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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Dan3 who wrote (67787)	12/1/2006 8:09:38 AM
From: ChanceIs	Read Replies (2) \| Respond to of 306849

>>>With real estate tanking there's no where else for the cash to go except to bid up long term bonds, causing rates to fall.<<< Interesting analysis. There are many, many interconnections in the market these days. A couple I read thia AM: 1) Iran is in trouble because its internal consumption of oil/products is rising so quickly that it will have little to export. That is on top of the fact that they have neglected their oil infrastructure, and the West is not likely to help (would you send a $10 million drilling rig on to Iranian soil?). 2) The following isn't new, but Randall Forsythe in Barrons stated it elegantly yesterday: The East is as addicted to our markets as we are to their cheap products and investment dollars. They don't want the dollar to sink because we loose purchasing power for their goods. Of course if the dollar sinks, they loose on their investment in our bonds. Forsythe adds a new wrinkle about foreign margins: _________________________________ With these export junkies hooked on U.S. demand, none of them are eager to see the dollar decline, Quinlan observes. Economics textbooks would say a weaker dollar would price their wares out of the market. That may have been the case decades ago, but in hyper-competitive globalized economy, exports would have to accept thinner margins rather than raise prices. No wonder central banks of China and Japan resist their currencies' appreciation by buying up the surfeit of greenbacks, which they recycle back into the American economy by buying U.S. bonds. As long as the dollar is kept relatively stable by exporters' vendor financing programs for American consumers, the world economy has been growing. Any sign that the game might stop would rightly cause disquiet for equity investors. A weak dollar may be Americans' currency, but it is our trading partners' problem. In the export-dependent world, a strong currency is a hot potato; nobody wants to have it. And that remains the best investment argument for gold. ___________________________________________________ Gold???? Blah. I don't do gold. Now black gold is another issue altogether. As in Canadian black gold. Own something in demand and get the exchange rate benefit as well.