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.

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

To: Kailash who wrote (26348)	2/12/2005 9:07:59 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

<make sense that China (and Japan) would issue private warnings> The public warnings have been been coming from smaller Asian CBs. Thailand has indicated it intends to cut USD holdings from 80 to 50%. Russia has issued similar statements. Malaysia and Singapore are rumored to be reducing dollar portfolios. Korea, Taiwan, Hong Kong hold $500 billion, and Singapore, Malaysia, Thailand, and India collectively hold over $350 billion. Roubini refers to these smaller CB actions as "free riders", using the monetizing and anchoring of the larger Wizards to unload Old Maid Cards. It makes perfect sense, and it's not insignificant. All the tired global monetary regimes of the past failed because of a pick up in free riding and players going for seats in the game of musical chairs. According to the Fed's own data, foreign custodial holding fell 10.820 billion in the last four weeks. Normally they purchase about $5 billion per week, so that's nearly an $8 billion swing. Since the Fed is increasingly under the gun not to print during this feeble USD stabilization, they've resorted to lending via repos, including unusual Treasury activity in order to finance this gap. omo.co.nz This in turn places extreme burden on the dealers (Boyz), and puts even more pressure on the Ministry of Propaganda to influence rally behavior so that Boyz can unload profitably. I believe the bond rally was nothing more than a manipulation to blow out the funds (just like they did in gold, anti-USD, and oil). Clearly some CBs used the recent USD strength and fund liquidations to get rid of Dollar assets. Obviously the logical bagholders, China and Japan were unwilling to pick up the marginal selling. I guess the question is: was this opportunistic () or a new pattern. () May explain how three fourth of an enormous fund long position in currencies and gold can be blown out in a short period, and cause only a small decline in gold (could the Asian CBs have been buyers?) and a feeble USD rally.