World economy talk

[tidus1203]

That's why I believe in the long run INFLATION and not DEFLATION will be the problem. Yes right now, there is deflation in some commodities and financial instruments (by the way even in a recession we still have a positive CPI in the US meaning we still have positive inflation in the economy right now) because the economy is tanking and demand is suffering. But if you believe that the economy will recover again then all those money they printed now will start chasing goods in the real economy and thus inflation.

[uls]

Just wait for the Obama stimulus package

the amount will be more than half a trillion dollars

[tidus1203]

With Mr. Obama's liberal economic policies plus a Democratic controlled lower and upper house, the spending and debt will just rise. The thread will become even more relevant during an Obama administration.

[uls]

Gold rising

LONDON, Nov 24 (Reuters) - Gold gained more than 3 percent on Monday as investors, worried about the state of the global financial system, jumped into quality investments. Spot gold rose to $825.20 an ounce, touching its highest level since Nov 16 and was at $818.5/$811 an ounce at 1512 GMT from $799.45 on Friday.

[uls]

Rogers Says Dollar Will Be ‘Devalued,’ Commodities Are a Buy
http://www.bloomberg.com/apps/news?p...k3g&refer=home

Nov. 25 (Bloomberg) -- The U.S. dollar will be “devalued” as policy makers seek to weaken it, undermining the greenback’s role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore.

The dollar is “going to lose its status as the world’s reserve currency,” Rogers said yesterday in an interview with Bloomberg Television. “It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.”

[jeDi13]

so it's time to buy some euros or yens?

[tidus1203]

No not the Euro, the Yen yes you can buy it even at these levels. Ultimately though in currencies you can't hold on to them forever you have to have an exit plan. I plan to get out of my Yen positions if it reaches 85-86, I suspect at these levels there will be a lot political pressure already. If it breaches back past 102 then I will also close my trade as a form of protecting my gains.

[uls]

Jim Rogers has been buying yen months ago

“If I were doing it today and what I have done today is buy the yen,” Rogers said. “But, it is also an artificial move that’s going on. It’s a difficult problem to find out what is a sound currency.”

there really are no sound currencies

all the world's currencies are backed by nothing but faith

currencies used to be backed by gold decades ago...

now it's just thin air

[tidus1203]

Right! At the end of the day while some fiat money is superior to others they are all still backed by the idea that the government issuing them can pay you back. The problem is they always can cause they can print money indefinitely, but inflation risk is the concern.

[tidus1203]

Now the Fed is getting even bolder and instead of central banking they are now taking personal banking as well. Now the Fed will directly loan out money to banks specifically to be used for consumer borrowing. What is that? Wasn't it the over consumption of US consumers and over borrowing that got us here? The availability of cheap credit and all the recklessness associated with it? Now they want to do it again and reflate the bubble consumption that was based purely on credit and not rising incomes and prosperity... Why are these fools running the show?

http://biz.yahoo.com/ap/081125/financial_meltdown.html

[uls]

from the article:

The Federal Reserve will purchase $200 billion in securities backed by different types of debt including credit card loans, auto loans, student loans and loans to small businesses. That market essentially froze in October. These types of loans as a result have become harder to obtain and have carried higher interest rates

The Fed also announced that it would spend $500 billion to purchase mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks.

the Fed is gonna buy securities backed by credit card loans, auto loans, student loans and loans to small businesses, and mortgage-backed securities and buy mortgages directly.

Now the banks have somewhere to dump those hard-to-value, illiquid assets

Now they can make new loans and securitize them and sell them to the Fed

hey it's pre-meltdown 2006 again

[tidus1203]

http://finance.yahoo.com/expert/arti...hricher/124339

Interesting article by Robert Kiyosaki. Its kinda border line conspiracy theory, but it does make sense. The Fed was made as a private bank with the power to control the issuance of money just to serve the interest of the rich The Fed is making a Zimbabwe out of the world

[uls]

As the US govt and the Fed try to calm the markets (it's working), investors'/speculators' appetite for risk returns.

The safe haven status of the USD will diminish as greed starts to overtake fear

NEW YORK, Nov 25 (Reuters) - The U.S. dollar dropped for a third day against the euro on Tuesday, giving the euro its best three-day percentage advance ever, as new U.S. measures to boost consumer lending helped ease concerns about the financial crisis, diminishing demand for the dollar as a haven.

[tidus1203]

Yep huge gains by the Euro, the Aussie, the Kiwi, the Swissy, and Cable. Interestingly the Yen didn't budge by a lot. These currencies are so hard to predict they just jump all around the place.

[uls]

The dollar rally in the past months is just global risk aversion.

investors all over the world lost confidence in the financial system.

They fled to the safety of US govt bonds.

They had to buy dollars to buy US govt bonds.

that explains dollar demand.

As things stabilize, investors will go back to stocks and commodities.

[tidus1203]

Guess who is the biggest hedge fund???




















ITS THE US GOVERNMENT!!!!! Hank Paulson being the CIO of the fund and Bernanke the CFO . But this is one powerful hedge fund. A regular hedge fund would have limited amount of capital and have to take a lot of risk. While the government has the power to print money in case it had losing trades And its risk free cause again they could print more money if they lose. If they win, good for Uncle Sam I am sure he will create expand the bureaucracy even more!

http://blogs.wsj.com/deals/2008/10/0...st-hedge-fund/

[uls]

hahaha

hey, i posted this on page 12 of this thread (sept 23)

The US Treasury dept and the Fed have become one huge private equity firm.

i'll call them Paulson Bernanke Capital Partners LLC

They own 2 mortgage companies - Fannie and Freddie

They own 80% of the world's largest insurer - AIG

They own a $29B stake in Bear Stearns

Soon they will own all the troubled assets of the banks...

---

at the rate they are going, the Fed and US govt will soon own everything in America

hehe

[tidus1203]

Now I understood why Hank Paulson left Goldman Sachs for government work. Because at Goldman Sachs he had limited capital and unlimited risk. Now he wanted to move to a bigger fund with no risk. PANALO!

[uls]

And at Goldman, he's just CEO

but in the US Treasury, he is Master of the Universe

[Monseratto]