tag:blogger.com,1999:blog-11719208.post5663062498064617046..comments2023-11-05T04:36:14.223-08:00Comments on The Mess That Greenspan Made: Cheap dollars and the next financial crisisTimhttp://www.blogger.com/profile/16530974968126497397noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-11719208.post-20213848060109202212009-09-14T11:16:35.361-07:002009-09-14T11:16:35.361-07:00I think the mainstream investment community still ...I think the mainstream investment community still poo-poos gold. Ask around. Do any of your friends and family own gold (i.e., ones that you haven't already twisted their arm to do so)?Timhttps://www.blogger.com/profile/16530974968126497397noreply@blogger.comtag:blogger.com,1999:blog-11719208.post-19366330227224937582009-09-14T10:26:49.855-07:002009-09-14T10:26:49.855-07:00Thanks Tim.
If there is such a carry trade occuri...Thanks Tim.<br /><br />If there is such a carry trade occuring AND there is a surplus of dollars around to boot (allowing the carry trade in the first place) then what on Earth is holding up the dollar? Why isn't it plummeting? Is it just that the alternatives (Euro, Yen) look crappy too? Then why not gold if all the currencies are bad investments for sustaining value?<br /><br />I mean, if there is an oversupply of all currencies, and that seems to be the case, why isn't gold picking up the slack more?Vespuciannoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-29925213843057486552009-09-14T09:09:07.915-07:002009-09-14T09:09:07.915-07:00Vespucian,
Currencies used for the carry trade ar...Vespucian,<br /><br />Currencies used for the carry trade are artificially weak, similar to the Japanese yen a few years ago when it was trading at 125 per dollar (now it's at 90). When the carry trade "unwinds", the carry trade currency strengthens since borrowers are selling the higher yielding currency/asset to pay back the "carry trade currency denominated" debt. <br /><br />What Halligan is saying is that there is currently a dollar carry trade that is making the dollar artificially weak and nowhwer does this seem more clear than against the British pound.Timhttps://www.blogger.com/profile/16530974968126497397noreply@blogger.comtag:blogger.com,1999:blog-11719208.post-54707011642920697402009-09-14T05:43:33.589-07:002009-09-14T05:43:33.589-07:00Regarding the dollar carry trade, Dennis Gartman o...Regarding the dollar carry trade, Dennis Gartman of The Gartman Letter, has been discussing this for months.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-59336666292644231762009-09-13T21:35:41.465-07:002009-09-13T21:35:41.465-07:00Hi Tim,
Long time no see.
Hey, I must be missin...Hi Tim, <br /><br />Long time no see.<br /><br />Hey, I must be missing something in Halligan's piece. How exactly would this cause the dollar to rise? Seems to me an oversupply of dollars leads to nothing but one conclusion: Dollar depreciation.<br /><br />And Chinese "divesment"? Sure, they want to switch to SDR's but aren't they still buying up DDA's like crazy? I think if anything the Chinese are still buoying the dollar. Isn't that the case?<br /><br />Please forgive me if you're being ironic with us and I didn't catch it.Vespuciannoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-25848822785332517892009-09-13T20:22:30.509-07:002009-09-13T20:22:30.509-07:00I'm glad you mentioned LTCM. The problem then...I'm glad you mentioned LTCM. The problem then was/is that big Wall Street firms were told to "chip in" and fix the problem (pay off LTCM's counterparties). That established the precedent that all problems can be and should be fixed. One of America's strengths is the belief that evey problem has a solution. Unfortunately that reinforces the idea that every crisis should be "solved". In this case, the "crisis" (credit crunch, failure of banks en masse) IS THE SOLUTION to the problem of too much debt. Unfortunately, not enough banks (esp the big ones) have been allowed to die. Yet. Sure it will be tough when they do implode, but only after excess debt is defaulted can we move forward in a sustainable way. Printing money and borrowing at an insane rate is not sustainable, by the way.<br /><br />Ebola is a horrible disease, but one reason it's never gone worldwide is that - thankfully- it kills its victims so quickly that outbreaks peter out. If we could extend the lives of doomed Ebola patients by a few months, it could wreak havoc on the world. Same thing with trying to help zombie banks limp along. Helping them will eventually bring about our sovereign financial demise.<br /><br />Everything we have been doing is wrong, even if it seems (temporarily) to be working. All of the bailouts and gov't guarantees are the wrong approach. The debt level was/is too high. Bad debt should default - not be made whole by the government. Who's going to backstop the US government? <br />Cricket...cricket...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-70355560298088336232009-09-13T15:15:19.007-07:002009-09-13T15:15:19.007-07:00" The dollar carry trade. You herad it here f..." The dollar carry trade. You herad it here first." <br /><br />Stephanie Pomboy of Macro Mavens and Randall Forsyth of Barron's, who has been quoting her, have been on this theme for many, many months.Anonymousnoreply@blogger.com