Get Out Of $dollars$ Now!

[TRIPxCORE]

In the U.S., Net Foreign Security Purchases (NFSP), which you may recall fell to its knees in July at $32 Billion, far below the needed $72 Billion each month to finance the deficit. August's number came in at a record $116 Billion this morning! That triples July's figure! Something smells fishy to me...

You should quote your sources...

http://www.kitcocasey.com/displayArticle.php?id=1012

It didnt come from there. It come from my currency newsletter written by Chuck Butler

[ding]

the usa recently started to hide the m3

hmmmm

anyone know why?

[cclub75]

the usa recently started to hide the m3

hmmmm

anyone know why?

Yes, in march.

Officially, it's because "nobody cares" (ah ah ah ah).

Unofficially, it's because... it looks very dirty.

Money supply is of course a data that allow people to judge the value of the money...

But, let's be fair : US are not alone. Russia, China, Europe... they all have high levels of money creation.

[TRIPxCORE]

Currency newsletter by Chuck Butler:

Overnight, Bank of Japan (BOJ) Gov. Fukui said that borrowing costs will rise appropriately in Japan... Hmmmm, was that Central Bank Parlance for "watch out a rate hike is coming?" I think so... But then I have a bet with someone for a shiny quarter that the BOJ will hike rates one more time in 2006, so what else would I think? Japanese yen did gain VS the dollar on this talk... But again, the range is tight!

Oh... Get the kids, and hide out in the cellar! China's GDP has fallen, the sky is falling the sky is falling! I can hear the ding bats out there saying... "I told you so, I told you so"! China's GDP "fell to 10.4%" in the 3rd QTR, down from the previous quarter's 11.3% showing... OK... I'll admit that this fall is interesting... But it don't mean a thing if it ain't got that swing... Until China's growth falls to about 6 or 7%, then I'll worry....

[Fred C. Dobbs]

I live in the U.S. and put some money in this fund, just in case.

http://www.merkfund.com/index.html

Currency newsletter by Chuck Butler:

Overnight, Bank of Japan (BOJ) Gov. Fukui said that borrowing costs will rise appropriately in Japan... Hmmmm, was that Central Bank Parlance for "watch out a rate hike is coming?" I think so... But then I have a bet with someone for a shiny quarter that the BOJ will hike rates one more time in 2006, so what else would I think? Japanese yen did gain VS the dollar on this talk... But again, the range is tight!

Oh... Get the kids, and hide out in the cellar! China's GDP has fallen, the sky is falling the sky is falling! I can hear the ding bats out there saying... "I told you so, I told you so"! China's GDP "fell to 10.4%" in the 3rd QTR, down from the previous quarter's 11.3% showing... OK... I'll admit that this fall is interesting... But it don't mean a thing if it ain't got that swing... Until China's growth falls to about 6 or 7%, then I'll worry....

[cwilliam]

100% of mine in US real estate and $. Guess I'll be broke by December.

If the dollar drops the world economy will collapse.For those that can't figure it out the US wants a

weak dollar.Strong doesn't mean better.

[Maestro]

If the dollar drops the world economy will collapse.For those that can't figure it out the US wants a weak dollar.

That’s a rather bold statement you are making there, because you are in fact saying that the US wants the world economy to collapse:

If the dollar drops the world economy will collapse...the US wants a weak dollar = the US wants the world economy to collapse.

---------------

Maestro

[ray23]

Well lets see the first George wasn't reelected because he didn't take care of the economy maybe it's a family trait. Just kidding

I watched an interview on CNN the other day a Wall Street big shot he was very happy with the way stocks were going, just thought the economy was great amd might very well be in his circle.

Now here is a scarey thought for someone like me fixed income retirement in dollar. Let the dollar fall enough and US products are competetive with China, with that kind of edge in exports be good for the US economy, for some yes, for others a total disaster. Only a few there could have the American dream. Well I didn't have mine until I moved here.

So maybe it isn't that they want the world economy to crash but want a bigger piece of the pie. In any event it's not a good thing for me.

[ray23]

This really made me think of what we have been seeing with all the cash coming into Thailand, good thing or bad?

Global Cash Glut Fuels Investment Boom, Rate Concern (Update1)

By John Fraher and Simon Kennedy

Oct. 30 (Bloomberg) -- Markets around the world are awash in excess cash, fueling a frenzy of investment from London to Tokyo that may lead central banks to push interest rates higher than investors now anticipate.

Money remains cheaper than in the 1990s even after every major central bank raised rates this year, the first simultaneous tightening since 2000. The cash glut is reheating the U.K. housing market, while in Japan companies plan the most investment since 1990. China's biggest bank this month attracted orders for more than half a trillion dollars with its initial public offering of shares.

``Interest rates in the main economies have still not been raised enough,'' says Tim Congdon, visiting fellow at the London School of Economics and one of the ``wise men'' who advised the U.K. Treasury in the 1990s. ``There is a buoyancy in asset prices one gets with high-risk monetary growth.''

Without further tightening, central bankers may have new asset bubbles and inflation risks on their hands. The European Central Bank, whose officials voice the most concern, is convening a conference in Frankfurt next week on the role of money growth in guiding interest rate policy. Among participants: Federal Reserve Chairman Ben S. Bernanke, People's Bank of China Governor Zhou Xiaochuan and Bank of Japan Deputy Governor Kazumasa Iwata.

Pressure on ECB

``When monetary growth is strong, the housing markets are very dynamic and the stock markets are vigorous, the probability of an inflationary episode within three or four years is very strong,'' says Jose Manuel Gonzalez-Paramo, a member of the ECB's executive board.

The ECB, unlike other major central banks, explicitly uses money supply to gauge inflation. Growth of M3, the bank's preferred measure for the 12 nations sharing the euro, unexpectedly accelerated to 8.5 percent in September, close to a three-year high. That added to pressure on the bank to add to its five rate increases since early December.

``It's a bit ironic, given that they are the ones who pay most attention'' to money supply, says Thomas Mayer, chief European economist at Deutsche Bank AG in London.

While the ECB will probably leave rates unchanged when its governing council meets Nov. 2, President Jean-Claude Trichet said earlier this month that ``liquidity in the euro area is ample by all plausible measures'' and recommended ``enhanced monitoring'' of money-supply growth.

`Pretty Lavish'

Charles Dumas of Lombard Street Research Ltd. in London calculates that money supply in the world's top economies is growing at an annual rate of 7.5 percent. Though down from a four- year high of 9 percent a year ago, ``that's still pretty lavish,'' he says.

Tim Drayson, global economist at ABN Amro Holding NV in London, says major central banks will all have to tighten credit more than investors now assume.

``Money supply on a global basis is growing quite rapidly as is overall credit growth,'' says Drayson, a former U.K. Treasury economist. ``We don't see much evidence that monetary policy around the world is restrictive.''

Drayson expects the ECB to lift its benchmark rate to 4 percent or higher by the end of 2007. The Fed's target rate will reach 6 percent, from 5.25 percent; the Bank of England's will rise to 5.5 percent from 4.75 percent; and the Bank of Japan's will go to 2 percent from 0.25 percent, Drayson forecasts.

Those predictions are at odds with futures trading, which suggest most central banks won't raise rates much further, if at all, next year.

Revival of Monetarism

Other central banks including the Bank of England and the Bank of Japan are starting to share the ECB's view on money growth. That's a shift from a few years ago, when following money supply was deemed a relic of the 1970s. ``There is something of a revival of monetarism,'' says Stephen Jen, London-based head of global currency research at Morgan Stanley.

One central bank that isn't joining is the Federal Reserve, which no longer sets a target for monetary growth and stopped publishing one measure of money supply in March.

``In the U.S., looking at monetary aggregates has gone out of fashion,'' says Jim O'Sullivan, senior economist at UBS Securities Llc in Stamford, Connecticut. ``The Fed responds to the effects of asset prices, not to the prices themselves.''

For central bankers, the threat is that overinvestment pumps up asset bubbles that lead to economic busts, just as the explosion of investment in U.S. technology companies did at the turn of the decade.

Risky Investments

Available money is encouraging ``barely profitable and highly risky'' investments, French Finance Minister Thierry Breton said last month. The average interest rate of 10 leading economies adjusted for inflation is now around 2.8 percent, below the 3.2 percent average of the 1990s, Morgan Stanley estimates.

The Bank of England, which once shared the Fed's skeptical view of money supply as a policy guide, is now grappling with the fastest expansion of money in 16 years. After raising rates a quarter point in August, citing ``rapid growth'' of cash and credit, Bank of England officials are signaling a further quarter point increase when they convene next week.

Average home prices in the U.K. have climbed 2.3 percent since August, and inflation has topped the bank's 2 percent target for five months. In an Oct. 10 speech, Bank of England Governor Mervyn King noted monetary growth had ``picked up.''

Worried Governor

Growth in M4, the broadest measure of U.K. money supply, accelerated to 14.5 percent in September from 13.7 percent in the previous month, the Bank of England said today.

``It is clear the governor is now quite worried,'' says Charles Goodhart, a professor at the London School of Economics and a former Bank of England policy maker. ``The rates of monetary growth are worrying and unless reduced relatively soon will represent a significant inflationary pressure.''

The Bank of Japan is also keeping a closer eye on liquidity, concluding a review in March with a pledge to gauge ``longer run'' risks to inflation. Corporate spending is being spurred by an overnight loan rate of 0.25 percent, the lowest among the Group of Seven nations.

``A significant increase in capital spending plans could prompt the bank to raise rates again this year,'' says Takuji Aida, chief economist for Japan at Barclays Plc in Tokyo.

Cheap cash means China may also be overheating. The country last year had 118 million tons of excess steel production capacity, more than the 112 million-ton output of Japan, the world's second-largest steelmaker.

Industrial & Commercial Bank of China Ltd. this month completed the world's biggest initial public offering, raising $19.1 billion and attracting more than $500 billion in orders, equivalent to twice Citigroup Inc.'s market value.

``This was massively oversubscribed,'' says John Fildes, managing director of Instinet Pacific Services Ltd. in Hong Kong. ``There is a huge pent-up wall of money.''

To contact the reporters on this story: John Fraher in Frankfurt at [email protected] ; Simon Kennedy in Paris at [email protected]

Last Updated: October 30, 2006 05:09 EST

[Martin]

I see lots of borrowing for consumption and little saving 'against a rainy day', in the West. That doesn't seem right to me.

So I feel lonely and confused----like the young Mr and Mrs Lemming, whose parents had brought them up on the adage "Never run down a steep and slippery slope", who turned aside and sat (and did other things) on the plateau.

Lonely, confused little creatures.

[backflip]

"Let the dollar fall enough and US products are competetive with China"

That's a very strange economic theory, and I'd love for you to explain it to a dunderhead like me.

[ray23]

"Let the dollar fall enough and US products are competetive with China"

That's a very strange economic theory, and I'd love for you to explain it to a dunderhead like me.

Well since I wrote I guess I better explain myself, I wasn't serious. Altough I'm afraid Bush might be.

[Martin]

This paragraph, in an article about the fortcoming APEC summit meeting in 'Guardian Unlimited this morning' caught my eye.

"But Mr Bush's hopes of furthering his free trade agenda by normalising trade ties with Vietnam's communist-capitalist bosses were dashed by Congress this week. Although the measure could be resurrected, the defeat was a sign of things to come. Many Democrats in the new congressional intake have adopted protectionist positions in response to voter concerns about "unfair" foreign competition. And Mr Bush's fast-track authority for approving a global trade deal will expire next July."

America 'adopting protectionist positions' (which is a euphemism for 'shutting out imports') was the first step in a scenario, postulated earlier this year, that resulted in the whole House Of Cards of Prosperity Through Greed and Growth coming tumbling down.

The scenario went like this:

If America stops taking China's output, the Chinese Government is going to be miffed with America. But the Chinese Government is owed an enormous lot of dollars by the American Government, and America will have to print so many dollars to pay off the Chinese that the purchasing power of the dollar will come tumbling down. So it will be hard on those who are caught holding dollars at the start of the Second Great Depression.

Of course, the Chinese Government won't be wanting the dollar to come plunging down, so won't want to call in the American debt. But massive unemployment in China's newly-industrialised areas could force its hand. Scary.

[pap]

the yen carry trade,america's historic debtload,iran oil bourse in euros,russia oil for rubles,central

banks switching reserves out of dollars,america's real estate and stock market bubbles,etc.

one night this fall while america is sleeping,the rest of the world will be doing business and some central bank/country will dump their dollars causing others to which starts a panic stampede to get out of dollars before the next guy.last ones out will lose and since money is now electronically moved in seconds with a push of a button,america will wake up one morning this october or november and find out that trillions of dollars have come home to roost in an economy with trillions in debt making a dollar worth a penny and a loaf of bread cost $100.dollars will be become like latin american money used to be and america will have thousands of percent inflation like latin america used to have.the us gov will naturally close down us banks and seal safety deposit boxes in the national interest,there will be rioting and looting which will have the cities turned into warzones,

paris hilton and jessica simpson will be fashionably starving in their pradas,americans will be fleeing across the border into mexico,and america will disintegrate into self-governing territories and regions.

convert your assets into gold and swiss francs and euros now and preserve your wealth or even profit from the collapse.

that is all.

Pretty funny but not likely within the next 2 or 3 economic cyles. After that 30 years out quit possibly but this same scenario has been tried on several times. One of the times was when the gold standard changed. One thing is sure... until a run on the dollar won't cause a global depression it isn't likely to happen. That will require other places to become much more self sufficient. The global economy includes the US and therefore a big crash their has consequences that won't be allowed to occur......yet.

[Fred C. Dobbs]

A Lower Trade Deficit Unlikely to Save the Dollar

Axel Merk, Nov 14th 2006

America’s massive trade deficit exerts pressure on the US dollar as currency is shoveled abroad in return for goods and services. As the economy is slowing down and possibly sliding into recession, the rate at which the trade deficit grows may be slowing down; in September, this deficit was “only” $64.3 billion – still near record territory, but not as bad as economists had predicted.

Does this mean the worst for the dollar is over? After all, it now costs over 50% more to pay for a €100 euro hotel room than six years ago, assuming the hotel has not raised its price. Can it get worse? Since you probably cannot afford to go to Europe on vacation anymore, it may not matter to you. But even if you do not travel abroad, it does matter to you as your purchasing power erodes; amongst others, the cost of imports and commodities, including the price you pay at the gas pump, is likely to go up.

The trade deficit is a component of the broader current account deficit, which also includes investment income. The current account deficit is the shortfall that needs to be covered by foreign investors for the dollar not to fall. Last year, foreigners needed to purchase $805 billion in US dollar denominated assets, just to keep the dollar from falling, that’s more than $2 billion every single day.

As the US economy is slowing down, what matters is whether other factors propping up the dollar slow down even faster. The most apparent one is whether foreigners will be as inclined to invest in a slowing economy. Another is trade policy: a new Congress may take a tougher look at ‘protecting’ local jobs. If such policy is not engineered very carefully, the risk is high that it will hurt all those who have been able to adjust by taking on jobs working in an industry dependent on imports; the trade deficit makes the dollar vulnerable should our trading partners not agree with new rules or restrictions on trade.

Note, too, that we are talking about slowing growth in the deficit, not about reversing the trend, nor about eliminating an enormous cumulative deficit that has been built over time. We only need to have a negative change at the margin of any parameter that supports the dollar, for the dollar to weaken further.

The main reason the dollar has not fallen faster and more sharply is that it is in no one’s interest for the dollar to fall. The most prominent recent example of the pain a weak dollar can cause is with Airbus, the European aircraft maker. It is an “old-economy” company with bureaucratic structures seemingly incapable of adjusting to a more rapidly changing world. Mistakes in today’s world are expensive, and Airbus has had a number of major missteps. In addition to their internal problems, the weak dollar makes their operation operate at a significant loss. While many rightfully say Airbus is too ‘important’ to fail, it has the hallmarks of being yet another disastrous European project along the lines of the overly expensive Eurotunnel project that has created losses for multiple generations of investors (Eurotunnel is the railway under the North Sea connecting the UK with mainland Europe).

At least in Europe, the central bank (ECB) employs a strong dollar as one of its tools to exert pressure on European governments to induce reform. The pain of too strong a euro is shrugged off by ECB president Trichet who says that a 1 percentage drop in US growth only impacts European growth by 0.2%. However, in Asia, economies are hopelessly dependent on exports to the US and, in our assessment, will do anything in their power to keep their own inflated economies afloat. In plaintext, this means that Asian countries are likely to engage in competitive devaluation, leaving the euro as the de facto winner as pressures on the dollar mount. Gold and resource rich countries are also likely to continue to benefit from this environment. In our assessment, dollar cash is a risky, not a safe asset; investors may want to consider diversifying their portfolios to be prepared for a potential further deterioration of the dollar.

The next time you hear about the trade or current account deficit growing at a less brisk pace, evaluate why this deficit has gone down. Is it because of a shift in policies to induce consumers to save and invest? Or is it because the economy is slowing down? As consumers cannot afford to spend as much as in the past, their savings rate is bound to go up as well; but there is a difference between savings going up because consumers cannot afford to spend anymore, and an environment that fosters savings and investments. Given that most politicians are interested in short-term growth no matter what party they belong to, it remains to be seen whether the new Congress will pave the way for a change. Remember that we do not have an “ownership” society when all we own is debt.

We manage the Merk Hard Currency Fund, a fund that seeks to profit from a potential decline in the dollar. To learn more about the Fund, or to subscribe to our free newsletter, please visit www.merkfund.com.

Axel Merk

Manager of the Merk Hard Currency Fund, http://www.merkfund.com/

the yen carry trade,america's historic debtload,iran oil bourse in euros,russia oil for rubles,central

banks switching reserves out of dollars,america's real estate and stock market bubbles,etc.

one night this fall while america is sleeping,the rest of the world will be doing business and some central bank/country will dump their dollars causing others to which starts a panic stampede to get out of dollars before the next guy.last ones out will lose and since money is now electronically moved in seconds with a push of a button,america will wake up one morning this october or november and find out that trillions of dollars have come home to roost in an economy with trillions in debt making a dollar worth a penny and a loaf of bread cost $100.dollars will be become like latin american money used to be and america will have thousands of percent inflation like latin america used to have.the us gov will naturally close down us banks and seal safety deposit boxes in the national interest,there will be rioting and looting which will have the cities turned into warzones,

paris hilton and jessica simpson will be fashionably starving in their pradas,americans will be fleeing across the border into mexico,and america will disintegrate into self-governing territories and regions.

convert your assets into gold and swiss francs and euros now and preserve your wealth or even profit from the collapse.

that is all.

Pretty funny but not likely within the next 2 or 3 economic cyles. After that 30 years out quit possibly but this same scenario has been tried on several times. One of the times was when the gold standard changed. One thing is sure... until a run on the dollar won't cause a global depression it isn't likely to happen. That will require other places to become much more self sufficient. The global economy includes the US and therefore a big crash their has consequences that won't be allowed to occur......yet.

[pap]

Intersting that that I am seeing differing economic news on property developement stocks in Thailand. The nation said the SET had jumped Nov 8th on property stocks uptick yet yesterday bloomberg said the two biggest developers in Thailand had to lost huge in the last quarter.

Interesting.

[quiggs]

I have been reading these posts on Thaivisa for 3 years. I have a feeling that these US$ posts will continue indefinitely until the orinial posters are dead, or the dollar actually does cause some financial crisis. Pretty funny really.

[PeaceBlondie]

Well, I thought I had to do something before I die, before the exchange ratio goes back above 40. So last night, I transferred half of my tax-exempt (401(k)) funds from a US market index to a European market index (all in socially responsible equities). However, in the end, this European index is dollar denominated. I figure that if the stocks appreciate in Euros, they'll appreciate even faster in dollars.......yes/no, chaimai? And if the dollar does restrengthen, I've got more pension income. Is that like hedging, or did I just ride off the road into a hedge?

[wasabi]

Well, I thought I had to do something before I die, before the exchange ratio goes back above 40. So last night, I transferred half of my tax-exempt (401(k)) funds from a US market index to a European market index (all in socially responsible equities). However, in the end, this European index is dollar denominated. I figure that if the stocks appreciate in Euros, they'll appreciate even faster in dollars.......yes/no, chaimai? And if the dollar does restrengthen, I've got more pension income. Is that like hedging, or did I just ride off the road into a hedge?

http://ask.metafilter.com/mefi/45841

[Martin]

"I have a feeling that these US$ posts will continue indefinitely until the orinial posters are dead, or the dollar actually does cause some financial crisis."

Well, there are some grim stories coming out of the States now, about people trying to sell their houses and having to come way down in asking price before even getting any viewers, never mind offers. I hope that reverses quickly, because the housing bubble ending would start the whole downward spiral going, and it would soon spread to the pound and the purchasing power of my pensions would drop.

I've 'hedged' our savings, from my pension payments of the past, by buying physical gold; but I can't hedge my pension payments of the future.

[ray23]

Housing market really not unusual, it will turn around in about five years my best guess. For periods of time they are gold plated at others you can't give em away. Sounds like the normal down cycle, nothing new

[HenryB]

"I have a feeling that these US$ posts will continue indefinitely until the orinial posters are dead, or the dollar actually does cause some financial crisis."

Well, there are some grim stories coming out of the States now, about people trying to sell their houses and having to come way down in asking price before even getting any viewers, never mind offers. I hope that reverses quickly, because the housing bubble ending would start the whole downward spiral going, and it would soon spread to the pound and the purchasing power of my pensions would drop.

I've 'hedged' our savings, from my pension payments of the past, by buying physical gold; but I can't hedge my pension payments of the future.

I heard even worst United States is going out of business and George Bush is going to sell the country to Nigeria or Mexico.

Sell the dollar. Soon one dollar = one baht

[PeaceBlondie]

Well, I thought I had to do something before I die, before the exchange ratio goes back above 40. So last night, I transferred half of my tax-exempt (401(k)) funds from a US market index to a European market index (all in socially responsible equities). However, in the end, this European index is dollar denominated. I figure that if the stocks appreciate in Euros, they'll appreciate even faster in dollars.......yes/no, chaimai? And if the dollar does restrengthen, I've got more pension income. Is that like hedging, or did I just ride off the road into a hedge?

http://ask.metafilter.com/mefi/45841

Thanks, wasabi, but it's around midnight now, and my brain is melting at the edges, and is warm and fuzzy inside, and my eyes are fading. Maybe I'll understand it tomorrow.

[Ijustwannateach]

Hmmm... when I was back home this year, I noticed that in my tiny, sleepy town of 25,000 or so, houses were being built like no tomorrow. Where were these people going to be working? Nobody could tell me.

A good friend of mine with a nice property considered until recently an instant seller in NEW YORK CITY of all places has had to change his whole retirement plan because he can't find a buyer for his place at any reasonable price.

I heard an old friend of mine in high school was barely living above the poverty level as a teacher in my hometown...

I've more or less assumed that by the time I'm old enough to retire, the whole ballgame will have changed, either for much better or for much worse. If it's much better, I may not have much to worry about. If it's much worse, then it's as I expect- we're going to be suffering a long time in the U.S. for the politics of the last 30 years or so. I suppose we deserve it. My version of "hedging" is to build a life & savings over here rather than trust the U.S. for any sort of "retirement."

"Steven"

[pap]

This thread is hilarious. Everyone has an opinion including me. People hoping the US economy will collapse because of the Evil Bushman and others using criteria that don't matter as far as economies go are probably all wrong.

If Martin gets his way and we go back to caves, the US will be fine because it has lots of caves and lots of unpopulated space and food. This has nothing to do with the dollar despite trying to tie in the death of industrialization from some esoteric belief.

The only way it matters if the dollar decreases is if you trade in currencies or are strictly investing in US Bonds.

Most people have stocks or mutual funds or a mix of investments. Stocks and mutual funds are multinational companies meaning that all of these investments take a hit if the US collapses but all of them will continue on. Their overseas branches will still be there. All economies are interwoven today to lesser or greater degrees.

If the US crashes so does everyone else just like if Europe crashes so does the US. That is interdependence. If the dollar goes down US goods become cheaper and the US begins to produce more things. If it goes up it imports more things. Supply and Demand.

China can’t afford to cash in her chips on US bonds right now because they are not yet self sufficient. 15-30 year range then yes but today…not a prayer.

China has stifled individual tendencies so they need someone to copy much like the Japanese 25 years ago. That is changing and they are getting much better at the creative part as a whole every day.

The US will not fail simply because of one moronic President. It is an accumulation of moronic Presidents that will cause its role as a world leader to decline on a variety of issues. Every Empire has its time.

Even if the worst case scenario occurs the US would simply do what numerous other countries have done in the past and simply say they will not pay their debts and our slate is now at 0. That would make things difficult but it is not without precedent. It would be hard for it to get money from writing bonds for a number of years but it would not destroy the US despite the wishes of many. It would continue on as other countries that of done similar things in the past.

If you haven’t been in the US stock market because you’re afraid of what the dollar will do have missed out on some amazing runups over the past several years.

The moral is be diverse in your investments and you should be fine. Currency fluctuations are normal. I remember just a few years back the Yen was going to crash and yet Japan is still here…..and thriving…..and not living in caves.

[cclub75]

Housing market really not unusual, it will turn around in about five years my best guess. For periods of time they are gold plated at others you can't give em away. Sounds like the normal down cycle, nothing new

Oh yes... there is something new :

-the size of the debt bubble that has fueled the housing boom cycle

-the fact that US gvt has done everything it could to delay the counter cycle.

I agree with you : up and down, by cycles, that's the sign of a healthy economy, at least in a real freemarket economy. Nothing wrong with that. But our politicians felt that it was bad for their interests, for their reelection. So they have cheated.

More and more.

And the more you delay the burst, the more it will hurt.

[ray23]

Don't get me wrong I'm not saying the economy is healthy, I'm just saying the housing market going through it's cycles is probably not the best guage.

Until spending is down they economy isn't going to get healthy George was working with a blank check until very recently. I think we know where the most money is spent today.

Only thing I can figure is it runs in the family, with what Sr. pulled off in Kuwait he was very popular, but the economy cost him a second term.

Well Congress has changed, I don't think the blank check is so available anymore, but it will take time to turn things around. But, we are closer now then we have been in six years.

America survived a terrilbe depression once and would probably survive another, if that should happen but I doubt it.. But never forget America may be the one that is talked about but the rest of the world was in a mess as well.

[backflip]

"America survived a terrilbe depression once..."

Therein lies a hint of what the US federal bank will do, or not, in the future. The US will do anything to prevent a depression. The German government will do anything to prevent a repeat of the hyperinflation in the late-30's. Each government will do its best to prevent the worse economic debacle from the past - that's why the closest of allies will support different monetary policies, and have significant disagreements towards interest rates, money supply, and tariffs. It's a dance, one that I'll gladly sit out.

[churchill]

For those worried about the value of the dollar - buy gold ! Dollar goes down the value of gold goes up ! With many countries trying to sell some of their dollars and buy other assets gold may well be in for a big rise over the next years .

[Martin]

Well, five-and-a-half nervous months later and the dollar has only edged down and inflation only edged up.

From what the high-ups in the banking systems of China and India have said, it appears they would like to be out of dollars, but don't want to start a rout.

I am wary of Russia, though. They have an old sore that still rankles about the way that Reagan and Thatcher kept the price of oil down till Russia was forced to its knees. And they won't feel inhibited by the fact that China will lose so much if the dollar tanks.

I notice that they have pushed Shell out from an oil-field development project partnership that they set up when oil was 20 dollars a barrel, but where it is much more lucrative to 'go it alone' at 50 dollars a barrel, or more by the time the field will start producing.

Also they have changed their minds about letting any foreign firm have a share of the development of the huge gas field way north of Siberia. They accept that this will mean a few years of delay, but so what? Leaving it at the foot of the well, for now, just means it will trade for more when it does come up. And they are going to pipe it to Europe, not ship it to the USA.

So I guess that we just carry on being nervous. Looking at black clouds, but it hasn't actually rained yet.