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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (72447)	12/17/2007 1:18:21 PM
From: Secret_Agent_Man	Respond to of 116555

From last Friday's Don Coxe's CC ( tinyurl.com ) courtesy of TheSlowLane at Silicon Investor. A couple of excerpts from the Coxe call: "The maneuvers which were announced were very creative. This special Treasury auction as a means of deflecting attention from banks who have to borrow at the discount window and giving longer term payouts as a result by bidding anonymously at an auction. And the fact that these other central banks are involved reflects something else, which was fascinating to me, was that one of the big squeezes that was going on in Europe, in the ECB zone and in London was a shortage of Dollars to roll over dollar assets. And that was one of the props to the Dollar oddly enough. When we were interested that the Dollar wasn’t going down as much as we had expected in response to all the bad news about the US economy and the US financial system, but, everybody…and Arthur Gray made this point in the call a couple of weeks ago – that everybody was short the Dollar but when they needed to roll over some of their positions, oddly enough the poor beleagured greenback got a sqeeze. So it illustrates that although you can get some idea of longer term trends, a short squeeze can cause problems in the very short term. Does this mean the Dollar’s about to start a new bull market? Absolutely not. But it indicates that players out there who are levered by definition, ten, twenty, thirty to one, can get themselves into temporary squeezes, against the long-term trend." and... "Overall then, the financial crisis does not seem to have been resolved by these activities. And one thing that's noteworthy is that despite all of the activities that the central bankers have done, the monetary base in the US has not been growing. In other words what's been done has been repos and other special short term events which don't actually add to the monetary base. And ultimately if the monetary base doesn't grow that's a constraint on inflation which would indicate that Ben Bernanke is still using mechanisms where he's not doing what predecessors did like Miller and Burns who expanded the monetary base dramatically and added to inflation and got it all the way up to 13%. How long he will be able to use these, in effect off balance sheet mechanisms, to prevent a credit implosion is not clear. I think we should all shed a tear for Ben Bernanke. I still believe that he's a great upgrade on his predecessor but he may be running out of stratagems other than printing money. Meanwhile as for gold we still think it's a terrific asset class in this environment. So we'll reiterate that the commodity groups that you can still feel great about, notwithstanding everything we've told you, are the agriculturals, the precious metals, then the oils. siliconinvestor.com