Dollar decline, round II, starts here

[killATwill]

dollar shorts have been cleared out

long term trend still sharply down

trade deficit gets worse on a strengthening dollar

time to test mr bernanke

 

[aPismoClam]

patiently waiting another awesome buy point.

"time to test mr bernanke" interesting.

 

[killATwill]

looks like more chop, but a down leg is looking right around the corner. i don't believe that if the economy starts to fail bernanke would even think once of supporting the greenback. according to some sources i've read, his seminal work on the great depression was that government failed to let the dollar fall. IMHO, that means any sign of slowdown will be met with a currency devaluation and thus higher rates in the short term means an ever lower dollar in the longer term.

 

[Digs]

If the USA goes down, there will USA lead golbal deflation.

Where do you want to put your monies, in Euros, Yan, Yen, AUD, GBD...yeah right,

You would by USD and get USA govt back 30yr bonds.

The USD will hold up in the world sinks, lead by the USA !

 

[da-net]

Quote from Digs:

If the USA goes down, there will USA lead golbal deflation.

Where do you want to put your monies, in Euros, Yan, Yen, AUD, GBD...yeah right,

You would by USD and get USA govt back 30yr bonds.

The USD will hold up in the world sinks, lead by the USA !

I agree with some of what you suggest, however if global deflation happens...I believe the quickest recovery will be in the Yuan. I see the Chinese has the manufacturing capability with extremely low labor costs, very limited domestic market that could be grown quickly along with price undercutting the other WTO countries.

 

[Digs]

Sorry you dont know China well enough

-Corrupt legal system
-Not part of the global free banking system
-There economy will collapse with out USA consumer spending
-9% GDP will turn into 5% GDP, which is a disaster for China
-Foreign investment in China will turn to mud as they dont have a western style legal and SEC investor protection system

Maybe the Swiss franc, but its not liquid enough !

Cheers

 

[EBenson]

Quote from Digs:

Sorry you dont know China well enough

-Corrupt legal system
-Not part of the global free banking system
-There economy will collapse with out USA consumer spending
-9% GDP will turn into 5% GDP, which is a disaster for China
-Foreign investment in China will turn to mud as they dont have a western style legal and SEC investor protection system

Maybe the Swiss franc, but its not liquid enough !

Cheers

- do you actually know that China trades with other nations besides the US ...?like the EU,Japan,Korea,South America etc..
- why should chinese exports to the US dissappear if the US goes into recession ?---> more likely they will be reduced by 10%,20%,30%,40% or 50% but surely not go to 0 ...or maybe you envision millions of freshly grduated law students suddenly going into shoe manufacturing ?
- what about the Chinese domestic market ? do you assume that it just stops growing overnight ?
- obviously you dont understand that societies in other countries(Asia etc) are not the same,do not behave the same way as US consumer/population--->>all asians and most europeans save,asians save a lot...in case you dont know ever since WW2 the US has had a "couple" of recessions and there has not been a recorded case where the Japanese economy collapsed (which is heavily dependent on US exports),slowdown? yes ,- in some aspects/areas of the economy ...and as economic history has learned us,savings are very important in case of economic trouble.
small example-Austria a country of 8million--->for the year of 2004--->>not considering any kind of "nests" that the "rich" use--->the population has savings of about 360 billion euro
- " western style legal and SEC investor protection system "...you mean they are missing on stuff like Jack Grubman,Mike Milken,CSFB,upgrades/downgrades,star analysts and countless others...,but yea youre right, millions of US investors got "protected" in the 2000-2001 great bull market...right now millions of ordinary americans are being prepared to get "great western style protection" with their houses/loans/mortgages/re...stuff like a $750.000 ordinary/normal family house in SanDiego with no Cash Down payment...
usually in movies the best comes in the last 15 mins...sooo stay tuned : PLAYING RIGHT NOW IN ALL AMERICAN THEATERS : one of the greatest american movies still known only under its work-title,nominated for 12 Oscars --->"The Great American RE Protection of the early XXI century"

---besides guys,im really getting tired that most people in the Us think that chinese are a kind of neanderthal people only able to produce shoes,t-shirts,some cheaporama plastic stuff etc...this summer the mayor of Moskow(Russian capital) signed a contract with a chinese engineering company to build several skyscrapers,worth of course couple of billion.

 

[da-net]

Hi Digs,

"Sorry you dont know China well enough"

You are right that I do not know China well enough, YET. I've only been going there since 1970 and find I admire them more and more everyday for what they are accomplishing. They have not forgotten their heritage and great things are still in front of them. The families work together for the common good of the family. China integrates its people and cultures into a single very proud entity called Chinese. We (the US) on the other hand are divided in groups like African Americans, Mexican Americans, Native Americans, etc.

I see the day when China replaces the US as the world financial power the same way the US replaced England. It may not happen in my lifetime but I believe my children will see it. In our schools we are teaching Spanish when we should be teaching Mandarin or Cantonese. We should not fear the Chinese, but embrace them as friends.

"-Corrupt legal system"

If catching and punishing criminals without the need for headlines is a corrupt legal system, may we be cursed with it in the US and especially Georgia!

"-Not part of the global free banking system"

They were a regional stabilizing factor when the other asian currencies were devalued.

"-There economy will collapse with out USA consumer spending"

Vendor Financing aka USA Consumer Spending will slow down, but unsure as to the reason. Perhaps they will be more selective as to whom they Vendor Finance.

"-9% GDP will turn into 5% GDP, which is a disaster for China"

Around Christmas 2001 I was on a flight from Beijing and seated next to an analyst (can't remember what firm). I was reading the South China Morning Post headline stating that China was going to achieve something like 7% GDP growth in 2002. The analyst scoffed at the prediction. Now I read where China has been attempting to keep growth capped so as not to be out of step too far with the rest of the world.

"-Foreign investment in China will turn to mud as they dont have a western style legal and SEC investor protection system"

China does not need foreign investment and they do their best to restrict it. Yes, they are allowing some but are extremely selective

I do not know how much help the SEC has been to you, but I have filed several legitimate complaints with them over the years and NONE have ever been addressed. The SEC only works for headlines and funding, not for those of us that pay their salaries from taxes and or fees. Asian cultures find and fix the problem, we (US) find whom to blame. Their way is more productive. Sorry to be cynical about US government, but US government is for US government not for the public!

 

[killATwill]

if the global economy faced deflation, i wouldn't put my money in usd. i would put my money in gold. yes, gold as a deflation hedge. the reason is that the main price driver in gold is E/P (the reciprocal of P/E ratio). In times of bad deflation, risk premia increase and P/E ratios get smaller. When that happens, gold rises.

 

[killATwill]

sentimentrader agrees...

"Trader positions in the U.S. Dollar are at their most bearish for the greenback ever. Past peaks in the Dollar have benefited gold stocks, consumer non-cyclicals, insurance and utilities

As you can see from the Commitments of Traders chart on the site, the current configuration of open positions is at its most bearish ever for the U.S. Dollar. By that, I mean that large commercial traders (aka the smart money) has its largest net short position in history, while trend-following speculators have their largest net long position ever. By contrast, the configuration looks much better for the Japanese Yen, British Pound, and Swiss Franc."