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

To: maceng2 who wrote (21886)	8/9/2009 6:49:58 AM
From: Real Man	Read Replies (2) \| Respond to of 71456

Exactly, the forces are there. However, my prediction is based on not BDI, but, rather, TED spread, which made a new low and indicates the financial crisis has passed. Of course, it signaled that last October, but stocks bottomed in March. We will need to monitor derivative Ponzi scheme very closely. I disagree - so much has been printed not because the economy is in the crapper. The financial system blew up, and would unravel in domino fashion through counterparty defaults. However, the Feds came in and nationalized the financial insurers like AIG, FNM, and FRE and other players on the losing side of contracts. That save requires a lot of money to be printed, because the Ponzi grew from 100 Trillion to 1000 Trillion in the past 10 years. That's notional amount. The real amount was 30 Trillion in highly leveraged bilaterial contracts as of December 2008. These contracts were what froze the system, as counterparty trust evaporated. It has been fixed for now. This means the global markets will operate according to computer models for some time, rather than fundamentals. Further rapid growth of derivatives will lead to collapse down the road. That, or hyperinflation if the central banks keep accomodating the monster. This IS the market now Surprisingly, it means the amount of printing is irrelevant for currencies, not because it isn't fundamentally, but, rather, because it is Not in the model that governs derivative markets. This means the dollar will move higher if US economy recovers on this enormous stimulus, and so will stocks. It is difficult to say exactly where the Ponzi will collapse again, but we will keep looking at BIS and other data. JPM has notional value of 100 Trillion, which exceeds the global stock market capitalization.