Friday, February 12, 2010

Phase Five Of The Currency Wars?

The Dredd Blog has an ongoing series of posts dealing with what we have called the currency wars.

Even though MOMCOM is experiencing a boom like never before, there are indications of a bigga badda boom coming to the "home land".

Like we don't have one already?

I guess the famous last words "It could not get worse" should be considered.

At least we should consider the words of some watch-dog types who have an ear to the economic ground and who say they hear thunder approaching:
China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets.
(China Orders Retreat, bold added). Add to that the words of a specially appointed watch-dog:
Today's latest report from the Congressional Oversight Panel makes it very clear that while things may feel relatively stable right now on the commercial real estate front, the real bomb hits in 2011. Banks could lose $200 - $300 billion, and 'every American' could be affected ...
(Banks Will Be Rocked, bold added). Maybe MOMCOM will become a bank and loan us some of our own money?

It is clear that she will be the last one standing unless we get a compass we can believe in here at home.


  1. Funny how soon we forget eh? Only this time last year we were still wondering when we'd hit bottom, and now, only after mass infusions of Treasury debt mainlined straight into the banking system, the talking heads on Wall St and D.C. pronounce the recession "over." I suppose that we should be happy that at least some of them are quasi-apologetic about the lack of jobs to go with it (or the fact that state governments don't have the same access to the Fed money printing machine).

    With or without the coming commercial real estate debacle, our goose was probably cooked anyway. With it, we can at least speed up the process a little, and better assess the total systemic damage. This may be a "band aid" case, where the best medicine is just to rip the lid off quickly, suffer the momentary agony, and get about the business of cleaning up the mess.

    Unfortunately, Obama and the Fed have already shown their colors with last year's bailouts. That said, even the US Treasury's pockets aren't infinitely deep, so we'll soon see where those policies takes us well. At the very least, the days of the dollar's status as reserve currency are almost certainly numbered. Could sovereignty be close on its heels as well?

    I wonder if Wall St has devised any trading options for that yet? I'm betting they have, and the market is almost certainly growing.

  2. disaffected,

    Poppy Bush talked about voodoo economics but it took his protoge Bush II to bring us VOODOO economics.

    The spell has been cast upon us and it remains to be seen what we will turn into.

    Probably a banana republic dictatorship of sorts, selling military hardware cheap.