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

To: SouthFloridaGuy who wrote (83340)	8/17/2008 9:42:28 PM
From: Proud Deplorable	Read Replies (2) \| Respond to of 116555

"I suspect the dollar has probably bottomed as there isn't very much real estate in terms of rate cutting to go, while the Europeans and British can cut away." You're falsely assuming the dollar can't fall without a correlation to interest rates. Japan went to zero and that's where the USD is going IMO except back then Japan had stuff the world wanted. The USA has nothing it manufactures that the world needs or wants. The proof of this is a USD now at 140 Euros and still US car companies are going under. What more proof does one want?

To: SouthFloridaGuy who wrote (83340)	8/17/2008 9:54:44 PM
From: carranza2	Respond to of 116555

It's obvious to me that a stronger dollar means more expensive debt. Hang onto your cash [and your steady income-producing job] for a very powerful argument can be made that we have been in the midst of deflation. Proof: Merrill wrote of $46 billion in asset values and sold $30.6 billion in CDOs at 22 cents on the dollar. Morgan Stanley wrote off $14.4 billion on its mortgage stuff. Fannie Mae lost $ 2.3 billion last quarter and has set aside $ 5.3 billion to cover to June. Freddie has a negative net worth. No telling how big Bear Stearns losses were. AIG and UBS, ditto. Fannie and Freddie have lost tons of their market value. GM, Ford, IndyMac, etc., the list seems endless That is not all. About a third of US homeowners who bought recently are underwater on their mortgages. Real estate, both residential and commercial, is in the dumps. Oil is down, commodities are down and so are all precious metals. Bottom line: assets of every stripe from financial to commodities to real estate are down. And what has debt done in the recent past? Increased hugely. Private mortgage and credit card debt went up to nearly $14 trillion. It is simplicity itself to note that debt is piling up as the value of our assets, some of which must necessarily be used to pay down the debt, is going down. At the same time, the dollar is going up, suggesting that this might be deflation with an added bite. The fact is that the stronger dollar is making the debt more expensive and, at the same time, gnawing away at the value of our assets as well as serving as a negative impetus to exports, the only bright spot in the economy. But in case you missed it, the downfall in the value of just about everything including gold but excepting the dollar means we are in classic textbook deflationary mode. Not to despair, the helicopters are getting loaded and the printing presses warmed up for there is one thing we know about Bernanke: He will not allow deflation to take hold.