← Autodidact Archive · Original Dissent · solutrian
Thread ID: 15758 | Posts: 18 | Started: 2004-11-24
2004-11-24 17:18 | User Profile
President Bush and our leaders are doing a marvelous job in managing the US economy. The most recent one is the tanking doller. I"ll leave it to the financial talking heads to autopsy the reasons behind it, but letting the people who you would least trust with your money-the politicians-managing the economy would seem to be at the top of the list. Throw in a war, deficits of cosmic size, and probable vast corruption and we have a witch's brew of powerful and original stench.
2004-11-24 18:13 | User Profile
[QUOTE=solutrian]President Bush and our leaders are doing a marvelous job in managing the US economy. The most recent one is the tanking doller. I"ll leave it to the financial talking heads to autopsy the reasons behind it, but letting the people who you would least trust with your money-the politicians-managing the economy would seem to be at the top of the list. Throw in a war, deficits of cosmic size, and probable vast corruption and we have a witch's brew of powerful and original stench.[/QUOTE]
That's right.
I predict that the dollar will fall to 1.5 to the Euro by the middle of 2005. That's real good news for me.
2004-11-24 18:24 | User Profile
[QUOTE=Walter Yannis]I predict that the dollar will fall to 1.5 to the Euro by the middle of 2005.[/QUOTE]
Walter,
What's your prediction for what Greenspan is going to do with the interest rate in 2005?
2004-11-24 19:05 | User Profile
[QUOTE=Texas Dissident]Walter,
What's your prediction for what Greenspan is going to do with the interest rate in 2005?[/QUOTE]
He's between a rock and a hard place.
He can't raise it too much or the vastly overextended middle class won't be able to make their mortgage payments and there will be a rush of bankruptcies that could spin out of control.
On the other hand he absolutely must raise interest rates else foreigners will stop buying our funny money to finance the War on Israel's Enemies and the self-indulgent overconsumption of the America sheeple.
My best guess is that he will split the baby, do another quarter point rise at the next meeting, and then let it ride a couple of quarters.
BTW, it appears that our Chinese brothers will let the Yuan rise against the dollar, as this is the source of much pressure. The dollar has to go down by a lot. The whole situation is very artificial, and there's a big correction coming.
Also, if we attack Iran, then watch for Russia (and maybe others) threaten to denominate their oil contracts in Euro. That could trigger massive dollar dumping as entire national economies move to exchange dollars for Euro (and maybe even Yuan).
CAVEAT: I've been saying this for the longest time now, and I always underestimate how well the dollar can defy gravity when all the world's central bankers want it to. But something's gotta give here, and I'm placing my bets on the dollar diving in 2005. That also entails bankruptcies - we might have a good buying opportunity for real estate soon.
2004-11-24 19:09 | User Profile
[QUOTE=Walter Yannis]That also entails bankruptcies - we might have a good buying opportunity for real estate soon.[/QUOTE]
Ha! You might. I'll be one of those bankruptcies. :lol:
Thanks.
2004-11-24 19:15 | User Profile
Walter,
If you don't mind me asking, what do you have your investments in? I would assume that you are liquid right now, if I follow your strategy correctly. Are you mostly in precious metals of some kind or have you invested in another currency, probally euros?
2004-11-24 20:00 | User Profile
Economic `Armageddon' predicted [url]http://business.bostonherald.com/bu...articleid=55356[/url]
Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.
But you should hear what he's saying in private.
Roach met select groups of fund managers downtown last week, including a group at Fidelity.
His prediction: America has no better than a 10 percent chance of avoiding economic ``armageddon.''
Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, ``it struck me how extreme he was - much more, it seemed to me, than in public.''
Roach sees a 30 percent chance of a slump soon and a 60 percent chance that ``we'll muddle through for a while and delay the eventual armageddon.''
The chance we'll get through OK: one in 10. Maybe.
In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates further and faster than he wants.
The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded.
Less a case of Armageddon,'' maybe, than of aPerfect Storm.''
Roach marshalled alarming facts to support his argument.
To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day.
That is an amazing 80 percent of the entire world's net savings. Sustainable? Hardly. Meanwhile, he notes that household debt is at record levels. Twenty years ago the total debt of U.S. households was equal to half the size of the economy.
Today the figure is 85 percent. Nearly half of new mortgage borrowing is at flexible interest rates, leaving borrowers much more vulnerable to rate hikes. Americans are already spending a record share of disposable income paying their interest bills. And interest rates haven't even risen much yet.
You don't have to ask a Wall Street economist to know this, of course. Watch people wielding their credit cards this Christmas. Roach's analysis isn't entirely new. But recent events give it extra force.
The dollar is hitting fresh lows against currencies from the yen to the euro. Its parachute failed to open over the weekend, when a meeting of the world's top finance ministers produced no promise of concerted intervention.
It has farther to fall, especially against Asian currencies, analysts agree. The Fed chairman was drawn to warn on the dollar, and interest rates, on Friday.
Roach could not be reached for comment yesterday. A source who heard the presentation concluded that a ``spectacular wave of bankruptcies'' is possible.
Smart people downtown agree with much of the analysis. It is undeniable that America is living in a ``debt bubble'' of record proportions.
But they argue there may be an alternative scenario to Roach's. Greenspan might instead deliberately allow the dollar to slump and inflation to rise, whittling away at the value of today's consumer debts in real terms.
Inflation of 7 percent a year halves ``real'' values in a decade. It may be the only way out of the trap. Higher interest rates, or higher inflation: Either way, the biggest losers will be long-term lenders at fixed interest rates.
You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent.
2004-11-24 20:01 | User Profile
Walt, Building on Skemper's question, what is the best way to invest in gold? What about foreign currencies? Have you actually opened accounts with foreign banks, or just invested in funds denominated in foreign currencies?
2004-11-24 20:38 | User Profile
[QUOTE=skemper]Walter,
If you don't mind me asking, what do you have your investments in? I would assume that you are liquid right now, if I follow your strategy correctly. Are you mostly in precious metals of some kind or have you invested in another currency, probally euros?[/QUOTE]
I have most of my liquid investments in foreign currency assets. Euro and Swiss Francs. Also foreign real estate. I own a little gold, wish I had bought more when Yggdrasil advised to do it last year.
2004-11-24 20:46 | User Profile
[QUOTE=Quantrill]Walt, Building on Skemper's question, what is the best way to invest in gold? What about foreign currencies? Have you actually opened accounts with foreign banks, or just invested in funds denominated in foreign currencies?[/QUOTE]
I'm no expert in Gold. I had an account with HSBC in Hong Kong that was really easy to handle - you could just switch from dollar to Euro to Yuan to gold whenever you wanted. My gold investements are limited to gold coins, including some very beautiful Tsarist coins. It's not much, but would be useful in a crunch. Many of the Elliiot Wave Theory people predict gold going to $2,000/oz. I dunno if it will go up that much, I would say that gold going up more is a pretty safe bet, and I plan to throw a few bucks at it.
Opening a foreign bank account is easy - just go to Switzerland with a passport and some money. I have a Swiss account that is 100% internet. International wire transfers cost six Swiss francs. The only thing you need to do is disclose it to the IRS on you tax return. There's a form you file. And that's it, really.
I think that for most of us the thing to do is to get out of debt and get out of dollars. IMHO, of course. Basically that's what I did. So far it looks like I'm right.
CAVEAT: I've been real wrong before (lost a bunch not getting out of the stockmarket on time in 2000 - made a couple of totally idiotic calls on tech stocks).
2004-11-24 20:55 | User Profile
[QUOTE=EDUMAKATEDMOFO]Economic `Armageddon' predicted [url]http://business.bostonherald.com/bu...articleid=55356[/url]
Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.
But you should hear what he's saying in private.
snip You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent.[/QUOTE]
That's basically my take on it, and I think most finance types believe it to.
It's the irresistible force meeting the immovable object. Military spending must increase because our Zionist Masters must pursue and expand this current war, but neither can social spending be cut as that would harm the favored coalition partners of our Glorious Zionist Ascendancy and damage their credibility and perceived right to rule. But at the same time taxes can't increase because that would cause a depression and increase the deficits and again threaten Zionist legitimacy, which means that we borrow more from abroad but that can only go on so long before our creditors get nervous, which they're already showing signs of.
So, something's gotta give, but the political equation is such that I think it unlikely that it can be managed without a catastropic breakdown.
2005 I think will be interesting. The dollar will continue its slide, despite intervention by the central banks - that's what I'm betting my limited fund on, anyway.
2004-11-24 21:17 | User Profile
[QUOTE=Walter Yannis] Opening a foreign bank account is easy - just go to Switzerland with a passport and some money. I have a Swiss account that is 100% internet. International wire transfers cost six Swiss francs. The only thing you need to do is disclose it to the IRS on you tax return. There's a form you file. And that's it, really.[/QUOTE] Walt, I'm hoping the part about having to physically go to Switzerland is a joke. How and with whom did you set up your 100% internet Swiss account?
2004-11-24 21:55 | User Profile
I think that having 10% of one's assets in precious metals is always a good strategy, no matter the market, if anything just for diversity. I have been reading up on gold and silver and some have recommended investing in silver because it is used heavily in industry and is a limited resource ( this I need to further investigate). Coins are good because they are more liquid. I would be interested in knowing how much in gold and other precious metals that America's Old money elite has as a typical percentage of their earnings.
2004-11-24 23:36 | User Profile
On a related note:
[QUOTE]... Both the Clinton and Bush administrations are guilty of permitting China to maintain a grossly undervalued currency that sucks productive capacity out of the US. The combination of cheap Chinese labor and an undervalued currency are destroying US middle class living standards.
As Americaââ¬â¢s industrial base erodes, so does its competitiveness and ability to close its trade deficit through exports.
Currency markets cannot correct the undervalued Chinese currency, because China does not permit its currency to be traded and there are insufficient stocks of Chinese currency in foreign hands with which to form a currency market.
Sooner or later the peg will come to an end perhaps when China fulfills its WTO obligation to let its currency float. When the peg ends, it will deliver a severe shock to US living standards. Suddenly, Chinese manufactured goods including advanced technology products on which the US is now dependent will cost much more. Overnight, shopping at Wal-Mart will be like shopping in high-end department stores.
China accounts for a quarter of the US trade deficit and for one-third of the US deficit in manufactured goods, is the second largest source of US imports after Canada, and is Americaââ¬â¢s third largest trading partner as conventionally measured. Despite these facts, the US government does not publish full current account data for China, instead lumping China in with Other Countries in Asia and Africa. This keeps the magnitude of the problem out of sight.
Canada and Mexico rank as the USââ¬â¢s two largest trading partners because of double counting in the measure of imports and exports. For example, the full value of auto bodies shipped across the borders to Canada and Mexico for assembly operations are counted as exports when they leave the US and as imports when they return.
In contrast US trade with China involves almost no double counting of component parts.
Recently, Goodyear Tire and Rubber Company declared its intention to close all US plants and to manufacture offshore for US markets. Each time the US loses an industry, Americaââ¬â¢s export potential declines and Americaââ¬â¢s imports rise. This scenario guarantees a rising trade deficit and the end of the dollarââ¬â¢s reserve currency role.
...
Chinese Exchange Rate Peg Threatens World Economy By Paul Craig Roberts [url]http://www.originaldissent.com/forums/showthread.php?t=15724[/url]
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2004-11-25 00:18 | User Profile
I have no formal education and I am not an "economist" but even someone like me can judge what is going on by simply going to the DOLLAR store.
I have been keeping my eyes on this particular store for the past five months and I can see that what they are selling now days is of real low quality.
Five months ago they had a better variety of products and of better quality and that tell me that we are in deep doodoo.
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As you know farmers keep part of their seeds from one year to the next in order to produce more food for the next year but now in Iraq it is against the law to do that,,,,why? simple,,,,the seeds that are now in Iraq are American habry seeds that the Americans have produce in order to "help" the world and the hungry people.
So first the Americans tell the world how nice they are and convince them to use the "better" seeds and then because they have the patent on that particular seed the farmer has to buy new seeds every year and can not save it from one year to the next.
This was tried in some countrys in Africa plus in Brazil and Mexico and the Americans were told to go to hell,,,,do you blame those people?
"Control the money and you will control the country, control the food and you will control the people",,,,,,,, Ponce
2004-11-25 03:02 | User Profile
President John F. Kennedy was well aware of the victimization of American citizens and started the 2-dollar bill, backed by silver. Was he killed for it ? The American dollar is a worthless piece of toilet paper, and the rest of the world is coming finally to this conclusion, namely because the whole world objexts to our War against the Iraqi People. If said war didn't happen, the fall of the dollar wouldn't be happenning right now. Other powers like Europe, Russia and China are fully aware of our weaknesses, and choose not to ally with us. Saddam Hussein was in the process of accepting only the Euro not the Dollar for Iraqi oil, and that is one of the primary reasons why the U.S. illegally invaded Iraq. Our currency has been worthless for over 75 years now. President Roosevelt declared America BANKRUPT and put a call on all gold to be melted down and sent to the international bankers in the early 30's.. We live in an economic system where our basic means of exchange has no value whatsoever. The ONLY thing that gives the dollar ANY value is the largesse of the American military. As that is being marginalized, so is the paper dollar.
2004-11-25 08:09 | User Profile
[QUOTE=Quantrill]Walt, I'm hoping the part about having to physically go to Switzerland is a joke. How and with whom did you set up your 100% internet Swiss account?[/QUOTE]
I was in Switerland on business and opened the account. There are lots of banks in Switzerland. In fact, the Swiss make chocolate, watches, and run the world's money offshore. That's what they do (although their bank secrecy laws are changing).
If you want heightened secrecy one way to go is to register an offshore company. For example, you can register a company (last time I checked) in the Turks & Caicos Islands for a few thousand bucks, with all fees prepaid for 20 years. This company has only bearer shares (you can do other kinds of incorporations). Bearer shares means that the company belongs to whomever holds the stock certificates. There's no record of who owns them, at least no public record, and Turks and Caicos has strong secrecy laws. The you can have this company open a bank account someplace. This is getting more tricky, but I believe that HSBC in Hong Kong will still do this - I saw it done rather recently, in fact.
These bearer share companies are great for a number of purposes, including for people who want to pay large bribes. Say you work for a weapons manufacturer and you want to bribe a general in Lower Sobovia to buy your systems. Well, you set up your offshore company with bank account, deposit the money into the company's bank account, and then instead passing a suitcase of cash or even a wire transfer to the general's offshore bank account, all you do is turn over the bearer shares of the company and the seal, along with the bank account secret codes. Nobody's the wiser, because no money changed hands, only some unregistered stock certificates in a company registered in a country with strong secrecy laws. It happens every day. A great deal of the world's money is in offshore accounts.
2004-12-08 23:09 | User Profile
The need to protect one's a$$ets is becoming more obvious than ever.
[url]http://www.upi.com/view.cfm?StoryID=20041206-071405-1039r[/url]
Commentary: Rubber checks that don't bounce By Arnaud de Borchgrave UPI Editor at Large Published 12/6/2004 2:34 PM
WASHINGTON, Dec. 6 (UPI) -- Foreigners put up 90 percent of the $2 billion required every day to make sure Uncle Sam's checks don't bounce. The profligate uncle thus can write checks that are accepted as payment as long as they are never cashed. This sleight-of-hand shell game is what keeps the international monetary system from imploding. Shakedown rackets and Ponzi schemes are usually less transparent.
The United States' foreign creditors hold an estimated $11 trillion in U.S. "paper," or 43 percent of the superpower's privately held national debt, up from 30 percent since George W. Bush became the 43rd president. China, Japan and Saudi Arabia are among the biggest dollar stakeholders, and they have seen their assets fall 35 percent against the euro and 24 percent against the yen.
The administration pooh-poohs any connection between tax cuts coupled with soaring deficits, from the federal budget to the national debt and an insatiable appetite to borrow and spend. What about the $3 trillion surplus left by the Clinton administration that is now a projected $5 trillion to $7 trillion deficit? Nothing to worry about, we are told, because there is a plan to halve it without so much as a small war tax to make us finally understand "we're a country at war," as Bush keeps telling us.
The $220 billion cost of Afghanistan and Iraq thus far has not changed any minds in the White House that the pre-war tax cuts must be maintained. More borrowing should do the trick. The more U.S. bonds and T-bills are sold abroad, the less need to curb the ravenous appetite for foreign goods. Thus, the United States can have its cake and eat it, too.
The $420 billion defense budget, almost more than the rest of the world spends on its armed forces, will top half a trillion dollars before the end of Bush's second term, and social programs will keep pace, all without tax hikes. The United States is expected to borrow $670 billion this year, according to estimates made last week by the Organization for Economic Cooperation and Development. The 10 Nobel laureates whose recent open letter urged a dose of fiscal restraint to curb current manifestations of "fiscal irresponsibility" were dismissed as eggheads talking through their mortarboards.
London's prestigious Economist thought the situation was alarming enough to put "The Disappearing Dollar" on its cover this week. It showed a dollar bill as a leaf on a tree, half eaten by a worm.
Foreign central banks, the major purchasers of U.S. securities, are spooked. Either they stand idly by and watch the value of their reserves continue to plummet -- or they begin moving them into euros, or a basket of several currencies. Saudi Arabia has sold some U.S. paper for cash to go into new projects in the kingdom. China (with $515 billion) and Japan ($720 billion) have switched steadily out of dollars throughout 2004.
The Bank for International Settlements reported over the weekend dollar-denominated deposits fell to 61.5 percent of total deposits by OPEC members in the second quarter of 2004 -- from 75 percent in the third quarter of 2001. Euro-denominated deposits rose to 20 percent from 12 percent over the same period.
Asia as a whole has accumulated $2.2 trillion in foreign reserves. The U.S. trade deficit with China, now nearing $150 billion for 2004, grows alarmingly from year to year. Wal-Mart alone imports $18 billion worth of Chinese-made goods for its stores. When China and India can compete across the entire spectrum of high-tech networking jobs, globalization begins to lose its allure. China's sidewalk moneychangers are betting the renminbi is now a stronger currency than the dollar. Chinese companies are luring Chinese-American executive talent from U.S. multinational corporations with higher compensation packages.
Seemingly unconcerned, the administration says the external deficit has little to do with conspicuous consumption and much to do with the sluggish economies in Europe and Japan. Fast-buck economists -- or reckless high rollers -- argue the disappearing dollar could be the answer to all of the administration's problems, as it will automatically shrink the U.S. deficit. And the more the dollar falls, they explain, the more expensive European and Japanese goods become, choking off their exports to the United States -- and boosting now much cheaper U.S. exports.
But such a laissez-faire policy -- besides poisoning anew trans-Atlantic and trans-Pacific relations -- will only encourage the dollar stakeholders all over the world to unload ever faster. The dollar is expected to shrink another 30 percent during the Bush 43B mandate. This could then be the biggest default in history, wiping out anyone holding dollar assets, and burying the dollar as a global reserve currency.
The Europeans blame the United States' intemperate borrowing and meager household savings. They know the more the dollar drops, the more claudicant their economies.
A run on the dollar would knock the props from under the United States' global alliances and further erode what little support the United States has left for defeating the insurgents in Iraq and midwife-ing a democratically elected government. The only victor in such a tragic denouement would be Osama bin Laden and his global network of extremist troublemakers and terrorist destroyers.
In his latest video, released just before the Nov. 2 elections, bin Laden referred to religiously inspired Arab volunteers with whom he fought the Soviet occupation of Afghanistan in a war he says "bled Russia for 10 years until it went bankrupt and was forced to withdraw in defeat."
Bin Laden clearly believes he can do it again. "So we are continuing this policy of bleeding America to the point of bankruptcy," he said, speaking without his habitual automatic weapon in the picture.
A horizon of endless deficits and a dollar with the buoyancy of a lead balloon is a recipe that can only please the countless millions who wish us ill.
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