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Re: Coming Soon: Banking Crisis of Historic Proportions
TPC,
Understood.
I agree that there are definitely equally large structural issues in the ROW, and furthermore that the US financial institutions have apparently been able to 'pump and dump' several times in the past year+.
However my view is simple: the largest problems are in the US. A few nations such as Eastern Europe, the PIGS, and Japan might arguably be in worse relative shape but the US is absolutely in the worst absolute shape. This bodes poorly if the dollar is truly a proxy for national economic health.
Secondly, while there is an ingrained ROW habit of running to the dollar when times get bad, my view from my considerable contact with those outside the US is that this 'lab rat crack pedal reflex' of fleeing to the dollar in times of economic fear is getting significantly weaker with each vast Fed/Treasury expenditure.
Thirdly while there are debt problems in the ROW - a big chunk of this is US/UK related (bad mortgage securitizations) or EU loan related (Eastern Europe, PIGS). Those nations outside of the US and EU are still growing and will continue to do so albeit at a slower pace.
Lastly the real question concerning the US financial institutions (USFI) machinations is this: is the pie growing or shrinking?
If the overall pie is shrinking but USFIs are making money, then sooner or later the pie will be gone and so will the USFIs ability to manipulate.
In my study of the event leading to the crash of 1929 - I noted very similar behavior as what you describe: up until the actual point of no return was reached, the National City Bank, JP Morgan, and what not were able to maneuver the market into temporary obedience (and their own profits), but it did not take long before even the most drastic actions failed.
So whatever your strategy is, keep this past example in mind.
TPC,
Understood.
I agree that there are definitely equally large structural issues in the ROW, and furthermore that the US financial institutions have apparently been able to 'pump and dump' several times in the past year+.
However my view is simple: the largest problems are in the US. A few nations such as Eastern Europe, the PIGS, and Japan might arguably be in worse relative shape but the US is absolutely in the worst absolute shape. This bodes poorly if the dollar is truly a proxy for national economic health.
Secondly, while there is an ingrained ROW habit of running to the dollar when times get bad, my view from my considerable contact with those outside the US is that this 'lab rat crack pedal reflex' of fleeing to the dollar in times of economic fear is getting significantly weaker with each vast Fed/Treasury expenditure.
Thirdly while there are debt problems in the ROW - a big chunk of this is US/UK related (bad mortgage securitizations) or EU loan related (Eastern Europe, PIGS). Those nations outside of the US and EU are still growing and will continue to do so albeit at a slower pace.
Lastly the real question concerning the US financial institutions (USFI) machinations is this: is the pie growing or shrinking?
If the overall pie is shrinking but USFIs are making money, then sooner or later the pie will be gone and so will the USFIs ability to manipulate.
In my study of the event leading to the crash of 1929 - I noted very similar behavior as what you describe: up until the actual point of no return was reached, the National City Bank, JP Morgan, and what not were able to maneuver the market into temporary obedience (and their own profits), but it did not take long before even the most drastic actions failed.
So whatever your strategy is, keep this past example in mind.
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