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

To: Crimson Ghost who wrote (29940)	4/3/2005 9:07:09 PM
From: mishedlo	Respond to of 110194

Here it is in a nutshell: The “conundrum” that Alan Greenspan now faces is a simple one. America is rapidly going bankrupt owing to basic financial incompetence and needs constant infusions of money at the rate of some $2.9 billion dollars a day to keep the illusion of a prosperous economy going for a little while longer. However, the money providers are getting somewhat unhappy and nervous. Because the huge amounts of dollar denominated debt that they hold becomes ever more worthless as the dollar sinks. They have even been complaining publicly about this fact recently can you imagine what they must be saying privately! First the Chinese, then the South Koreans, finally the Japanese. Is this just a coincidence? America has no choice but to take these economic threats very seriously. Somebody has to keep buying all the new debt and they must continue to hold there old debt at all costs. So now we are seeing some interest rate rises to halt the dollar decline. To me the Dollar chart does not look so bearish anymore, i am not saying for one minute that we are going to see a glorious new dollar bull what I am saying is that we will probably see a sideways trading market bordered for the foreseeable future between 80 and 90 on the USDX. The only way Alan Greenspan can strengthen the dollar is to get international capital flows moving back into the dollar, and the only way he can do that is to make it more attractive to hold dollars by raising interest rates. At present you are faced with a negative return for holding dollars.