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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (3101)	12/27/2007 11:08:53 PM
From: Real Man	Respond to of 71456

Yep, the loon is driven by oil that refuses to drop from almost $100, despite seasonality. The US Fed has not printed since May, but they sure did cut a lot. Overall, shorting USD has been very profitable in 2007.

To: RockyBalboa who wrote (3101)	12/28/2007 12:01:49 AM
From: Real Man	Respond to of 71456

cbot.com Fed funds 100 bp. lower are priced in over the next year, with 50% probability of a 25 bp. cut this January. 3.50% by August, 3.25% by next December. Not very bullish for the dollar. The Fed may not be able to cut if the dollar starts dropping fast. Next year should be interesting.

To: RockyBalboa who wrote (3101)	12/28/2007 7:41:22 AM
From: Real Man	Read Replies (1) \| Respond to of 71456

Barring a large derivative meltdown, the carry trade will certainly continue to rule the currency markets in the immediate future and maybe beyond. The World Feds will certainly continue to fight systemic meltdowns such as the carry trade meltdown. So, here we are - the dollar must go down over the next year even against the Euro, unless the ECB or Fed policy changes. Derivatives are completely obscene, and must melt down at some point like all pyramid schemes do. However, it is impossible to predict that event. Well, either that or the World CBs flood the World with money. So far the latter happened whenever the threat of carry trade meltdown materialized, and I think it will keep happening. Such cash floods cause the derivative pyramid to grow and become even more powerful. How much further can interest rates and currency swaps grow? 1 quadrillion? 2 quadrillion? Good question. I have no idea. My guess is that an acceleration of the dollar slide, unforeseen by authorities in Basel, Switzerland, may be the eventual cause of derivative pyramid meltdown.