Will The Dollar Rebound In 2008

[VegasVic]

...the Bush administration welcomed a weakening currency to increase U.S. exports while muting to a degree (a seemingly small degree at times) any increase U.S. imports...

But did it work? US annual trade balance:

2000 -379,835
2001 -365,126
2002 -423,725
2003 -496,915
2004 -612,092
2005 -714,371
2006 -758,522

2007
Month		 Balance
Annual
January	  -57,010
February	 -57,882
March		-62,688
April		-58,867
May		  -59,928
June		 -59,634
July		 -59,072
August	   -56,963
September	-57,118
October	  -57,768
November	 -63,118
December

Source: U.S. Census Bureau, Foreign Trade Division.

Based on last year's average for January to November, the annual total would come out at about 709,000, a substantial reduction from 2006, yet the dollar weakened agaist the euro by about 10%. Other factors obviously outweighed the improvement in the trade balance.

The latest interest rate cuts are too recent to see their effect on the trade balance. We’ll just have to wait and see.

--

Maestro

Maestro, U.S. consumers will continue to do what they do best, which is consume! With that said there is currently a slowdown in the U.S. economy which could eventually lead to recession (although the R word is thrown around a lot less lately and the CBO report last week stated that recession is not likely), and that in turn will lead to a substantial drop in the import numbers. U.S. equity markets will be helped out by the recent rate cuts and I would look for the trend during this year to be the repatriation of U.S. assets out of foriegn markets and back into U.S. equities, as well as the continued trend of large inflows from the Soveriegn wealth funds into U.S. markets. The strengthening of the U.S. dollar will be a gradual thing, you will not see the pound at $1.60 or the Euro at $1.20 by the end of the year (of course by the end of 2009 who knows), I think that GS has projected the Euro to be somewhere around the $1.32-$1.35 range at years end(it closed at $1.44 and change in the U.S. today) and the pound around $1.80(it closed at $1.94 and change today). The EU central banks are way behind the curve on rate reduction and so the E.U. will likely slip into recession and perhaps quite a bit more prolonged than in the states. The weak dollar-strong Euro relationship will compound the pain of EU exporters as they slide into recession, and thereby put more pressure on those EU central banks to decrease rates and weaken the Euro. The weak dollar has been great for many of my investments over the last 4-5 years so I will be kind of sad to see it go, but the pain threshold for many countries around the world (especially many EU countries) has reached or is about to reach a critical mass and so the rebound of the dollar is inevitable. On a side note to the poster "thaihome" , don't feel bad you original assessment was correct, there is a strong anti-american sentiment here on thaivisa, especially among those fringe gold lovers

[Maestro]

Back to the dollar-Baht exchange rate. Throughout last year there were news reports about how the strong Baht was hurting Thai exports, yet I remember reading that exports in 2007 – I believe it was for the period January to October – increased by 30%. Was that so?

--

Maestro

[bingobongo]

Back to the dollar-Baht exchange rate. Throughout last year there were news reports about how the strong Baht was hurting Thai exports, yet I remember reading that exports in 2007 – I believe it was for the period January to October – increased by 30%. Was that so?

--

Maestro

Thai exports reached 152,48 billions USD in 2007, that’s a 17,5% increase compare to 2006.However, in THB, the increase is 6,4 %. So there is the problem.

[Maestro]

Thank you, Bingobongo. You seem to know where to get the figures. Are the figures for Thailand’s balance of payments already out for 2007? Is the percentage higher than for the trade balance alone?

--

Maestro

[LivinLOS]

An amazing anti-American rant disguised as a supposedly intelligent analyses.

One question:

In your #3 you say a rate reset will cause another wave of foreclosures, while in your #4 you say the Fed will continue to cut rates. Since the variable rate mortgages you claim will be foreclosed due to [increased] rate reset are tied to the prime (or some derivative or it) and should therfore go down, aren't you stating mutually exclusive scenarios?

TH

How is that anti american ?? If the American economy is in trouble stating thats so does not make you anti American, you would hope that people become aware and FIX THE PROBLEM, thereby helping America !!

As to rate resets.. Most people have super low teaser / into rates, way way below primae rates.. Those rates will reset up even if the fed rates are down at 1% or so.. Of course they will reset up less but still reset up. Not hard to understand is it ??

These people speculated on the price of thier home rising.. interest only, ninja loans.. Now that gamble hasnt paid off.. And theres 'rescue' packages to help gamblers (same as the PPT is hard at work floating the equity markets).. Is america supposed to be a free market system or not.

Edited February 8, 2008 by LivinLOS

[thaihome]

[How is that anti american ?? If the American economy is in trouble stating thats so does not make you anti American, you would hope that people become aware and FIX THE PROBLEM, thereby helping America !!

I already withdrew statement after realizing it was a gold bug going on about the end of the world in order to plug news letter and web site.

TH

[LivinLOS]

Also I posted while reading the thread.. I tend to reply to posts as I see them and catch up, not finish then go back..

However we gold bugs have been pretty much right so far.. This decade my prediction for market tops, credit problems, housing bubbles, metals appreciation have all done exactly as they would, pretty much on the timescale I said.

Been a highly profitable 6 or so years.. Basically has now moved from having a nestegg to being set for life. And we havent even hit the mania stage of the run.

[ray23]

I think this is going to be a very impotant decesion for us foriegn currency earners. It was not popular but it did seem to send the hedge funds to the Philippines. I think it farily obvoius which way the Finance director is thinking. I would say off hand the BOT is fihgting a loing battle but we will see what we see.

"Central bank opposes lifting 30 pct reserve

The Bank of Thailand (BoT) is now gathering information concerning the 30 per cent foreign capital reserve requirement, imposed by BoT in December, 2006, for incoming Finance Minister Surapong Suebwonglee to study.

Pongpen Ruengvirayudh, BoT senior director for financial markets and reserve management, said senior central bank officials would explain to the Finance Ministry next week about the need to maintain the 30 per cent foreign capital reserve requirement, which aims at thwarting speculation on the Thai currency, the baht,

He said the bank has certain "secret data" the ministry still does not know about.

If the ministry receives more information, it may not waive the requirement because of the negative impact which could occur thereafter, said Mrs Pongpen.

Her remarks were made after Dr Surapong said Thursday, his first day in office, that he would invite BoT governor Tarisa Watanagase for talks next week on the necessity of maintaining the 30 per cent foreign capital reserve requirement.

He said he had discussed with Deputy Prime Minister and Commerce Minister Mingkwan Saengsuwan whether the measure would affect foreign investment in Thailand and if it does, then the measure will be revoked.

Mrs Pongpen said foreign direct investment (FDI) was still flowing into Thailand normally, and the 30 per cent foreign capital reserve requirement had not eroded foreign investors' confidence.

The measure has been eased from time to time by the BoT, Mrs Pongpen said, and part of the FDI is expected to be genuine investment in Thailand.

Movements of the baht in the past were in line with regional currencies, she said. Since the beginning of this year, the baht has strengthened by another two per cent, just slight more than Malaysian and Singaporean currencies, and less than the Japanese yen, she claimed. (TNA)"

[jetjock]

Although the US stock market and economy are doing poorly and may still have a ways to go down, it appears from what I have been reading recently that the technical picture of the Euro which is also a currency that is leveraged to global growth might also be overvalued and beginning to deteriorate. The economy in Europe is beginning to show signs of slowing which may mean that rate cuts by the ECB may be in the near future which may possibly not bode well for the Euro ??

[VegasVic]

I think this is going to be a very impotant decesion for us foriegn currency earners. It was not popular but it did seem to send the hedge funds to the Philippines. I think it farily obvoius which way the Finance director is thinking. I would say off hand the BOT is fihgting a loing battle but we will see what we see.

"Central bank opposes lifting 30 pct reserve

The Bank of Thailand (BoT) is now gathering information concerning the 30 per cent foreign capital reserve requirement, imposed by BoT in December, 2006, for incoming Finance Minister Surapong Suebwonglee to study.

Pongpen Ruengvirayudh, BoT senior director for financial markets and reserve management, said senior central bank officials would explain to the Finance Ministry next week about the need to maintain the 30 per cent foreign capital reserve requirement, which aims at thwarting speculation on the Thai currency, the baht,

He said the bank has certain "secret data" the ministry still does not know about.

If the ministry receives more information, it may not waive the requirement because of the negative impact which could occur thereafter, said Mrs Pongpen.

Her remarks were made after Dr Surapong said Thursday, his first day in office, that he would invite BoT governor Tarisa Watanagase for talks next week on the necessity of maintaining the 30 per cent foreign capital reserve requirement.

He said he had discussed with Deputy Prime Minister and Commerce Minister Mingkwan Saengsuwan whether the measure would affect foreign investment in Thailand and if it does, then the measure will be revoked.

Mrs Pongpen said foreign direct investment (FDI) was still flowing into Thailand normally, and the 30 per cent foreign capital reserve requirement had not eroded foreign investors' confidence.

The measure has been eased from time to time by the BoT, Mrs Pongpen said, and part of the FDI is expected to be genuine investment in Thailand.

Movements of the baht in the past were in line with regional currencies, she said. Since the beginning of this year, the baht has strengthened by another two per cent, just slight more than Malaysian and Singaporean currencies, and less than the Japanese yen, she claimed. (TNA)"

Ray, I think that your point is well taken that the BOT may be fighting a losing battle to keep capital controls in place. With that said I will also say that it was the capital controls that helped the baht moderate its rise and stay "in line with regional currencies" during 2007. It was of course during 2006 that the baht far outpaced regional currencies and so when you take a two year view the baht is still way ahead of regional currencies, and when Thai exports are priced in terms of the baht as has been shown here then growth is anemic at best. The BOT and the new government are in a tough spot, they have an economy with rising inflation, a low consumer confidence and lowering level foriegn investment. 2007 was also a year that saw more investment dollars flow into Vietnman than into Thailand, this is a theme that Thailand will be battleing for some time to come. Thailand also has a mini real estate crisis of its own, as levels of real estate inventory continue to rise (especially in places like Pattaya and Chiang Mai) and sales slow. Even Phuket and Ko Samui, which were places that I had thought to be recession resistent, are facing higher inventories and projects being put on hold and cancelled, despite what palm or highdiver would have you believe. I don't want to paint a Bingo Bongo type picture here, so I will also say that there are certainly some bright spots for Thailand, first of all the hunta is gone and Thailand has a new democratically elected government (this is a big positive), and as the Chinese equity bubble deflates (this has already begun and will be accelerated after the Olympics) the baht will be able to depreciate without the need for capital controls, and this depreciation of the baht will also be helped by the gradual appreciation of the dollar this year and this will help Thai exports to grow in real terms, help to increase tourist dollars spent and create a rise in long term investment brought into the kingdom. One final note, lets hope (for Thailands sake) the hedge funds stay in the Philippines

[morrobay]

Vegas Vic you say in post# 40 that there is a mini real estate crisis and that real estate inventories are rising in Pattaya:

I agree and would be interested if you or anyone else has specific facts on what real estate sectors are in surplus, like hotels. condos , malls, apartments ?

And if supply is over demand then when are the prices going to come down ?

[thaihome]

Also I posted while reading the thread.. I tend to reply to posts as I see them and catch up, not finish then go back..

However we gold bugs have been pretty much right so far.. This decade my prediction for market tops, credit problems, housing bubbles, metals appreciation have all done exactly as they would, pretty much on the timescale I said.

Been a highly profitable 6 or so years.. Basically has now moved from having a nestegg to being set for life. And we havent even hit the mania stage of the run.

Gold bugs are always right at least once every 10-15 years.

TH

[Abrak]

Also I posted while reading the thread.. I tend to reply to posts as I see them and catch up, not finish then go back..

However we gold bugs have been pretty much right so far.. This decade my prediction for market tops, credit problems, housing bubbles, metals appreciation have all done exactly as they would, pretty much on the timescale I said.

Been a highly profitable 6 or so years.. Basically has now moved from having a nestegg to being set for life. And we havent even hit the mania stage of the run.

Gold bugs are always right at least once every 10-15 years.

TH

This comment is a little unfair.

I hate the term 'gold bug' - I am certainly not one although I am invested in gold now. I am more an equity bug in the I usually invested in equities which I understand far better. Still investors in gold have done well over extended periods like 1970 to 1980 and over the last five years.

I would agree that anyone who invested in gold at current levels and forgot about it for 30 years might be disappointed in their returns but it doesnt mean it isnt a serious invest option.

The problem is that there are a few serious 'nutters' who invest in gold and give it a bad name.

[LivinLOS]

Yeah its easy to use it as a knock but hey.. I have trebled my net worth so I aint complaining.

Just spare a thought for those equity buy and holders.. Imagine holding the S&P so far this century, negative territory after 8 years and thats pre taxes, pre costs, etc. DOW done less than 1000 in that time too.. Dont even talk about NASDAQ or Japan etc..

It was easy to see that the US was pumping credit as fast as it could.. Gold was and is hardly rocket science given the conditions. When the cycle flushes out I will happily be out of gold and into another sector.. But we are long long way from out of this mess yet.

[Two Roads]

it seems clear from today that the fed rate cuts are not going to stop the US and maybe the world going into a major recession. hence the rosy dollar predictions based on a turn around in the US economy see unlikely.

i have cash in my retirement accounts (in dollars, bummer!) i can buy gold with it it turns out. i can't take possession of the gold because its in a tax differed account and fidelity charges a .125% storage fee every 3 months.

anyhow, any ideas about gold vs. the dollar over the next 6-12 months?

Buy the ETF GLD and you "own" the gold w/o having to take posession or pay storage costs.

Regarding the future direction of gold/dollar you can be sure they will move in opposite directions.

[LivinLOS]

Well the GLD ETF is not the same as owning gold.. The ETF is a derivative designed to mirror the price of gold, for those with a very paranoid mindset thats not the same thing. Gold on store can be leased out, and if that lease isnt returned theres a default risk, banks have often stated that in the event of a bank failure gold on deposit can be used as assets, things like that.

There are perth mint certificates (backed up by the Oz government) or bullionvault.com both of which do the same thing but with more security of ownership.

Me I am not that concerned and GLD and GDX (HUI tracker) are fine tools to trade.

[Abrak]

Well the GLD ETF is not the same as owning gold.. The ETF is a derivative designed to mirror the price of gold, for those with a very paranoid mindset thats not the same thing. Gold on store can be leased out, and if that lease isnt returned theres a default risk, banks have often stated that in the event of a bank failure gold on deposit can be used as assets, things like that.

There are perth mint certificates (backed up by the Oz government) or bullionvault.com both of which do the same thing but with more security of ownership.

Me I am not that concerned and GLD and GDX (HUI tracker) are fine tools to trade.

Oh come on now you are sounding like a totally paranoid gold bug.

Who hides is cash under the bed.

And shares are not like owning a company etc...

As I have said before gold is a very valid investment option but there are weirdos who hold it as some sort of collapse of the world and capitalism option. GLD is one way of owning gold that is relatively cheap as is CEF if you want exposure to silver as well.

As an aside the obvious play for equity players is gold miners but I find that that gold equities dont often perform as well as you would expect against the gold price.

[Pakboong]

I get paid in dollars and will until I die so I certainly hope the dollar can rebound. There are however economic indicators that make me more concerned than ever. I am not sure how these indicators will play out in the currency markets. The US economy is about to tank. Call it what you want, the derivatives market which is the direct result of Greenspan's easy credit monetary policies as well as the reconfiguring of the markets according to the "structured finance" model.The new model allowed banks to create money out of thin air. The Credit Default Swaps (CDS) turned into a huge scam to allaw banks to loan money while keeping their capital in play. The Fed can't contol the creation of credit by non-bank institutions.

The deriviatives market could be as much as $450 trillion. Some studies have put the real credit risk at just 6% of the total or $27 trillion. That puts the CDS market at somewhere between two and 6 times the US economy.

"America's place in the world has been guaranteed not by what it produces but by what it consumes..." Mke Whitney, Global Research.

[VegasVic]

I get paid in dollars and will until I die so I certainly hope the dollar can rebound. There are however economic indicators that make me more concerned than ever. I am not sure how these indicators will play out in the currency markets. The US economy is about to tank. Call it what you want, the derivatives market which is the direct result of Greenspan's easy credit monetary policies as well as the reconfiguring of the markets according to the "structured finance" model.The new model allowed banks to create money out of thin air. The Credit Default Swaps (CDS) turned into a huge scam to allaw banks to loan money while keeping their capital in play. The Fed can't contol the creation of credit by non-bank institutions.

The deriviatives market could be as much as $450 trillion. Some studies have put the real credit risk at just 6% of the total or $27 trillion. That puts the CDS market at somewhere between two and 6 times the US economy.

"America's place in the world has been guaranteed not by what it produces but by what it consumes..." Mke Whitney, Global Research.

"the U.S. economy is about to tank"? What? Where have you been my friend, the U.S. markets are already down 15% from their highs, have you been in a coma for the last 6 months. The markets (both real estate and equity) are putting in a bottom right now, and given the interest rate cuts (that won't effect the economy for 2-3 more months) and stimulus package, the U.S. economy will be in for a substantial rebound by the second half of this year. "the derivatives market which is a direct result of Greenspans easy credit monetary policies" What? The derivatives markets have been with us for decades now, I was involved in risk arbitrage back in the days of Paul Volcker before Greenspan was even considered for the FED job! The only aspect of this credit crisis that you seem to have a handle on is the fact that the CDO's were packaged and sold off and then releveraged, this is what caused the problem. A very substantial portion of these CDO's or CDS's were sold off to international banking concerns throughout Europe, China, Japan and elesewhere, thats why you see substantial writedowns by these foriegn banks(in some cases much more substantial than the writedowns that the Wall Street moneycenter firms have been hit by). Your math on the scope of the problem is wrong by an exponential factor. When these world banking institutions are finished with all their writedowns, it will ammount to $250-$300 billion, and given the fact that this credit crisis has already caused the loss of somewhere around $5-7 trillion of equity around the world, I would argue that in this current situation it is certainly the tail that wags the dog and given the scope and resilency of the U.S. economy, the U.S. is in a far better place to weather the storm and come out of it even stronger (hopefully with a crackdown on the hedge fund industry and the way in which derivatives are traded). The dollar has already begun to rebound (just in case you haven't been paying attention) despite the recent substantial cuts by the FED, this is because the worlds investors feel that it is the U.S. that will be the safest place and the smartest place to keep their money during this time of worldwide uncertainty.

[VegasVic]

Also I posted while reading the thread.. I tend to reply to posts as I see them and catch up, not finish then go back..

However we gold bugs have been pretty much right so far.. This decade my prediction for market tops, credit problems, housing bubbles, metals appreciation have all done exactly as they would, pretty much on the timescale I said.

Been a highly profitable 6 or so years.. Basically has now moved from having a nestegg to being set for life. And we havent even hit the mania stage of the run.

Gold bugs are always right at least once every 10-15 years.

TH

Thaihome, You hit the nail right on the head! In past posts I have said that while a broken watch is right twice a day that gold bugs are only right twice a decade, but I think your assesment of once every 10-15 years is more accurate. I won't feel sorry for the gold bugs when gold recedes back down to the $600/ounce level and below, but I do kind of feel sorry for those sucked (or is that suckered in) in to buy gold at these nosebleed levels. For those who just traded gold and already sold and locked in their profits (kudos to you nice trade), but the true believers aren't selling they actually think that gold is going to $1500 or $2000 an ounce and they will hype their cause by telling folks that they have tripled their money in gold over the last 6 years (actually $400 to $920 doesn't quite look like a triple to me) , but what they won't tell you is that for the previous 20 years that gold was dead money. By dead money I don't only mean that gold was flat over the previous twenty years or that these investors in gold lost out on any sort of interest, dividends or capital gains, but that over those 20 years as inflation continued, their investment in gold (in real terms) actually lost money each and every year! Ninety percent of the worlds media has a very negative slant on the world economic situation (bad news has always outsold good news) and that has played right into the gold hypsters hands, yet despite this perfect storm, gold seems to have hit a cieling in the $890-$930 level. If this is the best the gold bugs can do in an optimum environment, then what will they do when markets begin to rebound? I think any of us who are students of history know very well what will happen to the price of gold going forward, but according to the gold bugs "its different this time" , gee I wish I had a dollar for everytime I have heard that failed mantra

[tracer5050]

In New York not long I saw signs we take Euro,s and then saw 1 Euro for 1 Dollar. Man i would do that all day . keep bringing the Eruo,s

[LivinLOS]

Well the GLD ETF is not the same as owning gold.. The ETF is a derivative designed to mirror the price of gold, for those with a very paranoid mindset thats not the same thing. Gold on store can be leased out, and if that lease isnt returned theres a default risk, banks have often stated that in the event of a bank failure gold on deposit can be used as assets, things like that.

There are perth mint certificates (backed up by the Oz government) or bullionvault.com both of which do the same thing but with more security of ownership.

Me I am not that concerned and GLD and GDX (HUI tracker) are fine tools to trade.

Oh come on now you are sounding like a totally paranoid gold bug.

Who hides is cash under the bed.

And shares are not like owning a company etc...

As I have said before gold is a very valid investment option but there are weirdos who hold it as some sort of collapse of the world and capitalism option. GLD is one way of owning gold that is relatively cheap as is CEF if you want exposure to silver as well.

As an aside the obvious play for equity players is gold miners but I find that that gold equities dont often perform as well as you would expect against the gold price.

It amazing how people will blatantly ignore what I write.. As you can see I state quite clearly that "I am not that concerned" about those issues and use both GLD and HUI trackers as well as miners as part of how I invest.

However owning GLD is NOT the same as owning gold. Now if your only looking to play the price of gold rise then owning a derivative of the gold price may be acceptable but some people really dont think that, I am not one of them but I understand their fears. I think its highly possible that a bank can fail, gold held on deposit or in pool accounts can disappear in that case. Also the federal government has already a president on making personal gold ownership illegal and the associated gold confiscation (1933), having done it once who is to say they wont do it again ?? And where would it be easier to get at ?? When its in your own physical possession or when its some paper derivative (where they may not even hold the underlying asset as its leased out). These are real points.

Part of the driver in the rising gold price is an increasing awareness of the deficits and a lack of faith in the 'promise to pay the bearer' thats part of the fiat money system, obviously people whose mindset is distrustful of a promise over an actual asset will also be the type that would distrust other promises or pool accounts. If you think a promise to pay, or return an asset is the same as holding the asset you are quite welcome to give me all of your assets and I will promise to return them !!

[LivinLOS]

actually $400 to $920 doesn't quite look like a triple to me

Combine bullion holdings with unhedged miners and its not hard to do !!

[LivinLOS]

"the derivatives market which is a direct result of Greenspans easy credit monetary policies" What? The derivatives markets have been with us for decades now

Have they been around like this ??

Look at the bubble created from the tech wrecks greenspan put..

[Naam]

"the derivatives market which is a direct result of Greenspans easy credit monetary policies" What? The derivatives markets have been with us for decades now

Have they been around like this ??

Look at the bubble created from the tech wrecks greenspan put..

be fair LivinLOS. derivatives would be around with or without Greenspan -perhaps not that volume- but nobody can judge that properly. the majority of derivatives have been and will be created without the tiniest reference or bearing on USD or U.S. interest rates.

[LivinLOS]

OK I admit blaming greenspan alone is a reach..

However the entire fractional reserve banking system is more culpable.. But the greenspan put has given the basic fuel to the fire in the form of much higher debt and the refi boom, that was then sliced and diced into the derivative salad.

[VegasVic]

"the derivatives market which is a direct result of Greenspans easy credit monetary policies" What? The derivatives markets have been with us for decades now

Have they been around like this ??

Look at the bubble created from the tech wrecks greenspan put..

be fair LivinLOS. derivatives would be around with or without Greenspan -perhaps not that volume- but nobody can judge that properly. the majority of derivatives have been and will be created without the tiniest reference or bearing on USD or U.S. interest rates.

Thanks Namm, I was merely correcting Pakboongs post in which he clearly states that the derivatives market was a direct result of Greenspans policy which of course is a total falsehood, there certainly was an exponential increase in both hedge fund creation and derivative activity from the mid 90's until now, and if you look back at some of my posts last spring you will see me warning of the leveraging of assets, the derivative markets and the growing power of the hedge fund industry controlling these markets. My words fell on deaf ears for the most part back then, and looking back on those posts I guess I could call myself prophetic, but the truth is that I still had a few friends at GS and I knew full well what was going on. If our young aussie friend on patong beach is really looking for a scapegoat, then he has to look no further than William Jefferson Clinton The hedge fund industry had Big Bill in their back pocket and although there were many attempts at legislation to regulate and lend transparency to the hedge fund industry, they all failed to reach the floor for a vote thanks to Clinton and other corrupt politicians like Conn. Senator Chris Dodd who sat on the banking comittee. The dotcom bubble and the eventual market crash were also allowed to flourish on Clintons watch. Its funny how many sheep think that Slick Willie was a great president, when in fact a great many of our current problems had their beginings during the Clinton administration and the U.S. not only had a President that was asleep at the wheel, but worse he was purposely looking the other way. As for our young aussie gold bug down there in patong, I don't pay him much mind, in my 30 years of investing I've seen gold bugs come and go (bust), the one thing that I am certain of is that about a month or so after gold begins its eventual descent, you will find this guy posting that he sold out his entire gold position at the top of the market Have a good day Naam, the Asian (china in particular) markets could be in for a wild ride this week so I hope that the TV members invested over there are hedged in the derivative markets

[LivinLOS]

If you really want to start looking for a scapegoat for the credit derivatives industry Lous Ranieri back at solomon would have to be top of the list..

Once they managed to split mortgage debt in tranches and bond them.. Thats where it blossomed from.

BTW who is the young Aussie ??

[Pakboong]

"the derivatives market which is a direct result of Greenspans easy credit monetary policies" What? The derivatives markets have been with us for decades now

Have they been around like this ??

Look at the bubble created from the tech wrecks greenspan put..

be fair LivinLOS. derivatives would be around with or without Greenspan -perhaps not that volume- but nobody can judge that properly. the majority of derivatives have been and will be created without the tiniest reference or bearing on USD or U.S. interest rates.

Thanks Namm, I was merely correcting Pakboongs post in which he clearly states that the derivatives market was a direct result of Greenspans policy which of course is a total falsehood, there certainly was an exponential increase in both hedge fund creation and derivative activity from the mid 90's until now, and if you look back at some of my posts last spring you will see me warning of the leveraging of assets, the derivative markets and the growing power of the hedge fund industry controlling these markets. My words fell on deaf ears for the most part back then, and looking back on those posts I guess I could call myself prophetic, but the truth is that I still had a few friends at GS and I knew full well what was going on. If our young aussie friend on patong beach is really looking for a scapegoat, then he has to look no further than William Jefferson Clinton The hedge fund industry had Big Bill in their back pocket and although there were many attempts at legislation to regulate and lend transparency to the hedge fund industry, they all failed to reach the floor for a vote thanks to Clinton and other corrupt politicians like Conn. Senator Chris Dodd who sat on the banking comittee. The dotcom bubble and the eventual market crash were also allowed to flourish on Clintons watch. Its funny how many sheep think that Slick Willie was a great president, when in fact a great many of our current problems had their beginings during the Clinton administration and the U.S. not only had a President that was asleep at the wheel, but worse he was purposely looking the other way. As for our young aussie gold bug down there in patong, I don't pay him much mind, in my 30 years of investing I've seen gold bugs come and go (bust), the one thing that I am certain of is that about a month or so after gold begins its eventual descent, you will find this guy posting that he sold out his entire gold position at the top of the market Have a good day Naam, the Asian (china in particular) markets could be in for a wild ride this week so I hope that the TV members invested over there are hedged in the derivative markets

Didn't he repeal Glass-Seagal during one of his terms?

[Pakboong]

I get paid in dollars and will until I die so I certainly hope the dollar can rebound. There are however economic indicators that make me more concerned than ever. I am not sure how these indicators will play out in the currency markets. The US economy is about to tank. Call it what you want, the derivatives market which is the direct result of Greenspan's easy credit monetary policies as well as the reconfiguring of the markets according to the "structured finance" model.The new model allowed banks to create money out of thin air. The Credit Default Swaps (CDS) turned into a huge scam to allaw banks to loan money while keeping their capital in play. The Fed can't contol the creation of credit by non-bank institutions.

The deriviatives market could be as much as $450 trillion. Some studies have put the real credit risk at just 6% of the total or $27 trillion. That puts the CDS market at somewhere between two and 6 times the US economy.

"America's place in the world has been guaranteed not by what it produces but by what it consumes..." Mke Whitney, Global Research.

"the U.S. economy is about to tank"? What? Where have you been my friend, the U.S. markets are already down 15% from their highs, have you been in a coma for the last 6 months. The markets (both real estate and equity) are putting in a bottom right now, and given the interest rate cuts (that won't effect the economy for 2-3 more months) and stimulus package, the U.S. economy will be in for a substantial rebound by the second half of this year. "the derivatives market which is a direct result of Greenspans easy credit monetary policies" What? The derivatives markets have been with us for decades now, I was involved in risk arbitrage back in the days of Paul Volcker before Greenspan was even considered for the FED job! The only aspect of this credit crisis that you seem to have a handle on is the fact that the CDO's were packaged and sold off and then releveraged, this is what caused the problem. A very substantial portion of these CDO's or CDS's were sold off to international banking concerns throughout Europe, China, Japan and elesewhere, thats why you see substantial writedowns by these foriegn banks(in some cases much more substantial than the writedowns that the Wall Street moneycenter firms have been hit by). Your math on the scope of the problem is wrong by an exponential factor. When these world banking institutions are finished with all their writedowns, it will ammount to $250-$300 billion, and given the fact that this credit crisis has already caused the loss of somewhere around $5-7 trillion of equity around the world, I would argue that in this current situation it is certainly the tail that wags the dog and given the scope and resilency of the U.S. economy, the U.S. is in a far better place to weather the storm and come out of it even stronger (hopefully with a crackdown on the hedge fund industry and the way in which derivatives are traded). The dollar has already begun to rebound (just in case you haven't been paying attention) despite the recent substantial cuts by the FED, this is because the worlds investors feel that it is the U.S. that will be the safest place and the smartest place to keep their money during this time of worldwide uncertainty.

I gladly defer to your wisdom on this matter. I truly hope you are correct.