yesterday's headline on drudge:
which, as night follows day, led to today's headline on drudge:
of course,
- if you've been reading this blog for any length of time (plus doing the assigned listening), you were not caught nearly as flatfooted by the above events as were many of the commodities traders who were frantically covering their shorts today;
- the arabs are denying that they're colluding with the chinese, russians and brazilians, among others, to bypass the dollar altogether in their nation-to-nation commerce, but my sources have been talking about this story for months, and it should be evident to anybody who has watched the fed and the treasury department debase our currency so spectacularly over the last couple years; and, finally
- as is the case with so many stories of this kind, it took a non-u.s. (in this case, british) paper to break it to the general public, proving once again you're never gonna hear the truth from your government or your media.
are gold and silver (which is performing even more spectacularly) gonna move up in a straight line? of course not--there will be many dips along the way. watch for 'em, and get in before it's too late.
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oh, and in related news: as our dollar falls apart, the dow closed up 131 points today as the sucker rally continues--absolute insanity.
5 comments:
So where does this end guttermorality? 20 euros to the dollar? The yen and the dollar at an even trade? Gold at $10,000 an ounce?
First, if there is a transition away from dollar contracts in oil and in using the dollar in world trade and in using the dollar as the central reserve currency in the world, this will have a negative impact on the U.S.A. since we would no longer be having others keep this money interest free for us.
So, yes, some reevaluation of the dollar is likely. But recall where the dollar was trading prior to the 2008 financial meltdown. The dollar was trading significantly lower than it is now. There was a flight to the dollar and United States Treasury bills as the safest investments in the Fall, 2008.
The upshot of all this is that there is no investor panic that would cause a run on the dollar or a run on some other major currency. That means, then, that while there will be some downward drift of the dollar, it will not result in a great depression.
As far as gold, well gold is a commodity where speculators have overtaken the valuation of it.
The noblesavage prediction is that gold will be under $1000 at the end of 2009 and trail down in 2010.
There might be a lag on this, but as the United States and world economies recovery, gold will drift downward.
It's not that guttermorality is wrong, it's just that the scenarios are simply unlikely.
noblesavage: i have no idea where it will end; what i do know is that my endgame scenario differs radically from yours.
yes, there's been a huge flight to the "safety" of the dollar since this mess began, but, as the stories featured in this post suggest, many dollar holders are having serious second thoughts.
for now, we're enjoying a kind of uneasy stasis as the chinese and americans play chicken--the americans betting that the chinese won't bail on the dollar no matter how foolishly we inflate and debase it, because of our unhealthy mutual symbiosis.
problem is, stasis isn't good enough--we need more and more and more, and everybody's maxed out; there isn't any more.
nobody wants to buy our debt anymore, tax revenues are dropping like crazy, the printing presses are running overtime, there will be hundreds of more bank failures in the coming year and the fdic is already broke, the christmas shopping season is gonna be a disaster--i could go on and on and on.
tell me--where is all the money we need to keep running this corrupt, bloated machine gonna come from?
there is no recovery underway, rob--it's all a lie. it's a lie that's not gonna go down easy, of course, because obama's whole political future is tied to this phantom "recovery," and they will keep this walking corpse animated as long as they can--which will, when it inevitably comes, make the fall even harder.
OK guttermorality, what's your prediction for the price of gold at the end of 2009 and a year from now?
You are stating the world is ready to go to hell in a handbasket, so put it on the line and say when and how badly.
One thing about China, Russia, and other nations attempting to co-opt the dollar, you can't replace something with nothing. They must find an alternative.
Also, world instability is in no one's interest.
The lesson from Lehman Brothers was that letting a company fail, however feckless, has serious unintended consequences for everyone.
If all of these nations so wishing the U.S. would "fail" or at least stop having the world default currency, I want a smooth transition versus a crisis.
noblesavage: impossible to predict how or when it's all gonna come crashing down. the markets are so manipulated--the us gov't buying its own treasuries, and the plunge protection team stepping in with massive stock buys whenever the dow dips 100 points or so--that they could keep this going artificially for months and months.
no nation wants america to "fail", rob--at least not in the short term--because their interests are so inextricably bound to ours.
but the thing all dollar-invested nations know is, they're playing a dangerous game of musical chairs. as the dollar bubble grows and grows, the first one to pull the trigger and cut their losses will make out the best, while the others will be left with wheelbarrows of green toilet paper. it is this thought, i imagine, that keeps bernanke up at night, even as he keeps the presses running.
as for your assertion that "The lesson from Lehman Brothers was that letting a company fail, however feckless, has serious unintended consequences for everyone", all i can say is, you are truly a keynesian to the core.
on the contrary, had they all been allowed to fail, the fallout would've been sharp, violent and short, with the feckless getting their just desserts, and those players who had been smart and judicious enough to stay outta this mess in position to take up their rightful places at the reins of power. we would've found a bottom to the market relatively quickly, and capitalism could've done its job of cleaning out the greedy and stupid, thus clearing the decks for the next business cycle.
that's the way a true recovery happens.
[plus, of course, we would've saved trillion or so in bail-out money for real emergencies.]
the fact that things didn't play out that way--that that rat bastard paulsen bailed out all his buddies at taxpayer expense so that they can live to fuck us over another day, and that mr. hopey mcchange came in and not only didn't challenge that corrupt status quo, but reinforced it with his own team of economic incompetents, is what makes me wanna punch holes in walls.
You are correct to label me a Keynesian.
Which then begs the question, what are you?
You appear to be espousing the classical economics approach -- the Chicago School most closely identified with Milton Friedman.
And, if I may, your view of what would have happened had the Bush crowd (or Obama) followed a laissez-faire capitalist approach of hands off, is a fantasy of economic theory not associated with actual human behavior. Your vision happening as you describe it assumes everyone is and does (and would have) behaved entirely rationally. The economic behaviorists can show example after example after example of how economic theory's assumption of rational economic behavior predicated on rational self-interest is just plain wrong. Empirically wrong.
Indeed, I believe the economic crisis so completely discredited a laissez-faire approach to regulation or government.
Capitalism a la Adam Smith is a wonderful and powerful theory. You can go to dinners where everyone champions "freedom" and makes lots of money. You can make toasts to Ayn Rand (even if not many people ever truly read any of her books cover to cover).
But a nice and tidy theory is of no use if it cannot actually function in the real world.
What the last economic crisis showed us is the widespread prevalence of market failure.
What the last economic crisis also showed us was that there are times when the market is not "self correcting." When there is an emotional panic in the market, you do not want to rely upon self correction, because that will not solve any panic.
A close examination of the Great Depression shows the failure of Herbert Hoover's laissez-faire approach.
Guttermorality, and I say this with love, your views are outside the mainstream of economic thought here and pretty much discredited. I know that there are people who espouse your views like Larry Kudlow (he is a trained economist, but seems to be an ideologue first).
But the empirical data here is overwhelming that a crisis was unfolding that could not have been solved by the market.
To do nothing would have plunged us in to a depression. To do nothing would have meant a wild emotionally charged gyration to some sort of "market bottom."
Keep in mind that the normal rules were not applying after Lehman went under: credit markets completely froze up. This was true for everyone, not just all the bad apples. The markets were not functioning and it was absolutely necessary to step in and do something.
You can argue that a different "something" would have been better or that Paulson tried to save Goldman Sachs at the expense of other more pressing needs. But the fact that the Bush team did something was necessary. And Bush took a lot of heat from people in his own party saying the very things you are saying. Government action was necessary.
You're just wrong here.
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