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

To: robert b furman who wrote (20801)	6/11/2009 9:40:50 PM
From: Real Man	1 Recommendation Read Replies (1) \| Respond to of 71456

Unemployment is now at levels seen at the depth of Great Depression, and still soaring rapidly. They don't count it the same way these days. This is not just a recession. I guess it's green shoots we are losing 600k jobs a week. These folks live in Hoovervilles and don't consume anything

To: robert b furman who wrote (20801)	6/12/2009 12:14:15 AM
From: Real Man	2 Recommendations Respond to of 71456

Bob, to put it mildly, it's a monetary policy screw-up. The Fed had a goal to bring mortgage rates down to 4-4.5% by Summer via direct purchases of 1.2 Trillion in MBS and 300 Billion in Treasuries. Given that this triples the narrow money, investors ran from treasuries fearing inflation and interest rates doubled since the policy was initiated (November 2008). As a result, we are in an inflationary depression. Stock market moving higher could be an illusion created by inflationary forces. It simply offers a better protection against inflation than bonds do. As to whether things improve or get worse, we shall see. IMHO it is most dangerous when a policy fails, and that's when the deepest crises erupt. Most common policy in foreign countries is pegging exchange rate. When it fails, a currency crisis hits. And that's very ugly. IMHO rates are now at a critical point. Should they go any higher and crash up, a new wave of the crisis will hit. They are definitely not going up because they are pricing recovery. Rather, they are pricing inflation due to quantitative easing. T-rates are the base for everything. Normally, as crisis abates, T-rates move up but corporate bond spreads decline, so net-net interest rates for corporations move down. At some point as T-rates rise and spreads have already dropped considerably, corporate rates follow them higher. That's the point when the rising rates hurt. We are there.