Long equity, *short US Dollar* is Bernanke Zimbabwe's bailout trade

Yes, but it's not gonna be on a straight line.

Right now there are way too many dollar bears. Quite a one sided trade. Perfect setup for intervention, then further collapse. Look at Euro and Swissy swan dive just now :D How many pips was that!

Should be a nice opportunity to "diversify" away from the dollar in a few moments. Bernanke's exit strategy is laughable. It will still end up in devalued dollar, imho.

Long term, dollar is still way overvalued. Just like poundsterling a long time ago.

When the average joes find out, it will already be too late to get out from the US dollar.

In 3 ... 2... 1 Prechter's "dollar bottoming" article coming up soon.

Quote from S2007S:

The dollar is going to collapse, plain and simple.
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Bernanke Fed is out of ammo, although they would have you believe otherwise. Eventually jawboning will be ineffective as investors are waking up to the horror unfolding.
 
Bernanke is not out of ammo yet. He's got a variety of tools.

Fundamental does not support dollar at the current level. But the noise is getting louder, especially with people like Jim Rogers, Peter Schiff, Soros, etc on TV saying things about the dollar. When you have too many people on one side, they'll tip it over. They will jawbone it and you can bet they will be successful, even if it's only temporary. This is necessary to prevent "Argentina"-like inorderly devaluation. When the US Dollar permabulls come out of hiding, that will be the chance to get out of the US Dollar :p

And oh .. forget about those paper gold/silver ETF. In fact, that's one of Fed's tools. Better get some physical gold. :)
 
First of all, congrats to everyone who made money from this call :D

Secondly, *be careful*, you are near a point where co-ordinated intervention can jam your trade. Leverage can kill.

My long term view is that the math just doesn't make sense. The dollar needs to be devalued 50% further from where we are today. The fact is the US budget deficit is unsustainable.

Just remember, Poundsterling was $4.85 and today it is only $1.66. There have been many bottom calls in between.

I hope that EW's subscribers, who listened to Prechter's US dollar bottom call, haven't filed bankruptcy yet. :D
 
Quote from option_trad3r:

And oh .. forget about those paper gold/silver ETF. In fact, that's one of Fed's tools. Better get some physical gold. :)
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Why do you say to forget GLD and SLV? How is that one of the Fed's tools? I agree with owning some physical gold and silver, but gold stocks and gold/silver ETFs seem like a good way to diversify in the precious metals sector.
 
FYI, hyperinflation in Weimar happened after a brief period of deflation.

The math just doesn't work and it's a ponzi scheme. It's like paying your credit card bill with your second credit card. So far, Japan. Arabs, and China will still buy treasury bond or else what they have will decline drastically in value. How long can they keep saying it's going to be okay to *prevent disorderly collapse* ?

The next 5-10 years will be one of the most interesting time we'll ever see.

http://www.theage.com.au/national/joyce-warns-of-bigger-gfc-20091022-hbg6.html

Joyce warns of bigger GFC
MARK DAVIS
October 23, 2009

THE Nationals Senate leader Barnaby Joyce is openly canvassing an economic upheaval that would dwarf the current global financial crisis, triggered by the US defaulting on its sovereign debt within the next few years.

In unusually pessimistic comments for a senior political figure, Senator Joyce said the US Government was running such large deficits and building up so much debt that it was in a similar position to Iceland or Germany before World War II.

In a Senate estimates hearing on Wednesday night, he asked Treasury secretary Ken Henry what would be the implications of an American debt default for the Australian economy.

Dr Henry warned that canvassing extreme scenarios could alarm the community.

''I don't mind discussing hypotheticals in general … [but] one has to be careful not to discuss publicly hypotheticals that are that extreme,'' Dr Henry said.

''I don't, myself, consider that outcome to be a high probability outcome, certainly not one that I would want to say much about in a public forum.''

But Senator Joyce insisted yesterday that the dangers to the global economy from the run-up in US private and public sector debt were real and should be debated.

''It is the elephant in the room,'' Senator Joyce told The Age. ''This is a huge risk that Australia faces. What is the game plan, what happens if it comes unstuck?

''Far from turning around the [George] Bush legacy of deficits and debt, [US president Barack] Obama has made it worse. It has got all the hallmarks of a financial collapse about to happen in America.''

Senator Joyce said investor concerns about the American Government's ability to fund its deficits were already undermining the role of the US dollar in the international trading and financial system.

''The US dollar is almost becoming like junk bonds,'' he said.
 
Optiontrad3r, you are wrong! I saw an interview with Geithner and Bernanke , and they said that they "Support a strong dollar"!! see, problem solved!! look, the dollar is already improving, it is 1.3 euro... no, wait 1.4.... geez 1.5 ??? Hang on, there must be something wrong with my screen.
 
This is it, guys :) Posted on Oct 23 just before the dollar rallied.

In my opinion, gold will soon exceed the all time high that was set before. It could dip to $950, however.

$600 billion military spending, extension of home buyer tax credit, healthcare bill, 99 weeks of unemployment benefits. More money printing on the way.

Minimum target is $1350.

Good luck.

Quote from option_trad3r:
Secondly, *be careful*, you are near a point where co-ordinated intervention can jam your trade. Leverage can kill.
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Quote from piezoe:

It seems the smart money, Soros, Rogers, and ilk, are all on the side of a weak dollar. They are short the dollar-- but they didn't tell us what's in the denominator :) -- and short bonds as interest rates will have to rise. But there will be squeezes of course and these things take a long time to play out; so weak, impatient hands should not play this game. It is pretty clear that a weak dollar is essential to improve our trade balance and boost domestic industry, and that will also make US assets cheaper so you can expect a spate of foreign companies coming in and buying up assets, especially since this is a primary way for them to protect against us cheating them on bond returns.

A major problem Bernanke and Treasury have is the balance between currency strength relative to currencies of our trading partners and interest rates. One thinks of a weak dollar (easy money) and low interest rates going hand and hand, and that can be true domestically -- we have that now, for example. Unfortunately, in the long run, for a debtor nation a weak currency and low interest rates are mutually exclusive, and that's the dichotomy that Bernanke and Company are faced with. Just how much longer will our creditors put up with us? Surely interest rates will have to rise at some point and a balance will be struck between rates and monetization. In the end, we will have no choice but to monetize a substantial portion of the debt as it will be simply impossible to improve productivity enough to service the debt without monetization.

There are two actions on the fiscal side that would help immensely, and that would be to bring medical care costs in line with those in other nations, and the other would be to do the same with military expenditures.

These are nearly impossible tasks given the control lobbyists have over the US Senate, and the relative disinterest among the less educated, but vast, segment of the US voting population -- they want lower medical cost without changing anything "too much", and they want a strong defense.

Well Bernanke is coming up for reappointment soon and I expect him to be reappointed. And i'll be glad of that, because so far as i know he has never worked for Goldman Sachs. :D
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great post.

It is inevitable that US gov will keep spending the same if not MORE now with this bailout mentality to save the country. Airlines soon again?...Your right on about the fact they won't make significant budget cuts while continuing to print into death deficits. This ain't post WWII era. No way we finance this scenario without default imo. There was a housing EXPANSION in the 1950s forward when we were in big debt.
 
They simply just won't stop printing like mad, beyond normal.

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Yes, it's true that the money are just sitting at the bank's vault and hasn't exactly reached the economy yet. Some are being used to prop up stock prices and carry trade. But it will make it to the economy for sure. Once the fractional process begins, then .... [insert your own imagination]

You might wanna stock up some can food before they become more expensive.
 
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