off. But the other possibility is that the Bush Administration are the ones who panic when they realise that the rest of the world will NOT be coerced into rescuing them. Their track record in the face of past near-panics is clear - they start a war.