moonman
09-12-2007, 12:12 AM
Okay moon, so if there is going to a collapse in the financial markets this October, how come we aren't seeing any real signs of it yet. The Dow is up 7% on the year. Not great but better than bank interest rates, bonds and real estate.
The Dow is not reflecting the US domestic market. The profits Dow companies are earning are virtually all from overseas operations.
Last week alone, while central banks mouthed support for the USD, the net result was the central banks dumped more than 48 billion USD's and treasury notes onto the market. While that was going on our Fed pumped 32 billion in new money into the system buying back those notes, USD's and CDO's based upon mortgages gone bad.
Those are the numbers from last week and it follows a trend that began two months ago when the Chinese announced they were divesting their holdings of USD's and treasury notes.
In other words the world is abandonning the world's reserve currency. With good reason of course. We've indulged virtually half a century of deficit financing with the only exceptions being one Clinton and one Eisenhower year when the budget was balanced.
And that's why I say if you really want someone to blame look in the mirror. For a half a century we have supported the party that promised a free lunch. When the Republicans were advocates of fiscal repsonsiblity (1947 through 1979) they were the minority party. The Democrats only became the minoirty party when they began advocating fiscal responsibility under Carter.
As the global economy grows, and it most surely will, central banks will reduce their exposure to USD's directly proportionate to the amount of trade within that banks jurisdiction is doing with the USA. 30% of everything traded in the world is done with the USA, except we aren't paying for it COD. We're financing it.
Financial paper is the virtual economy. Things we make and/or grow is the real economy. Fact is we don't make much anymore and we are quickly becoming a net food importer. Thank you NAFTA and the WTO.
We have so distorted the virtual economy with funny money that nobody knows what value in USD's means anymore. The real economy, that part which is still left will survive. The virtual economy, the financial markets mirroring the real economy are getting wiped out.
The actions of central bankers is not lost on the big dolla global investors. They will follow the bankers and divest as themselves of USD's and treaurys as well. Sometimes the private money runs ahead of the banks sometimes behind. There is rarely anytime when they run counter for more than 90 days.
Our time is up next month.
The Dow is not reflecting the US domestic market. The profits Dow companies are earning are virtually all from overseas operations.
Last week alone, while central banks mouthed support for the USD, the net result was the central banks dumped more than 48 billion USD's and treasury notes onto the market. While that was going on our Fed pumped 32 billion in new money into the system buying back those notes, USD's and CDO's based upon mortgages gone bad.
Those are the numbers from last week and it follows a trend that began two months ago when the Chinese announced they were divesting their holdings of USD's and treasury notes.
In other words the world is abandonning the world's reserve currency. With good reason of course. We've indulged virtually half a century of deficit financing with the only exceptions being one Clinton and one Eisenhower year when the budget was balanced.
And that's why I say if you really want someone to blame look in the mirror. For a half a century we have supported the party that promised a free lunch. When the Republicans were advocates of fiscal repsonsiblity (1947 through 1979) they were the minority party. The Democrats only became the minoirty party when they began advocating fiscal responsibility under Carter.
As the global economy grows, and it most surely will, central banks will reduce their exposure to USD's directly proportionate to the amount of trade within that banks jurisdiction is doing with the USA. 30% of everything traded in the world is done with the USA, except we aren't paying for it COD. We're financing it.
Financial paper is the virtual economy. Things we make and/or grow is the real economy. Fact is we don't make much anymore and we are quickly becoming a net food importer. Thank you NAFTA and the WTO.
We have so distorted the virtual economy with funny money that nobody knows what value in USD's means anymore. The real economy, that part which is still left will survive. The virtual economy, the financial markets mirroring the real economy are getting wiped out.
The actions of central bankers is not lost on the big dolla global investors. They will follow the bankers and divest as themselves of USD's and treaurys as well. Sometimes the private money runs ahead of the banks sometimes behind. There is rarely anytime when they run counter for more than 90 days.
Our time is up next month.