Comments on: Dollar Headed into Perfect Storm

By: FranSix

FranSix — Tue, 29 Jun 2010 02:08:18 +0000

Just this evening, 6mo. treasury yields have collapsed, while 3mo. treasury yields continue to be propped up. The whole yield curve was flattening, with the exception on the shortest term yields for the last week, but this is a twist:

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

By: gary leibowitz

gary leibowitz — Mon, 28 Jun 2010 20:16:11 +0000

On a short term basis it is possible. It only increases the eventual response though. You can’t “force” investors to accept the imbalance. Once large corporations fall in line with future eanings reductions there is nothing the Fed can do to prop up the market. greed will quickly turn to fear.

In fact I believe the supposed manipulation you talk of is already happening. I am counting on it. How else do you get crashes.

By: mario cavolo

mario cavolo — Mon, 28 Jun 2010 18:55:19 +0000

…Most of what goes on is just the the trader’s lair…oil up 3% then down 1%…nat gas tanks 3% ….give me a break people…this is just the big boy traders pumping and dumping positions, longing and shorting chart and pivot point and TA numbers, they’ve got BIG big accounts just a mouse click away….any attempt to be a short term trader to make money is like a guppy in a pool of sharks…I’m not saying it can’t be done successfully and consistently well, even I’m getting better at it as time goes by, I’m saying you gotta know what reality is and what the rules really are…

Someone argued with Rick awhile back that the markets are too big to be manipulated….wrong…for example you don’t need to buy the whole DOW to move it…when it comes to the stocks you just need to pump or dump certain sector bellweathers like GS, C, AAPL, etc. to get a reaction going…it doesn’t take zillions to do that….hey, don’t listen to me, maybe I’m very wrong here…Cheers, M

By: wmd_wtf

wmd_wtf — Mon, 28 Jun 2010 18:37:01 +0000

you still have to monetize the debt

By: mario cavolo

mario cavolo — Mon, 28 Jun 2010 18:30:59 +0000

I’ll side 100% with your scenario Andy…as anything and everything else may go to hell, it will then be a flock to the perceived sentiment safety of the USD as the world’s reserve currency which is a status and reality that is not going to change anytime soon…logic has nothing to do with it.

None of us sees the world’s economies somehow taking off, but it would be nice for all of us if they somehow did! It could happen by a somehow consciousness decision by those who have somehow hoarded their riches to go out and spend/invest it instead of sitting on it. It is NOT going to happen because of any more lending as lending has gone far beyond its point of such benefit in today’s global economic environment. 400 million newly asset-rich Chinese may help by their joyful newfound ability to spend (that is exactly what it is) to save the world from a deflationary death spiral, or at least save their own country from getting sucked too far down into it with the U.S and EU…

Cheers, Mario

By: Bruce

Bruce — Mon, 28 Jun 2010 18:08:32 +0000

Well Rich, did you think that all money printing activity documentation would be provided to you personally? When trillions of dollars appear out of nowhere, where do you suppose it all came from? Do you believe that all of the debt being issued is being snapped up by foreigners, or do you think some of it might be being purchased by the US government. Where do you suppose the 2 trillion dollars that Bloomberg is trying to track down through the courts came from? No one is denying quantitative easing. When a debtor nation comes up with a trillion dollars for stimulus, where do you suppose that comes from?

By: Rich

Rich — Mon, 28 Jun 2010 17:30:45 +0000

http://www.nytimes.com/2010/06/28/opinion/28krugman.html?ref=paulkrugman
Those that do not know history are condemned to repeat it.
Too bad Krugman does not apparently know economic history beyond the usual academic orthodoxy headlines. (One hopes Uncle Ben does.)
For starters, every recession used to be called a depression until the Great Depression made NBER define the difference as a -10% decline, which we already had, until month-to-month GDP reporting obscured it.
Secondly, Hoover, a successful Stanford Engineer not unacquainted with either economics or politics through his work with Soviet Central Command Economy Famine relief, created a whole host of alphabetic agencies that FDR inherited to spend our way back to prosperity with taxpayer money from Woodrow Wilson’s resurrection of the IRS to fund the Fed. (Raising taxes didn’t work then and won’t work now.)
Third, the Fed, like now with few exceptions, did it’s best to push on a loose monetary string. No one wanted to borrow while assets declined three years to the bottom. After the bottom, few had balance sheets or cash flow enough to borrow.
It become clear Krugman and his apologists, blinded by the glint of his Nobel, want hyperinflation for their gold hedge friends.
At least Bernanke is trying to provide a little balance in monetary policy, having slowed monetary base Fed Balance sheet growth -90% and contracted it 9% this year, after almost trebling it from 2008 to 2010.
He and his Harvard Winthrop classmates Geithner and Blankfein know the bond vigilantes are poised to pounce if they see the monetary base or 83% money multiplier creeping up again. Timmy has Four-year average durations on his $13 Trillion Treasuries, not to forget the Fed’s Mortgages, and is keeping a careful eye on the 2, 5 and 10 years to extend quietly and safely, without jumping interest rates that could easily make service on the voracious debt, the number one budget item during his term, instead of #3 if we lump Social Security and Medicare, both now paying out more than they are talking in.
Doesn’t Krugman realize this?
Or his he just content to repeatedly pen the same old simple headlines and uninformed logic.
Talk that Uncle Ben is planning to double the Fed Balance Sheet to $5 Trillion may be just that, DC poker table talk designed to smooth worried markets.
$5 Trillion is still a drop in the bucket compared to $755 trillion of deflating global GDP, unfunded government agency mandates and defaulting derivatives.
Deflation is a blessing in disguise for everyone but those committed to inflation…

By: Rich

Rich — Mon, 28 Jun 2010 16:58:38 +0000

Please show us the money printing presses are pumping out in quantity:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s1id=BASE&s1transformation=pc1

By: Bruce

Bruce — Mon, 28 Jun 2010 16:22:20 +0000

The market crashed in Sept 2008 and gold dipped for three months and never looked back after that. I suspect that if the market crashes again that gold will hold up even better than 2008. If the market crashes, then the dollar will rise again on an index of other failing currencies. However, against a real currency like gold it will continue to lose value. The moment you print dollars inflation has already occurred. It does not matter when that inflation reaches main street. The event has already happened. It never ceases to amaze me that people argue a currency will appreciate in value while the printing presses are pumping it out in quantity. Is there anything these people will not believe?

By: mike

mike — Mon, 28 Jun 2010 16:19:58 +0000

has anyone read the krugman article in the times today?
I know,I know…

what is anyones take on it?

thanks

By acknowledging that the economy is already mired in a deflationary depression that will last a long time, Krugman gets it half-right, which is about as good as it gets for him. But he runs off the rails with the thesis that more easing is needed. Could it have escaped his notice that $13Tr has already been shot at deflation to no avail? Meanwhile, and to the best of my knowledge, he has never acknowleged that deficit spending entails borrowing and that every dime of it will eventually have to repaid, with interest. RA