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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (75201)	4/10/2007 9:18:35 PM
From: Real Man	Read Replies (3) \| Respond to of 94695

We'll see. In my view, our country has engaged in a severe abuse of the dollar as a reserve currency for a very long time. This is the cornerstone of all bubbles, since all of those are really blown by the Fed. The resulting misallocation of capital is huge - US still runs enormous trade deficit with the rest of the World, consuming all its savings, and it only got larger as the dollar index lost 30%. We resort to making money in bubble industries, such as construction, service, and finance, which means just credit multiplier for the money printed by the Fed. Manufacturing gradually disappeared. It is now only 10% of the economy. Lots of dollars are stored outside the country, ready to come back in a crisis. I have quite a few worries. 1) Once the confidence in the dollar as a reserve currency is lost, lots of dollars will come back from abroad, causing more of a decline. Rates will shoot up because of foreign bond selling. 2) What about Yen carry trade that held the dollar up for so long? All that will have to reverse. 3) What can the Fed do? They can't lower, and will have to raise rates! Raise rates and print, that's what they will do, and have been doing! 4) What can the government do? They already used the budget deficit tax reduction pill to bail out the stock market bubble of 2000. They are broke. Raise taxes now? 5) How can we repay the debt to other countries if we have 10% of manufacturing? What will we eat and consume if we are dependent on constant imports? My conclusion: the dollar crisis will have very severe consequences for the economy, and it will take a very long time ~ 10-20 years to come out of it! Housing will collapse. The debt will have to be forgiven, or eaten away by hyperinflation, since the Fed most likely will resort to printing more dollars. Printing dollars is all they really can do. They don't have magic powers. It's a central bank.

To: William H Huebl who wrote (75201)	4/12/2007 6:40:34 AM
From: Real Man	Read Replies (2) \| Respond to of 94695

The Fed is at it as usual, but it isn't working that well anymore - they have multiple problems in credit market, currency market, and the stock market. Which bubble to save? Save one, and the other will pop! The housing has popped. The credit market is just starting to, thanks to defaults. The economy is in inflationary recession already (due to CPI lies, the GDP is still "growing", but only in nominal terms, of course). BK has not been outlawed, just postponed. There will be nothing to celebrate when it finally comes -ng-. Now, I really don't like AG for not letting the markets clear while there was still time, and for blowing various bubbles. There was still time in the mid-90-s. A nice summary of Chris Puplava on US manufacturing - it is really in a bad shape. That despite the dollar drop. financialsense.com We have to thank AG for that. Since he was blowing bubble, it has been a lot more profitable to speculate than it was to produce anything, for a very long time now.