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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 (75211)	4/12/2007 8:39:51 PM
From: Real Man	Read Replies (1) \| Respond to of 94695

80 is an important support area, which goes back to early and mid 90-s, and even 80-s. A break is not guaranteed. Hopefully, it never happens, but the fundamentals are sure against that! The dollar drop to 80 happened as foreigners bought a lot of it, not sold it. They want to unload, because their dollar assets are underperforming, but they are afraid to, since their economies depend crucially on exports to the US. Some rat will abandon ship first, then a bunch of rats will follow. To hold things as they are, the Fed may have to raise and print, and print more than raise. This will support the economy, and higher rates will put some support under the dollar. That's what they have been doing. I don't think there is a real way out now, except postponing the inevitable, but who knows! Unfortunately, if the trade deficit stays high, pretty soon all World savings will not be sufficient to hold the dollar stready, because of the rising interest payments to foreigners. Their hope was that the trade deficit would decline as the dollar dropped, but that did not happen.

To: William H Huebl who wrote (75211)	4/12/2007 9:00:54 PM
From: Real Man	Read Replies (1) \| Respond to of 94695

There seems to be no way out but to take the tough pill. A recession and a dollar crisis will cure the trade deficit and restore the manufacturing base after a few years (5 or so). That will bring employment back from India and China. All that provided that the Fed does not engage in excessive printing due to very tough times that this will bring. That would be tempting for them. If they do, that will cause hyperinflation, which is a lot worse than a dollar crisis. I would think in a dollar crisis and a very severe recession, a drop to 40 would be more than enough. In hyperinflation the dollar will go to zero. Not exactly zero, 0.00000000000000001, but that's pretty close.