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

To: regli who wrote (48125)	12/24/2005 3:19:41 PM
From: kris b	Read Replies (3) \| Respond to of 110194

"Ramsey, very good post. I totally agree. If the RE decline is pronounced and the economy strongly slows then the dollar is likely the riskiest asset to be invested in." Wrong , you got it backwards. It all starts with CREDIT BUBBLE. If the US RE declines, credit contracts (shrinking collateral), consumers can't refinance/borrow and have no funds to buy imports. They are cutting drastically on foreign consumption. Current account balance goes down to zero. Fewer US $ are being created and entering the world economy. Dollars become scarcer and anyone who borrowed in US $ is trying to get their hands on it, in order to repay US denominated debt that is being forcibly liquidated. Law of supply and demand in action. Kris