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

To: Real Man who wrote (10728)	8/27/2008 7:13:11 AM
From: philv	Read Replies (1) \| Respond to of 71456

"The current account deficit will be dramatically reduced in case of serious US recession (we don't buy foreign stuff)." That is probably true, but to a point I think. A serious recession means an economic slowdown, which affects not only the US but the rest of the world. It will result in job losses and more bankruptcies. That could spin out of control as people are forced to rely on government for entitlements for support. It would also result in less taxes being collected by the FED govt. with obvious implications. So to me, the net benefit of a serious US recession is very uncertain. Continued inflation in denial is the best course, as slowly money is taken from savers to pay the debt. Its a form of taxation without calling it that. And no blame is attached all the while the frog is slowly being cooked in the pot. That way financial institutions can thrive, continue to make "creative" loans, and the government can finance all the foreign wars it wants. Inflation seems to the way to go as it has been from the beginning. The best part is that the US dollar need not suffer alone, as the rest of the world is more than willing to jump into the same pot! <g>

To: Real Man who wrote (10728)	8/27/2008 1:16:45 PM
From: GST	Respond to of 71456

<current account deficit will be dramatically reduced in case of serious US recession (we don't buy foreign stuff>. But the current account is not just the trade deficit.

To: Real Man who wrote (10728)	8/27/2008 1:24:21 PM
From: RockyBalboa	Respond to of 71456

Yes because it means disinvesting. By pulling funds from the US, and placing them somewhere else, I reduce the current account deficit.

To: Real Man who wrote (10728)	8/28/2008 12:59:47 AM
From: TH	Respond to of 71456

Vi, I agree with most everything you stated. Still, I think there will be a point where the competitive devaluation race hits a serious roadblock. And that is the point where importing inflation offsets the value of the exports. I do not know that point for the Europeans, but I think the equation is much more simple if the American consumer shows real signs of fatigue. China is a complete unknown at this point. I don't know what the game plan is post Olympics. Japan is simple. They will continue to devalue the Yen at any cost. I compete with those fxxxxxx and the pain of pricing my imports from Euros to Dollars is severe. Sidenote: I spoke with my counterpart in the Europe this morning about exchange rates for some major business we are in the hunt for. I wanted to revise down to the current exchange rate, but he told me that our experts don't want to do that. They want to stick with 1.55 dollar to the Euro. They are not convinced the dollar rally has legs and they don't want to commit to any 90 day quote window until they see a sustained Dollar rally of at least that length. I would add, those internal <experts> have been wrong for six years <ng> GT TH