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One last heads-up on the US economy
by Mr. Chuckles
| Mar. 15, 2008 |
I have no confidence in any predictions now. The US financial and monetary situation has become chaotic. Anarchy! Soon, if not before that, the economy will freeze up because forecasting is
nearly impossible for everyone -- everyone except the Commander In Chief of the USS Titanic, and his forecasts are always useless unless you assume that he is 180 degrees off target...
In most cases when everyone is predicting some future event in the markets, the opposite happens in the short term. That is because the bets have already been made by the time the public becomes fully apprised of the situation. And right now everyone is totally pessimistic about the US dollar. Everyone loves gold and oil too! So it kinda stands to reason that the crowd is wrong at this moment...
One other reason to suppose that: the US
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The fate of Western Civilization is at stake, and it is reasonable to suppose that Europe, and Japan at least, will come to our aid in this time of crisis.
But the President has burned every bridge, and there are valid reasons to suppose that right-
thinking allies see this as a perfect time to de-fang and defenestrate a hyper-powerful country that has turned fascist and gone horribly wrong!
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financial and monetary problems are now so severe that they may rightly be classified as a National Security
Issue. Therefore, the fate of Western Civilization is at stake, and it is reasonable to suppose that Europe, and Japan at least, will come to our aid in this time of crisis.
But the President has burned every bridge, and there are valid reasons to suppose that right-
thinking allies see this as a perfect time to de-fang and defenestrate a hyper-powerful country that has turned fascist and gone horribly wrong! Just last week President Bush vetoed a bill that would outlaw torture of prisoners under US control -- but these deeds are already outlawed internationally and domestically, so why would Congress even feel the need to create more paper for an outlaw President to ignore? The US executed captured Japanese after WWII for waterboarding American prisoners, so there is no question that the US has committed grievous crimes against humanity.
Therefore, it may well be that the entire world will unite and watch the US collapse under the weight of its arrogant greed, stupidity and failed leadership. It is cheaper for the world to suffer economically during the US collapse than to be forced to fight WWIII later -- which would be the logical result of more US military adventurism... which will soon come to a screeching halt because we are totally bankrupt.
Here are a few articles to ponder. Good luck, people!
Wishing for Another Z.1
by Doug Noland,
Credit Bubble Bulletin
Excerpt: Undoubtedly, currency markets have begun to increasingly discount the “nationalization” of U.S. Credit risk -- both by the Federal Reserve and the federal government. The Fed may plan on 28-day terms for its exchange of Treasuries for other “street” collateral. Yet, the way things are developing, I see little prospect anytime soon for an environment conducive to the Fed reversing course and transferring such risk back to Wall Street. Indeed, this week likely marks a key inflection point for what will soon evolve into a huge expansion of Fed holdings (and various guarantees) of U.S. risk assets. And, at some point, the federal government will be similarly forced into accepting Trillions of “financial guarantee” obligations - for mortgages, municipal debt, student loans, various “deposits” and who knows what. ...
There are now forecasts for a 100 basis point cut in the Fed funds rate for next Tuesday. Many are arguing that financial and economic developments support more aggressive Fed rate slashing. I am reminded of the joke of the entrepreneur that loses money on every sale but is determined to make it up on volume. At this point, it should be apparent that rate cuts are destabilizing the system. They not only damage Federal Reserve credibility, they are battering confidence in the dollar and U.S. financial assets more generally. With the financial crisis having reached the “core” of the U.S. Credit system and the currency markets having turned “disorderly,” we’re now on Dollar Crisis Watch. One of my greatest fears has always been an unwieldy dislocation in the currency derivatives market.
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Leading economist: Dollar faces outright collapse
Excerpt: Peter Schiff, a dollar-bear at Security Pacific Capital, told the London Telegraph that the greenback faced the danger of outright collapse as countries in Asia and the Middle East mull plans to break their dollar pegs, which are fueling inflation across the region.
"The decline could accelerate rapidly. The world is still holding a lot of dollars it doesn't need," he said.
Schiff is well respected amongst the major financial publications, primarily due to the fact that over two years ago he accurately forecast that the U.S. housing market was a bubble that would soon come to bust, and also that the crisis would extend to the credit card lending industry. ...
"The "strong dollar" message is so familiar, and is uttered with such unfailing regularity, that market observers often roll their eyes when they hear it, and short-term traders pay it little heed," reports Market Watch.
In the wake of the news that the G7 nations may intervene to shore up the dollar, analysts have stated that such action may now be futile considering that the Fed is seemingly unfazed by the currency's total degradation and has the ability to effectively "pull rank" over policy makers who may be genuinely worried about the decline.
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This crisis has
a life of its own
by Larry Elliott,
economics editor,
The Guardian
Excerpt: ...
There are three immediate conclusions to be drawn from today's events. The first is that the market turmoil will continue and perhaps deepen. The second is that the Fed will now almost certainly cut interest rates by 75 basis points when it meets next week. The third is that the chronic weakness in the dollar will continue and before long may prompt coordinated central bank action to prop it up.
But the scary truth is that the Fed has lost control of events. This crisis has a life of its own and it is not going to end until a floor is put under the US housing market, because only that will stem -- eventually -- the losses being made by the banks. As things stand today, that still looks a long way off.
*** *** ***
On the verge of utter economic collapse:
A suspicion, a guess, a fear, a hope and an idea
Excerpt: My guess:
The current orgy of dollar selling, oil buying and gold hoarding will climax messily no later than June 1st, and perhaps a month or so sooner. Eventually the falling dollar will resolve the US problem of unaffordable real estate and falling mortgage bond prices. It will also pretty much resolve the need for the Fed to keep cutting interest rates. Why? How?
Simple. When the dollar falls enough, all those bubbleized assets will be affordable -- not to most Americans, but to foreigners who will be able to exchange over-priced Euros for dirt-cheap Ameribucks.
These foreign investors get a twofer: their currencies sky- |
rocketed while our asset prices nose-dived. And if this next leg down doesn't solve the problem then the leg down after that will be like opening an extra-dimensional vortex which connects to The Void -- everything in the US that isn't nailed down will be loaded into those empty shipping containers and hauled off to Asia. (As Steve Saville wrote, the falling dollar won't create many jobs as there are minimal manpower requirements for loading our autos onto ships and waving good-bye.) ...
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