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

To: SouthFloridaGuy who wrote (6852)	5/4/2008 11:53:24 AM
From: Real Man	Read Replies (1) \| Respond to of 71446

Current market relationships are determined by huge derivative positions, which lead to sustainable imbalances and weird market relations. By providing liquidity to the marketplace, the Fed backstops these positions, so things return to "normal" - subprime becomes risk-free again, stocks rally, puts expire worthless, volatility contracts, gold drops, investment houses selling these profit. By any means, these relationships are not "normal", not what they used to be BEFORE this huge derivative bubble developed. According to textbooks, US government bonds are risk free, because the government can print money. It is thus foreign investors, not the government, who bear the currency risk. At some point they might just get tired of bearing it, and it seems the Gulf states are getting there. -g-