Thursday, October 15, 2009

The Diving Dollar...

Greetings good citizen,

The Dow not only dropped below the 10,000 mark in early trading but it rallied even higher just before the close…and we can only wonder if this is being done for the ‘psychological benefit’ of tricking the ignorant into thinking the economy is on the mend…somehow.

Naturally, today’s er, ‘surge’ is being credited o Goldman Sachs and Citigroup…who actually lost money again but, like last time, managed to ‘beat expectations’…whatever the fuck that means in the real world?

So if you’re riding that ‘we’re saved’ high, you can just stop reading right here…

tonight’s offering contains more reality than you can handle, brought to you by that master of doom & gloom, Jesse!

[Hat tip: Jesse’s crossroads café ]

Sumitomo Forecasts Dollar to 50 Yen, End of Dollar as Reserve Currency

"We can no longer stop the big wave of dollar weakness," said Daisuke Uno at Sumitomo.

Nothing goes straight up or straight down. Look for corrections in the precious metals and the dollar, and the strengthening currencies such as the Aussie dollar, which seems headed to US dollar parity. However, the macro trend is apparent.

We get a chuckle over this dollar weakness when free market people like Steve Forbes come out and look for market intervention to stop it. The market is taking the dollar where it should be, where it needs to go. If only countries with obvious pegs and ongoing manipulation to support export mercantilism were also to allow their currencies to float more freely. It is going to kill off global trade. It is the great failure of the WTO and US trade policy to have allowed pegs and overt currency manipulation policies which are de facto tariffs and subsidies on trade.

A 'crash' in the US stock market, should one occur, will temporarily jar nearly everything. More likely is a long slow slide as in the second phase of the Great Depression, from 1931 to 1933.

Monetary inflation can make the nominal charts more palatable as it is doing today. The problem is that all Ponzi schemes come to bad ends.

The only way out, the only viable path, is for the US to embrace a serious reform of its markets and its financial system, and to change system that encourages the debilitating corruption of decision-making in Washington, which is under the influence of an army of well-heeled lobbyists. [And Jesse’s not kidding, the only way out IS a total overhaul of the monetary system, right down to the nature of money itself!]

To that extent, the "straight talking" pre-Palin version of John McCain had it right. Little serious reform can be done until campaign finance and influence peddling in Washington is addressed. McCain saw the danger of this conflict of interest in his own career as part of the Keating Five, and his own party and the rise of the neo-con statism and its assault on republican ideals. [Must be another one of those ‘best kept secrets of conservatism’ if the Rethugs actually favor reform, nobody knows about it! On the other hand…]

The Democrats have shown themselves to be no better, having gone down the slippery slope of Clinton capitalism, the partnership of special interests and government. Obama failed when he embraced it and now both parties are deep in the mire of corruption.

The banks must be restrained, and the financial system reformed, and balance restored to the economy, before there can be any sustainable recovery.

Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says
By Shigeki Nozawa

Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy. [A totally ‘manufactured’ double dip as there was and is no reason for stock prices to be what they are…]

“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.” [The dollar is and has been ‘worthless’ for quite some time, it’s just taking some segments of the economy longer to recognize it than others…]

The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency. [Making the dollars you get your ass busted for each and everyday worth that much less.] The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has fallen 15 percent from its peak this year to as low as 75.211 today, the lowest since August 2008.

The gauge is about five points away from its record low in March 2008, and the dollar is 2.5 percent away from a 14-year low against the yen. [Does this scare you good citizen? If it doesn’t then you’re not afraid of nothing because this is the stuff collapses are made of…this is how, all of a sudden, you’re paycheck stops cracking your nut!]

“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said. [Sadly, we already know that the US government isn’t beyond lying about the true state of affairs…so it will be up to you to ‘nut up or shut up’…]

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency. Hossein Ghazavi, Iran’s deputy central bank chief, said on Sept. 13 the euro has overtaken the dollar as the main currency of Iran’s foreign reserves...

I’ve always admired Jesse’s work and I shouldn’t throw stones because even I sometimes, er, borrow from conservative writers. Hell, from what I’ve observed to date, we all borrow from them on occasion.

Although borrowing from their dispatches is light-years away from actually watching their Kool Aid closely enough to be able to quote it from memory…

Maybe I ran myself through last night when I admitted that gold bugs and conservatives were on the same page because their ideologies are both rooted in fantasy…and most of you think us ‘gloom & doomers’ are a few steps farther down that road than the rabid wingers are…

Something we doomers chalk up to the poor treatment history is given in our schools. ALL of the horrors I point to HAVE ACTUALLY HAPPENED IN THE PAST!!!

History doesn’t necessarily ‘repeat’ itself…but it sure as hell rhymes!

Thanks for letting me inside your head,


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