CDZ Stronger Dollar

[william the wie]

With China in the midst of the biggest bubble perhaps in human history, the EU having at least two entrants in the "We got get out of here" sweepstakes and Japan showing little response to stimulus or reform the US claim of being the best of the worst is getting stronger. This in turn is making the dollar stronger.

The EU, Japan and China combined are more than twice as big as the US in economic terms. Those three economies sinking into possibly deflationary stagnation will be a much bigger deal than the meltdown and there is no domestic solution to an external cause of economic crisis.

The roots of this unhappy situation are:

In retrospect it is clear that the meltdown was primarily a result of the Fed and Treasury ignoring clear signs of mismanagement at Bear Stearns and Lehman during the 1998 collapse of Long Term Capital Management. (Both banks were too strapped to pony up the money requested of them by the Fed and Treasury in the LTCM liquidation.) Minus that error that led to the Lehman bankruptcy and Bear Stearns forced merger with JPM the meltdown would have been a highly mitigated survivable disaster like the 2000-3 turndown.

Domestic and soon to be foreign fracking has broken OPEC but another side effect of fracking is that played out fields can usually be used as a source of renewable geo-thermal energy. The wells are deep enough to create steam from the heat differential.

The substitution of US automation for Chinese labor is causing massive capital flight and as foreign currencies sink as a result of capital flight exchange rate profits are sucking up more foreign capital. This in turn is financing faster automation and other high tech in the US. So what is the endgame?

 

[Josf]

Leaving out free markets as if free markets were not in the game is telling.

Open source, including open source government, including open source encryption of private information, including thereby open source financial services, including open source energy sources, including open source production with such open source inventions such as 3D printing, almost ensures the requirement that the closed source, counterfeit, tyrannical, criminal organizations must either lose market share slowly, then rapidly, then reach a point of insignificance, or escalate world war into an all out pogrom as was done in every other example of that type of final solution to the criminal zero sum game with that specific, cyclic, end game.

If moral people in positions of power exert their power there won't be a World War III escalated to that state in which all the world suffers, and in my opinion that will be the end of the age of the Petro-Dollar, and that will be the end of the age of world wide tyranny.

Free markets may yet prevail world wide.

 

[waltky]

Granny ain't worried - Obama'll just print some more an' sell `em to the Chinese...

US dollar’s tumble sends shockwaves through markets
Sun, May 01, 2016 - The US dollar is plunging so far, so fast, its shockwaves are reverberating far beyond the US$5.3 trillion-a-day foreign exchange market.

The greenback plunged the most this week since 2008 versus the yen after economic reports trailed forecasts, dampening the outlook for growth as US Federal Reserve policymakers await evidence needed to justify more interest-rate increases. The US currency has eroded more than half its 9 percent surge last year, with one measure of US dollar momentum approaching a level that indicates to some analysts that it is oversold and set to reverse direction. The US dollar’s dive has hurt investors in international stocks, boosted the price of US dollar-denominated commodities and higher-yielding assets in emerging markets, and complicated the task of central banks around the world that need weaker currencies to boost their economies.

Investors are increasingly unconvinced that growth in the US can make up for a slump elsewhere. A slate of reports scheduled for release next week, including a monthly payrolls release, may add to their qualms. “Any time that you’ve got a major reserve currency like the dollar falling, you tend to get a bid to other stores of value,” said William Northey, who helps oversee US$125 billion as chief investment officer in Helena, Montana for US Bank’s private client group. “From a broader capital markets perspective, there’s a couple of real benefits to the cessation of the dollar strength.”

The US currency tumbled 4.7 percent this week to ￥106.50, the largest drop since October 2008. It lost 2 percent to US$1.1451 per euro. The Bloomberg’s Dollar Spot Index slumped 2 percent, the most in more than a year, after touching its lowest level since May last year. Hedge funds and other large speculators extended bets on US dollar weakness after turning net bearish on the currency versus eight peers for the first time since 2014 last week.

US dollar’s tumble sends shockwaves through markets - Taipei Times

 

[william the wie]

It is getting interesting.