Open Question
How great is it to be an American?
We are socializing Fannie and Freddie which adds approximately $5 trillion in
debt to the U.S. balance sheet and will immediately cost $200 billion in
expenditures to shore them up. Our largest deposit bank, Washington Mutual, is
at $2/share. The FDIC only has $50 billion to cover $4 trillion in deposits.
Everybody knows of Lehman's troubles and is betting that Merril is next.
Inflation is at least 5.6%. Unemployment is at 6.1% with no signs of a turn
around. The Fed has warned that 3Q GDP will be much less than 2Q and 4Q isn't
expected to be much better. The Fed and Treasury have basically shot all their
bullets and now have to think of using the neutron bomb of the printing press.
You have all of this and yet: THE DOLLAR IS AT A ONE YEAR HIGH.
So basically the rest of the world, who lent us all of this money in the first
place, is running to the dollar as a flight to safety? Gold, a traditional
shelter in times of financial storms, is being taken to the woodshed. China has
taken its forewarned two month Olympic hiatus, but all things commodity related
are acting like China is done forever. Am I the only one that think this is
somewhat, ummm, NUTS?
Anyhow, Otto von Bismark was right on when he said that God smiles on fools,
drunkards and the United States of America.
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i wouldnt want a market that is easy and makes sense. THAT would be tough for
me.
everyone "didnt" know these things in 2006, when the dollar really
started its slide. it makes perfect sense in my mind. at the very hight of
liquidity, the Dow, the $USD plunged. when everyone in stocks--many of whome
dont trade with us in forex--get supremely bearish, and THEY start talking up
the inherent problems for the $USD, it turns. i think its beautiful.
why do forex traders not care? well for one the majors are ruled by technicals
80% of the time. secondly, theyve been saying what youve been saying for YEARS!
now, there is certainty on what the Fed has to take on. its no longer "oh
man things will get bad and they will have to..." not to mention it has
spread all around the world.
oh, and WM is NOT the largest deposit base in the USA, that would be BAC.
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it is amazing, but the rest of the world will/is buying our government debt hand
over fist. the paper that will come from all this nationalization. they
wouldn't be if they were still strong, and them buying our debt sends up the
dollar and actually hurts their money. our country has pretty much always been
state capitalist. maynard keynes is still right.
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ever think china put a hold on construction to get the prices to come down a bit
before they start buying again...plus maybe they are testing their effect on the
global market.
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Cramer is THE MAN !!!!!!!
:)
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