Still Calling it Right -- The Dollar is being Attacked by its Own...

[Gawain 0]

http://sufiy.blogspot.com/

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Monday, December 15, 2008
US Dollar Collapse - Downtrend Resumed as positions are taken. GDX, SLW, SSRI, AUY

You can tell it when the people are talking their books: short term rally is over in USD - what is important - the size of their positions. "This time it is different" - the most dangerous words in investing. Back to fundamentals when panic is over, Treasury Bubble is next.
"Dollar Staggers as U.S. Unleashes Cash Flood, Deficit (Update1) Full article.
Dec. 15 (Bloomberg) -- The biggest foreign-exchange strategists and investors say the best may be over for the dollar after a four-month, 24 percent rally. ..
...U.S. policy makers are flooding the world with an extra $8.5 trillion through 23 different plans designed to bail out the financial system and pump up the economy. The decline shows that the increased supply of money may be overwhelming investors just as the government steps up debt sales, the trade and budget deficits grow and de-leveraging by investors slows.
“The dollar will go to new lows as the U.S. attacks its currency,” said John Taylor, chairman of New York-based FX Concepts Inc., which manages about $14.5 billion of currencies. ..
...‘Turning Point’
Speculation that the dollar has peaked gained steam last week as the currency plunged 4.9 percent against the euro to $1.3369, its biggest drop since Europe’s common currency was created in 1999. It weakened 1.75 percent versus the yen.
“We’re at a turning point in terms of dollar dynamics,” said Jens Nordvig, a New York-based strategist at Goldman Sachs, the biggest U.S. securities firm to convert to a bank. “The dollar shortage has been addressed and we’ll see people start to focus on other things and those are all dollar negative.” ...
...A survey last month by New York-based Sanford C. Bernstein & Co. found that 63 percent of hedge-fund managers said they are about half done selling securities to reduce their use of borrowed money after financial companies cut back on credit following almost $1 trillion in writedowns and losses since the start of 2007. Twenty-three percent said they were three-quarters finished. ...
...Budget Deficit
Spending to shore up the financial system caused the U.S. government’s budget deficit for the first two months of fiscal 2009 that started in October to balloon to $401.6 billion, the Treasury Department said Dec. 10.
“It’s absolutely going to get worse before it gets better,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. “We’re looking at a $1 trillion deficit, and that’s before the next stimulus package. If Treasury spends all of TARP, it could be $1.2 trillion to $1.3 trillion.” ...

23 plans? I'm aware of one. Where's the transparency? What value comes out of us attacking our currency like this?

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[kallend 1,635]

Is the the follow on from "calling it right" about our not being in a recession?

...

The only sure way to survive a canopy collision is not to have one.

[Gawain 0]

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Is the the follow on from "calling it right" about our not being in a recession?

I never made a post "Still Calling it Right" re: recession. I did post about all the claims of recession when there was no consensus. So, back on topic: what value is there in flooding the world with $8.5Tr in money? How does this work in any favorable way? What are these other 22 "bail out" plans?

Prior to the "bailout" two months ago, I called it right in that it was not going to cost "only $850B"...we're well into the Trillions already, with longer-term unfunded mandates that have not been accounted for.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[VTmotoMike08 0]

So what would happen if we just printed a few trillion in new money but didn't tell anyone?

Serious question.

[billvon 2,404]

>I never made a post "Still Calling it Right" re: recession.

I think he was referring to your post where you mocked people who said a recession was imminent.

[Gawain 0]

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>I never made a post "Still Calling it Right" re: recession.

I think he was referring to your post where you mocked people who said a recession was imminent.

I know exactly what he was insinuating, however, the reality at the time was not "people were saying recession was imminent, they were saying we were in one already. Regardless of what some think tank says in hindsight...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[Andrewwhyte 1]

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So what would happen if we just printed a few trillion in new money but didn't tell anyone?

Serious question.

It's called quantitative easing and they have already started.

[billvon 2,404]

> however, the reality at the time was not "people were saying recession was imminent . .

Actually, that's exactly what they WERE saying:

"The seven economists who sit on the bureau’s recession-dating committee began exchanging e-mail messages late last year about whether the economy was on the verge of a recession . . ."

. . . and a lot of people were making fun of them for that. From your post:

"Either way, it must be tough to be a liberal who's been crying "R" for a while...the doom and gloom is near..."

In fact, the doom and gloom _was_ near. And had more people heeded such warnings, we may have been able to do more to mitigate the worst of the collapses in the financial industry. Instead we mocked the people who sounded the warning.

(Not singling you out here; a lot of people were doing that. I hope we can avoid that in the future, even if such predictions are bad for one party or the other.)

[SkyDekker 1,129]

If I remember your posts back then, you were loudly stating that everything was fine with the USA.

Which makes seeing posts from you headed: Still calling it right, very funny.

[SkyDekker 1,129]

Stupid liberals know nothing about the economy. Cut taxes and spend as much as you can....now that is a solid financial strategy, I mean just look around, the proof is in the pudding.

(if you don't eat ur pudding.....)

[Gawain 0]

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If I remember your posts back then, you were loudly stating that everything was fine with the USA.

Which makes seeing posts from you headed: Still calling it right, very funny.

What I was loudly stating was that there was slow down and that recession was not a guarantee. I've never advocated the level of
Government intervention that we have now. Where I've been correct is in the cost of this fiasco. SecTreas Paulson has squandered
the opportunity...yelling like Chicken Little...

You want to fix this? Get government out of the way.

Nationalization doesn't guarantee anything except ineptness...

A two month tax holiday with a big cut in spending...let everyone see just how much they're sending to uncle sam.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[kallend 1,635]

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>I never made a post "Still Calling it Right" re: recession.

I think he was referring to your post where you mocked people who said a recession was imminent.

I know exactly what he was insinuating, however, the reality at the time was not "people were saying recession was imminent, they were saying we were in one already. Regardless of what some think tank says in hindsight...

Well, the OFFICIAL arbiters of such things say we WERE in a recession already

...

The only sure way to survive a canopy collision is not to have one.

[billvon 2,404]

>A two month tax holiday with a big cut in spending...

Let's think about how that would work.

No taxes! Yay! We can keep more of our paycheck!

Oh, damn. I work for the FAA and they just cut back on inspection programs. I'm on unpaid leave. My friend works for a military contractor, and they just cut an E-2C modernization program. He's out of work. My wife used to tutor, but one of her clients just lost her house to the mortgage collapse, and the other one lost his job at the post office. She's out of work. She used to be able to work nights at a local bakery, but now that the trains and buses aren't running she can't get there so easily any more.

Wow, I seem to be keeping 100% of my (and my wife's) paycheck - but that paycheck now seems to be 0% of what I used to make. Should I spend more and stimulate the economy, or should I hunker down and try to survive the (now much worse) economic crash?

Government spending buoys an economy; Keynes demonstrated that pretty authoritatively. You can want to cut taxes and government spending; I agree with you on that to a degree. But you are absolutely going to damage the economy by doing that. Claiming that job cuts will save the economy is like claiming that if you just borrow enough you will get out of debt.

[Gawain 0]

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>A two month tax holiday with a big cut in spending...

Let's think about how that would work.

No taxes! Yay! We can keep more of our paycheck!

Oh, damn. I work for the FAA and they just cut back on inspection programs. I'm on unpaid leave. My friend works for a military contractor, and they just cut an E-2C modernization program. He's out of work. My wife used to tutor, but one of her clients just lost her house to the mortgage collapse, and the other one lost his job at the post office. She's out of work. She used to be able to work nights at a local bakery, but now that the trains and buses aren't running she can't get there so easily any more.

Wow, I seem to be keeping 100% of my (and my wife's) paycheck - but that paycheck now seems to be 0% of what I used to make. Should I spend more and stimulate the economy, or should I hunker down and try to survive the (now much worse) economic crash?

Government spending buoys an economy; Keynes demonstrated that pretty authoritatively. You can want to cut taxes and government spending; I agree with you on that to a degree. But you are absolutely going to damage the economy by doing that. Claiming that job cuts will save the economy is like claiming that if you just borrow enough you will get out of debt.

Bill, do some research. A tax holiday (fed income and FICA) for two months would cost about $200B and have a far better impact than these silly rebates, buy outs of banks, et al.

It would do something else too: wake people up to the reality of how much they pay in taxes (withholding beforehand makes it less tangible). If you and I had to pay taxes every month like we pay our utilities, there would be a tax revolt and the government would be far more accountable.

I'm frustrated with the apparent lack of "anger" over the government's constant meddling. These "bailouts" are not a mandate, and in my opinion, they're borderline unconstitutional. Having the fed pump $8.5 trillion into the system that doesn't need fuel for hyper-inflation now that they also cut the rate to 0-.25%...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[kelpdiver 2]

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It would do something else too: wake people up to the reality of how much they pay in taxes (withholding beforehand makes it less tangible). If you and I had to pay taxes every month like we pay our utilities, there would be a tax revolt and the government would be far more accountable.

Huh?

How much more tangible does it need to get? My paystub shows the gross, and then it shows the net which runs about 55% of the gross.

No subtlety there. Anyone that can do basic math can see it.

[Gawain 0]

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It would do something else too: wake people up to the reality of how much they pay in taxes (withholding beforehand makes it less tangible). If you and I had to pay taxes every month like we pay our utilities, there would be a tax revolt and the government would be far more accountable.

Huh?

How much more tangible does it need to get? My paystub shows the gross, and then it shows the net which runs about 55% of the gross.

No subtlety there. Anyone that can do basic math can see it.

I don't dispute your point in that sense. But surely you understand the difference of withholding, versus paying. Savings programs are more successful when drawn through withholding versus writing a check, etc. The money is gone before you can "touch" it. Taxes are the same. The taxes I pay each month nearly pay the rent where I live...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[billvon 2,404]

>A tax holiday (fed income and FICA) for two months would cost about
>$200B . . .

If you excluded corporate and payroll taxes, agreed.

>and have a far better impact than these silly rebates, buy outs of banks,
>et al.

?? If people use their recently freed up income to pay off their credit cards and/or mortgages (which is much more likely in this economy) they don't do much for the economy. If you do it in a better economy, people spend the money on things like car repairs, movies, restaurants etc and it has more of an effect.

However, if your proposal was to cut taxes on people about to default on their mortgages, that might indeed help by a) allowing them to remain solvent and b) preventing additional bank collapses.

If you cut spending, you cut jobs. There is no way around that. Cutting additional jobs now would be a disaster. If that is really your goal, it is best pursued when such action would not further cripple the US economy.

>It would do something else too: wake people up to the reality . . .

Yes, it might have an effect that pushes your political causes. That is a separate issue, one I disagree with. We should not shape our economic policies to push any individual's or group's political opinions.

>I'm frustrated with the apparent lack of "anger" over the government's
>constant meddling.

Since the LACK of meddling was one of the things that led to this collapse (i.e. the deregulation of CDS'es) I can understand the lack of anger, and the anger at those who deregulated them.

>These "bailouts" are not a mandate, and in my opinion, they're
>borderline unconstitutional.

How so? I think they are foolish in the long run, but Congress has the right to withdraw money from the treasury provided they vote on it as they would any other legislation:

"No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time."

[headcase 0]

I'm no economist but I believe the reason for printing, pumping, and pimping BIG dollars is to avoid further deflation of which we have been subject since summer. Deflation kills inflation maims.

[akarunway 1]

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http://sufiy.blogspot.com/

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Monday, December 15, 2008
US Dollar Collapse - Downtrend Resumed as positions are taken. GDX, SLW, SSRI, AUY

You can tell it when the people are talking their books: short term rally is over in USD - what is important - the size of their positions. "This time it is different" - the most dangerous words in investing. Back to fundamentals when panic is over, Treasury Bubble is next.
"Dollar Staggers as U.S. Unleashes Cash Flood, Deficit (Update1) Full article.
Dec. 15 (Bloomberg) -- The biggest foreign-exchange strategists and investors say the best may be over for the dollar after a four-month, 24 percent rally. ..
...U.S. policy makers are flooding the world with an extra $8.5 trillion through 23 different plans designed to bail out the financial system and pump up the economy. The decline shows that the increased supply of money may be overwhelming investors just as the government steps up debt sales, the trade and budget deficits grow and de-leveraging by investors slows.
“The dollar will go to new lows as the U.S. attacks its currency,” said John Taylor, chairman of New York-based FX Concepts Inc., which manages about $14.5 billion of currencies. ..
...‘Turning Point’
Speculation that the dollar has peaked gained steam last week as the currency plunged 4.9 percent against the euro to $1.3369, its biggest drop since Europe’s common currency was created in 1999. It weakened 1.75 percent versus the yen.
“We’re at a turning point in terms of dollar dynamics,” said Jens Nordvig, a New York-based strategist at Goldman Sachs, the biggest U.S. securities firm to convert to a bank. “The dollar shortage has been addressed and we’ll see people start to focus on other things and those are all dollar negative.” ...
...A survey last month by New York-based Sanford C. Bernstein & Co. found that 63 percent of hedge-fund managers said they are about half done selling securities to reduce their use of borrowed money after financial companies cut back on credit following almost $1 trillion in writedowns and losses since the start of 2007. Twenty-three percent said they were three-quarters finished. ...
...Budget Deficit
Spending to shore up the financial system caused the U.S. government’s budget deficit for the first two months of fiscal 2009 that started in October to balloon to $401.6 billion, the Treasury Department said Dec. 10.
“It’s absolutely going to get worse before it gets better,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. “We’re looking at a $1 trillion deficit, and that’s before the next stimulus package. If Treasury spends all of TARP, it could be $1.2 trillion to $1.3 trillion.” ...

23 plans? I'm aware of one. Where's the transparency? What value comes out of us attacking our currency like this?

Quiet. It's a secret unless you're on a need to know basis. (the rich buddy system) Can't have all the sheep uprising don't ya know. TARP is just the tip of the iceburg. Here's a little more. I just found this site. I have some reading to do. >http://www.propublica.org/article/the-feds-secret-893-billion-loan-portfolio-1124.....http://clusterstock.alleyinsider.com/2008/11/our-7-4-trillion-bailout

I hold it true, whate'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost
Than never to have loved at all.

[Gawain 0]

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Deflation kills inflation maims.

This is interesting, I would have thought it's the other way around, and I think a recession is a better option rather than inflation, and we saw what the inflation did this past year (even though the "official" numbers weren't reflecting it, we all know about what the stupid-crazy commodities prices did to us), and that wasn't even widespread.

The cost of this bail out is beyond anyone's comprehension, and the people pushing the buttons don't know what will work. Cutting the rate to 0-.25%, flooding the system with $8Tr...sh*t, the banks don't need to loosen the credit market, the dollar will devalue all by itself...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[headcase 0]

It was explained to me that during deflation that you can buy a car or an apple or gasoline or a house for $10000, $1.0, $2.00, or $100K today. But if deflation is occuring then 6 months or a year from now you could buy those same items for $5000, $0.50, $1.00, or $50k. Therefore since they cost 50% less no one spends money knowing they can buy many items much cheaper if they wait. The problem is cash flow is how the modern economy works. Businesses fail like dominos as they money stops flowing and the downward spiral continues with further deflation as failing businesses and individuals are forced to sell assets in a downward market at bankruptcy prices.

Whereas inflation is the opposite. If you know you're money will be worth less 6 months from now and that car now costs $12k instead of $10k and that house costs $120k instead of 100K even though you can but less with the same amount of money the economy doesn't implode.

Again I am no economist but I believe that is why the world banks start printing money like crazy at times like this to avoid massive deflation.

[nerdgirl 0]

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So what would happen if we just printed a few trillion in new money but didn't tell anyone?

Serious question.

Two different questions in there: transparency of federal monetary policy (the not telling anyone part) and inflationary pressures.

The usual resistance to printing more money, as others have noted, is that general concensus of economic theory is that it leads to inflation. That theory has also been demonstrated experimentally. There are some who challenge it, not so much to argue that printing money doesn't cause inflation but that the simple casuality is over-simplification.

Otoh, transparency, i.e., not doing things covertly, is important to maintain credibility in monetary policy. Such an action would be discovered and trust would be lost. That would be a very, very, very bad policy choice ... which unfortunately does not mean someone might not propose it ...

Currently most analysts and the Federal Reserve Board (the "Fed") are more concerned with avoiding deflation.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[kallend 1,635]

My car goes as far on a gallon of $1.59 gas as it does on a gallon of $4.30 gas. My HDTV shows the same channels as it always did, regardless of the sticker price this week in Best Buy. I can sit as comfortably on my comfy sofa as I could 6 months ago.

Real wealth doesn't just vaporize. Maybe we should all go back to bartering.

...

The only sure way to survive a canopy collision is not to have one.

[skydyvr 0]

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I can sit as comfortably on my comfy sofa . . .

You're an unlawful combatant?

. . =(_8^(1)

[marks2065 0]

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My car goes as far on a gallon of $1.59 gas as it does on a gallon of $4.30 gas. My HDTV shows the same channels as it always did, regardless of the sticker price this week in Best Buy. I can sit as comfortably on my comfy sofa as I could 6 months ago.

Real wealth doesn't just vaporize. Maybe we should all go back to bartering.

Isn't the value of the $ held in part by the value of assets like gold? if so doesn't the overprinting of money devalue the money itself and cause inflation?