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

To: Real Man who wrote (10850)	9/6/2008 10:53:00 PM
From: LTK007	Read Replies (1) \| Respond to of 71454

An EXACT recent quote from Dr.Marc Faber << I am a happy holder of gold and a buyer on the way down (in fact, irrespective of the price I buy every month some) for the following reasons. I am not a great believer in insurance policies but since I think that sooner or later the entire financial system will blow up I want to make sure that whereas my assets, which are on deposit and could become worthless through default, I shall still be left with some assets that are mine (physical gold in a safe deposit box – not in the US). I should like to emphasize that this is also a point which speaks for owning some stocks. Dr. Marc Faber Market Commentary August 20, 2008>> i note Faber says it is POSSIBLE Gold will go to 600. Two, this guy is pragmatist and he is NOT ruled by his longterm views. He was LOOOOOOOOOOOOOOOOOOOONG the dollar before this rally in USD. He published a call of another analyst of SPX500 reaching 500 in the future.

To: Real Man who wrote (10850)	9/7/2008 2:55:07 AM
From: GST	Respond to of 71454

<However, deflation is possible intermediate term. Japan has done it for decades - the debt levels of the Japanese government are even more insane now than those of US government. However, Japan is an exporter. Makes a huge difference... Moreover, Japanese savings rate is in the 20-25% range -- they finance their silly but enormous public debts within their own economy. We on the other hand are as dependent on foreign capital as we are dependent on foreign oil --- perhaps more so.

To: Real Man who wrote (10850)	9/7/2008 12:48:25 PM
From: Larry S.	Respond to of 71454

Since you are thinking about deflation, you might find the following article from the latest Barron's interesting. Santoli seems to agree with you and sees deflation for the near term. But I think he would agree that our burgeoning debt will require an inflationary spiral before long. Larry Monday, Sept. 8, 2008 Who's Afraid of Big Bad Inflation? By MICHAEL SANTOLI <javascript:document.byAuthorForm.submit()> The new threat: disinflation. WHO NEEDS ANOTHER REPUBLICAN ADMINISTRATION and all its promises of tax cuts and ramped-up drilling to ease the energy pinch when we have the markets? Sure, that's facetious, but it's true that during the GOP pep rally in St. Paul, consumers were voted a tax cut by acclamation of the global oil market as gasoline prices collapsed to a four-month low and the supply of petroleum suddenly seemed more than sufficient for a stalling world economy. The obvious inference from this action was drawn by everyone from the summer trading-desk intern to the managing partner: Lower petro prices went from being a positive for stocks (a break for straitened consumers) to a negative (signal of fast-waning economic activity) in a flash. Less discussed is the way that this dynamic reflects the predominant disinflationary mode in economies and markets, mere weeks after the conventional barstool wisdom held that an inflationary spiral was upon us. The online search-engine and news-report incidence of the word "inflation" peaked in mid-July, according to Google Trends -- right around the time this column disputatiously made the case that inflation was a waning threat and that "the current credit contraction and the rolling over of wage growth... are inherently deflationary." This won some fairly heavy pushback, understandable given that folks at the diner and water cooler have been complaining about the high cost of living since before they started remarking on the weather -- and because the stuff going up in price (food and gas) is so visible and visceral. But read a bunch of papers and blogs and sit in front of the newswires all day as some of us do, and it's pretty easy to assemble a scrapbook of data and anecdote that point to consumer disinflation (and asset depreciation) driven by weak demand, financial deleveraging and credit deprivation. Aside from the oil retrenchment, gold is rather more quietly down 20% from its March high. On a less macro level, cars are cheapening fast, with General Motors </public/quotes/main.html?type=djn&symbol=gm> (GM) giving everyone its generous employee discounts. The average new-car price fell 2.3% in the second quarter, says JPMorgan Chase, the biggest quarterly drop in the 41-year history of the firm's survey. The Wall Street Journal last week noted that "Price War Erupts for High-Speed Internet Service," with Verizon Communications </public/quotes/main.html?type=djn&symbol=VZ> (VZ) slicing monthly charges for some packages by 30%. The wires related that a major unit of Arcelor Mittal </public/quotes/main.html?type=djn&symbol=mt> (MT) was cutting steel prices by 5% and more. It's still possible to eat cheaply -- if not terribly well -- in this country. In a half hour watching football this weekend commercials from the purveyors of tacos, pizza and "never-ending pasta" will convince you that the cost-per-calorie of a quick meal out remains tame. Even better, the New York Times then helpfully informed us that lobster prices are crashing, thanks to tepid demand, the piece quoting a Maine lobsterman who's getting 25% less for his catch than he did three months ago and 20% less than a year ago. While this gathering trend ought to take the boot off consumers' necks before long, the implications for markets are mixed. It implies companies trying to jack prices in defense of margins will struggle to do so, though the easing raw costs should help in several consumer-facing industries. It also, more benignly, hints that price/earnings multiples on stocks need not crater, and that a 10-year Treasury yield below 3.75% is not fully insane, even if it's not real attractive. THE COLICKY CREDIT MARKETS finally made themselves heard among equity types last week, as did a run of sluggish economic numbers, as the Dow sank by more than 700 points from Tuesday's morning high to the intraday Friday low just above 11,000. Stocks were hurrying to an appointment with a "retest" of the July lows when they began to lift -- led by financials -- as chatter of some government help for the wounded mortgage giants Fannie Mae </public/quotes/main.html?type=djn&symbol=FNM> (FNM) and Freddie Mac </public/quotes/main.html?type=djn&symbol=FRE> (FRE) spread. The indexes recovered by 2% in the afternoon. As noted here before, stocks this year have yet to stage any kind of dramatic rebound off a new low except in conjunction with some government backstopping effort. Those rallies were subpar, but they happened, so at least a further noteworthy bounce can't be ruled out. The time to really worry would be when the government cooks up another rescue plan and the market can't muster any upside from it.