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

To: carranza2 who wrote (26669)	1/28/2010 3:48:26 PM
From: Real Man	Respond to of 71463

A lot of things can happen, but my most likely scenario remains a double dip recession, with the second dip in 2010-11 and 14-15% unemployment as they try to fix some stuff. No, I am not thinking the worst is over, it's just a moderate scenario, as opposed to an Armageddon. The unemployment will flatten as it did now, then start to climb again later this year. I am just stating the obvious, that 700 Trillion is not real money, all real money is in the relationship between asset prices and debt.

To: carranza2 who wrote (26669)	1/28/2010 4:06:39 PM
From: Real Man	Respond to of 71463

Roughly the same as here, nice article. Really in contradiction with the wildly bullish Investor Intelligence number. Don't get me wrong, it's a pretty gloomy picture, especially the double dip recession. The latter would mean mid teen US U3 unemployment number, a record since WWII the GD, but not as bad, and hopefully without another "crash". It was my original "moderate" scenario from early 2009. Unemployment stays flat, then goes higher to 14% davos2010.theatlantic.com

To: carranza2 who wrote (26669)	1/28/2010 4:19:43 PM
From: Real Man	Read Replies (1) \| Respond to of 71463

I'll be honest, Volcker coming into the picture has changed it. My meltdown warning is there IF they don't do what he says while things are liquid and keep blowing bubbles. Then we will have a recurrent meltdown down the road. Depending on how it is implemented, and if the bilaterial contracts are burned down. IMHO.

To: carranza2 who wrote (26669)	1/29/2010 12:18:08 PM
From: LTK007	1 Recommendation Respond to of 71463

<<Perhaps it has to do with the promise of higher interest rates.>> But from where is this promise coming, it is not coming from the Fed. We got but one dissenting vote in the last meeting, with Hoenig saying he was NOT happy with the phrase "extended period" regards keeping interest rates at bottom. As long as the phrase "extended period" remains i do not see any promise---extended i think carries at least a 9month implication. Bernanke is perhaps a "nutto", but he has the ball, and i can't see anyone taking it from him. The strength in the dollar i do not see necessarily as a measure of belief in interest rates going up, but, instead, possibly a fear the Market is going to fail. Max

To: carranza2 who wrote (26669)	1/30/2010 3:28:09 PM
From: Real Man	Respond to of 71463

The situation is exactly this - derivatives don't create new debt in the system, they just redistribute risk. For example, in credit domain, say, if then AAA AIG insured subprime mortgages, then that allowed these borrowers get very low rates in spite of the fact they are all high risk. Right now US government owns a lot of derivatives, it guaranteed virtually everything with it's AAA rating, while it's balance sheet is far from perfect. In other words, USA is one giant AIG, but one that can print money? No, there are no real obligations in excess of debt that exists in the system. However, as AIG's ratings deteriorated, the whole system blew, because a lot of money has been lent to marginal borrowers at low rates. The same is true here - the marginal borrowers are the banks, USA is the equivalent of AIG with AAA rating. These guarantees stopped the crisis. For now. All guarantees can be honored because the Fed can print dollars. However, with consequences. -g-