It looks like the dollar is losing value

[william the wie]

what is the total exposure of GMAC/Ally in terms of mortgage bundles(?) or other debt securities? And who securitized them?

I bet it wasn't GMAC.

But if this is real it will reflect incredibly poorly on team Obama's restructuring of GM.

The story is still breaking but incompetence in the transfer and storage of documents during reorganizations and takeovers was and maybe still is rampant in the mortgage industry. I am not a judge nor am I on a jury but I will say that the scale of incompetence in this industry will lead to numerous awards based on fraud. Due diligence was sacrificed to speed of execution decades ago. As to Obama he is toast on many fronts for a long list of dubious decisions.

 

[loosecannon]

Europe is hoping for a way to exact retributions after our institutions "caused" this credit crisis.

I am still very curious about the relative size of GMAC securities. It doesn't seem like they were the biggest fish or even a big fish.

And details beyond not verifying their facts need to be provided to gauge the scope of the "fraud".

But this could add dramatically to many probs. Like the debasement war.

Something happened today at 2:10 that caused the $ to drop 1% in 30 minutes. It wasn't the Fed announcement.

 

[KissMy]

Europe is hoping for a way to exact retributions after our institutions "caused" this credit crisis.

I am still very curious about the relative size of GMAC securities. It doesn't seem like they were the biggest fish or even a big fish.

And details beyond not verifying their facts need to be provided to gauge the scope of the "fraud".

But this could add dramatically to many probs. Like the debasement war.

Something happened today at 2:10 that caused the $ to drop 1% in 30 minutes. It wasn't the Fed announcement.

News of GMAC & Ally broke yesterday. That was way before the FED announcement around 2:10pm today that plunged the dollar.

 

[loosecannon]

I wasn't even suggesting that the GMAC news caused the dollar to drop like a rock.

But it wasn't caused by the fed's regurgitated announcement.

Something happened in the currencies exchange.

 

[william the wie]

I wasn't even suggesting that the GMAC news caused the dollar to drop like a rock.

But it wasn't caused by the fed's regurgitated announcement.

Something happened in the currencies exchange.

Probably GMAC with perhaps some opportunistic moves by the Bank of Japan. There is a serious communications problem here.

Europe is run under the Napoleonic code that assumes guilt until proven innocent. With the 3rd degree perfectly legal over there as when the UK kept their own citizens locked up in conditions that made Gitmo seem like a human rights showcase convictions are easy to get. Europeans who have not lived here therefore expect mass imprisonments and meltdown II. Given the current political environment and the higher bar that needs to be overcome to get a conviction there is most probably a serious miscalculation about what outcome is to be expected from this scandal that drove the dollar down.

The probable out come is that a couple of scapegoats will be convicted and released on appeal, a lot of mortgage shops will go into bankruptcy and great gobs of people will get either their old house or a better one back and the holders in due course will get pennies on the dollar. The housing market here will sink like a rock as the investors rush to liquidate foreclosures. Then when they realize the size of the haircut they got at least some of the investors will sue their own banks and brokerage firms who got them into this market. I have no idea whether that will cause a banking crisis in Europe but it sure won't prevent one.

 

[antagon]

Explain please

i'm regularly harangued by broke sportsbetters looking to bankroll their latest theory on a horse, stock car or spread with a day with one of my shovels or rolling around under my fords. this post bears the hallmarks of their pseudoscientific logic.

first, the precise but arbitrary probability is not credible to me, whatsoever. next, brewing a perfect storm from carefully picked co-factors and paying no acknowledgment to the capacity for markets and regulators to react or intervene is not credible. if you want to welcome the implications of the post, you could willfully suspend the disbelief which comes to mind when william crunches odds on his 'minor probabilities', but this isn't a sci-fi flick. i don't see the point.

Any and all investment theses are based on the assumptions of probability, whether implicit or explicit. When I hear someone like william say there is a third chance of this and a half chance at that, I don't see it as an exact arbitrary prediction to the fifth decimal point of a future situation but instead a rough approximation as he sees it. He very well may be wrong - and all of us who have done this for a long time have been wrong many times. However, you simply cannot invest without there being an assumption of probabilities regarding a future event. If you aren't able to roughly approximate future events, or mitigate your inaccuracies, then you will do very poorly at investing.

i'm not saying anything about flying blind, i'm just pointing out my opinion about the credibility of william's methods. "19 to 1 that there will be a bond crash in the next year" -- rough approximation? incredible? i sit with the latter.

i don't engage in any marketized investment so to speak. i think i'm better holding cash(!) without returns and taking the superior and less risk averse returns out here on main street. some in futures, debt and equity take his formulaic approach, but even in markets, shit is not so linear that all factors can be accounted for through reduction with more accuracy than holistic approximation. but that's my opinion which notwithstanding william might do exceptional with his money. but i think the human brain is a vastly superior decision engine than a computer. the proceeds from reducing the mind to computation rather than contemplation are less credible to me (generally, and for the specific presumptions which he contends to have included in his estimation).

 

[antagon]

I wasn't even suggesting that the GMAC news caused the dollar to drop like a rock.

But it wasn't caused by the fed's regurgitated announcement.

Something happened in the currencies exchange.

i wont put it past markets to herd behind the fed's announcement. you can say austerity, austerity, austerity and click your heels and they'll flock one way. say easing, and even if they'd seen it coming -- heard it the week before, they'll scramble the other way. states can and regularly do direct their currency policy through the press with more effect than a orchestra conductor.

 

[KissMy]

Oil rises above $75 as US dollar weakens

Oil prices rose above $75 a barrel Wednesday, boosted by a weaker dollar. But gains were limited by a report showing an unexpected rise in U.S. supplies last week, a sign demand for crude may not be improving.

 

[loosecannon]

The increase in commodities is exactly the indicator of real currency debasement. Gold and oil, check, what's next?

 

[loosecannon]

I wasn't even suggesting that the GMAC news caused the dollar to drop like a rock.

But it wasn't caused by the fed's regurgitated announcement.

Something happened in the currencies exchange.

i wont put it past markets to herd behind the fed's announcement. you can say austerity, austerity, austerity and click your heels and they'll flock one way. say easing, and even if they'd seen it coming -- heard it the week before, they'll scramble the other way. states can and regularly do direct their currency policy through the press with more effect than a orchestra conductor.

Antagon, the same basic announcement was also offered weeks ago at the summit in the Tetons. And in both cases it was an if/then scenario.

Something real had to happen at 2PM yest to cause the dollar to drop like a stone. Last week Japan dropped $20 billion in one day to buy dollars as reserves and it only moved the yen a few%. Currency markets trade trillions of $s/day. It is expensive to manipulate currency values, but obviously Japan and China have been doing it for years.

What if China dumped dollars after the Fed's comments or the Fed bought 10 billion Euros?

 

[loosecannon]

so what is the full significance of ten year note yields dropping to 2.55%?

 

[antagon]

I wasn't even suggesting that the GMAC news caused the dollar to drop like a rock.

But it wasn't caused by the fed's regurgitated announcement.

Something happened in the currencies exchange.

i wont put it past markets to herd behind the fed's announcement. you can say austerity, austerity, austerity and click your heels and they'll flock one way. say easing, and even if they'd seen it coming -- heard it the week before, they'll scramble the other way. states can and regularly do direct their currency policy through the press with more effect than a orchestra conductor.

Antagon, the same basic announcement was also offered weeks ago at the summit in the Tetons. And in both cases it was an if/then scenario.

Something real had to happen at 2PM yest to cause the dollar to drop like a stone. Last week Japan dropped $20 billion in one day to buy dollars as reserves and it only moved the yen a few%. Currency markets trade trillions of $s/day. It is expensive to manipulate currency values, but obviously Japan and China have been doing it for years.

What if China dumped dollars after the Fed's comments or the Fed bought 10 billion Euros?

i'm implying, perhaps in light of the cost, that states use propaganda for currency manipulation, and let market participants do the busy work with their fear. easing and talk about easing take the same effect.

if the US showed fear over the dollar, then i think there could be some some shocking implications. snatching up 10B euros couldn't affect much by itself, but it could incite a wave of reactions many times the impact, i would think. my feelings, however, are that there's more fear at the Fed over specific deflation and undertarget inflation.

 

[loosecannon]

snatching up 10B euros couldn't affect much by itself, but it could incite a wave of reactions many times the impact, i would think. .

But Japan snatching up $20 billion dollars did change the value of the yen by a few % just last week. And both China and Japan actually DO hold about $800 billion in US dollar reserves (bonds and dollars) explicitly to suppress the value of their currencies.

In the case of China, maintaining that reserve allegedly suppresses the value of the renminbi by 27-40%.

 

[antagon]

that's japan. what would the fed or euro have to do to seriously budge currency values? i say going to the press for a few weeks about easing or greece, respectively, is a practical solution.

is it really a matter merely maintaining the reserve with china? there's draconian restrictions on currency demand in china to affect a peg to the dollar. this peg is deflating our economy.

i think in both china's and japan's case, they perceive an optimal exchange rate with the buck. backing with dollars makes that easier to manage, but japan's $20billion is a dusting compared to the fed's easing capacity or asset acquisition capacity. perhaps in anticipation of the fed digging deeper, japan is moreso moving their position closer to the dollar than they are expressly hoping to adjust the yen in the short term. dunno.

 

[Douger]

The only way a currency can rise in value is for a country to produce more.
Canada has increased natural resource production. So has Brazil, Uruguay, Paraguay, Chile, Colombia,Costa Rica, Mexico,India, Indonesia, Vietnam and many others in Latam and Asia.
The "West" has consumed everything and are turning into customers for the rest of the world.
It's time for "the little people" to have a real life now.
Another empire has died.A perfect example of what nations should NOT do, but inevitably will............ due to a major genetic fuckup. Greed.

 

[antagon]

i think economies are naturally deflationary, douger. all you have to do is stop printing new cash if you want to pump up currency.

interesting take on greed. maybe exploiting human resources and letting western charities handle poverty in your state is more altruistic than meets the eye.

 

[Mini 14]

As I've said, many saw this coming and started to prepare 2 years ago.

Some of us are now in a position that as the economy continues to fall, our personal position continues to improve. We "bet" on a bad economy, and we are raking in the chips now. It was an easy bet though, and the bottom is still coming (which means the top for some of us

Silver rocks like nothing else, and gold is decent too.

We've already sold 11 of the DDXVs, and they only came in yesterday at 3pm

(As an aside, I'm not impressed with this rifle after 300 rounds, other than the rail. Stick with Stag or Rock River for an "entry-level" AR, then add Daniel's rails. A little more money that way, but a much more stable, accurate, AR. The DDXV is mil-spec all day...and then some. It is "ok" but for the money, the Stag and Rock River blow it away).

 

[loosecannon]

that's japan. what would the fed or euro have to do to seriously budge currency values? i say going to the press for a few weeks about easing or greece, respectively, is a practical solution.

is it really a matter merely maintaining the reserve with china? there's draconian restrictions on currency demand in china to affect a peg to the dollar. this peg is deflating our economy.

China is employing draconian efforts to curb lending in it's banks to avoid overheating it's real estate market and discourage foreign investment in a RE bubble.

That would put pressure on the yuan to increase in value, not to suppress it.

I am afraid, Antagon, that the evidence of buying foreign reserves to support or suppress a national currency has too long and broad a history to be discounted.

And anybody with enough money to spend can manipulate currencies as readily as they can anything else. It's become a norm to do so.

Ironically the IMF was founded expressly to eliminate that practice because currency manipulations were a leading econ cause resulting in the Great Wars. Then they abandoned that role after the US terminated the gold standard and almost immediately Japan began the practice in full force.

Once Japan depegged from the dollar in the 80's the yen skyrocketed and they entered a long period of deflation despite printing over $50 trillion in yen that they distributed in the carry trade.

What recent history shows is that because the economy of the world is nearly seamless and national economies are closed systems, printing gazzillions of dollars doesn't do much to counteract deflation or cause inflation.

But buying foreign reserves in much smaller quantities does. I really have no idea why.

 

[antagon]

my answer is the propaganda effect i'm harping on. if you step out of character an buy up reserves in an ostensible panic, traders will panic along with you. look at iceland. attempt a peg or something (if you have not routinely done so for decades) and they'll make a run on their investment in a panic. in that event, the market's perception vastly outweighed the wherewithal of a sovereign state to counteract. making a big move on reserves shakes things up. the tsunami after the quake affects the adjustment.

as for china, they control demand for exchange entirely. hot RE aside, it is hot money they're concerned about, and this is where your 'anybody with enough money' axiom fails: when china says you can only exchange $500/day.

 

[loosecannon]

china has no control over the currency exchanges.

"making a big move on reserves shakes things up. the tsunami after the quake affects the adjustment. "

exactly my point. Somebody made a big move, just as Japan did a week earlier.