Massive Dollar Collaspe

[Mega]

http://www.telegraph.co.uk/finance/4...-collapse.html
Mike

[D-Mack]

Re: Massive Dollar Collaspe

Writing on his blog, Prof Buiter said: "There will, before long (my best guess is between two and five years from now) be a global dumping of US dollar assets, including US government assets. Old habits die hard. The US dollar and US Treasury bills and bonds are still viewed as a safe haven by many. But learning takes place."

So he gives it 2 to 5 years, pretty much time.

Others probably agree

Watch the Dollar

By Dean Baker

...
But once the financial situation begins to return to normal (which might not be in 2009), investors will be unhappy with the extremely low returns available from dollar assets. Their exodus will cause the dollar to resume the fall it began in 2002, but this time, its decline might be far more rapid. Other countries, most notably China, will be much less dependent on the U.S. market for their exports and will have less interest in propping up the dollar.

For Americans, the effect of a sharp decline in the dollar will be considerably higher import prices and a reduced standard of living. If the U.S. Federal Reserve becomes concerned about the inflation resulting from higher import prices, it might raise interest rates, which could lead to another severe hit to the economy.

As for 2009, the ongoing collapse of the housing bubble, the coming collapse of the commercial real estate bubble, and the ensuing wave of bad debt will all be major sources of drag on the U.S. economy—even if the dollar bust happens later.

http://www.foreignpolicy.com/story/c...?story_id=4591

[Southernguy]

Re: Massive Dollar Collaspe

Well, on the currency front nothing noteworthy happened today, but the 30 years Tīs yield jumped 8%.
Has the treasuries bubble begun to deflate?
I suspect there shall be a close relationship between China exporting far less to the USA and a strong pressure on prices of Tīs. If the Chinese get less dollars, then, independently of their wishes they shall be buying less Tīs.
And thatīs another source of their depreciation.
Iīm personally still buying TBT.
Each day looks a better deal.

[walenk]

Re: Massive Dollar Collaspe

Well, on the currency front nothing noteworthy happened today, but the 30 years Tīs yield jumped 8%.
Has the treasuries bubble begun to deflate?
I suspect there shall be a close relationship between China exporting far less to the USA and a strong pressure on prices of Tīs. If the Chinese get less dollars, then, independently of their wishes they shall be buying less Tīs.
And thatīs another source of their depreciation.
Iīm personally still buying TBT.
Each day looks a better deal.

You seem to have a nice feel for credit dynamics. where do you look for commentary. The equity, stock market area, is as chockablock with knaves, fools, and charlatans as it every was. Take your pick, named fools (motley), Cramer clowns, and my personal favorite "what's that white stuff on your lip, Kudlow?".
Who covers credit best? ;)

[Southernguy]

Re: Massive Dollar Collaspe

Walenk:
What feelings Iīve got for these, and other economic matters come from reading Itulip, some N. Roubini and much of the same one can find everywhere.
Motivated by something written by EJ (I think it was him), I began to focus on the evolution of Treasuries prices.
And I found the evolution of the 30 years Tīs, which was quite astonishing. The most indebted country on earth paying the least interest on debt for the 30 years record I could find.
We had a short discussion here on another thread, not long ago on the matter, some fellow, I canīt remember whom said he was waiting to TBT to go to the 25īs to come in.
Now itīs 40 something, but who knows?
Maybe in a couple months itīs under 30. But what I find compelling is that in the medium term the fundamentals are very very strong.
Treasuries have no other way but down. The only reasoning I didnīt read anywhere (at least I donīt remember doing) itīs the one vinculating Chinaīs export crisis with the probable evolution of treasuries.
Probably today anouncements of tax rebates, jointly with ever growing spending by Obama fired the treasuries selling, but I really (again), donīt know.
Hope it was of some use to you.

[oddlots]

Re: Massive Dollar Collaspe

Walenk,

I've been reading John Jansen for awhile at Across the Curve:

http://acrossthecurve.com/

I should be qualified to place a fixed income trade by about 2012.

But good commentary I think.