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

To: Mike Johnston who wrote (76754)	12/28/2006 6:59:53 AM
From: Real Man	Read Replies (2) \| Respond to of 110194

When the dollar breaks down. It's not if, it's when, because of the confidence games played by the Fed. Foreign recycling of dollars and the ongoing carry trade are crucial for the dollar. Sharply rising gold price will sink the dollar. The BRIC group will be fast to sell their dollar assets. What will happen when a few trillion $ start flowing back in the US within 1 month time frame? I think that's a possible scenario when the confidence in US dollar is lost. Thus, the carry trade must be done and encouraged by the banks, to maintain this confidence, until they are overpowered by market forces (fear), and sharp selling of USD bonds by foreign CBs. The current bubble regime has some stability to it, otherwise it would not be here today. The distortions are enormous, but the ongoing arrangements make them grow even bigger.