The dollar is dead: long live the ?

It appears that the US dollar will not be able to continue to act as a reserve currency ( 9 trillion and increasing US national debt, rapidly declining value of the dollar, loss of confidence etc...).

There is talk of the Euro or the Yuan as an alternative reserve currency and also of a return to the gold standard.

I have no idea how feasible the former is, and had understood that a return to the gold standard was considered
so deflationary that the political and human price could not be paid. What are the alternatives, and can we survive any of them?

http://www.dollardaze.org/blog/?post_id=00352

The very simple solution was given by Jimmy Rogers last week on cnbc Europe. Get your paws on some gold right now by hook or by crook as the Euro only looks good compared to the dollar that could crash as soon as sunup tomorrow. Knowing my luck Wall Street will crash tomorrow after I selling my google short position. I still have apple and nordstom short. What we have yet to see is serious selling in the US Treasury Bonds. When this happens the real panic will happen as the interest rates rise quickly. Fortunately anyone that listened on the iseq thread will have paniced 6 months ago and sold out before it finally cracked 6000 last Friday. They will have bought silver at 12 dollars and gold at 650 dollars. So sell now as I will repeat this message when it cracks 5000 on the iseq.

Cracks 5000? dan you're mad - there's no way it can go that low - there is a lower limit of these things to which the value will fall before major international investors pick up the good bargains.

Isn't there ... ?

I'm really struggling to imagine how a gold standard implementation would work though in such a varied and extensive globalised economy as we have. But what's the alternative..? It all comes down to THE commodity which matters at the moment.

Auditor #9 wrote:

Cracks 5000? dan you're mad - there's no way it can go that low - there is a lower limit of these things to which the value will fall before major international investors pick up the good bargains.

Isn't there ... ?

I'm really struggling to imagine how a gold standard implementation would work though in such a varied and extensive globalised economy as we have. But what's the alternative..? It all comes down to THE commodity which matters at the moment.

If you can't stock up on gold, perhaps a cache of baked beans???

Bear Stearn has just been sold for two dollars a share

I heard a guy on the radio on Friday evening (Newstalk), said if you bought gold in 1979, you would now be making a loss.

Gold today is $1000/oz.
1979 price $600/oz. but adjusted for inflation is considerably more.

Ehhh. Now I'm confused myself.

The analogy was :

Regardless of the times we live in, an ounce of the Au stuff can buy you a fine suit of clothing. Apparently it cost an ounce of gold for a fine suit in Shakespeare's time also.

Is gold not the same as property then ?

DeGaulle wrote:

Bear Stearn has just been sold for two dollars a share

To some big euro bank? I wouldn't be surprised if the arabs or chinese bought it. And there will be more of this you'd think.

Auditor #9 wrote:

DeGaulle wrote:

Bear Stearn has just been sold for two dollars a share

To some big euro bank? I wouldn't be surprised if the arabs or chinese bought it. And there will be more of this you'd think.

JP Morgan bought them, according to the NY times.

I am regreting my selling of the google short more by the minute. Gold up 20 dollars an ounce should move newmont and hecla up nicely to ease my disgust somewhat. Bear Sterns going for 2 bucks will increase the loss by this english guy Lewis to 1.2 billion if he did not sell Friday. The Fed has also cut the discount rate by .25%. I have to read up on this as it appears totally inept as their scheduled meeting is this week where a .75% cut was expected. The absence of the 2 optimists and the 2 bearish posters will be sadly missed tomorrow. If it is the same Kerrynorth elsewhere then maybe he will show up and hopefully Anorak is short to the max.

If you go by the rate the Irish Punt converted to Euros at, the Punt is now worth more than the UK Pound.

DeGaulle wrote:

If you go by the rate the Irish Punt converted to Euros at, the Punt is now worth more than the UK Pound.

That wrecks my head. We converted at .787 and the StgPound was 1.60 Punts . I think.


How can that happen?

Mind you , Blairs(Browns) Party now at 27%. Tories at 46%, LibDems 16%
Seems like the Brits are fed up with ""Socialism"""

How do the brits feel about joining the euro now?

Or the americans

EvotingMachine0197 wrote:

DeGaulle wrote:

If you go by the rate the Irish Punt converted to Euros at, the Punt is now worth more than the UK Pound.

That wrecks my head. We converted at .787 and the StgPound was 1.60 Punts . I think.


How can that happen?

Mind you , Blairs(Browns) Party now at 27%. Tories at 46%, LibDems 16%
Seems like the Brits are fed up with ""Socialism"""

The French seem to be giving "Socialism" a lash after a few months of Sarkozy.

Lewis and Barrow Hanley lost 2 billion on Bear Sterns.

Oil is at 111....

Lads, if any of you out there are dealing with a nasty financial crunch, don't do anything foolish, we will be there for you if you want to talk about it, not like those nasty people at Propertypin who just point and laugh.

cactus flower wrote:

Lads, if any of you out there are dealing with a nasty financial crunch, don't do anything foolish, we will be there for you if you want to talk about it, not like those nasty people at Propertypin who just point and laugh.

This is what someone posted on the pin just as the ISEQ heads for 5500. Evil schadenfreudic bastards. Cool image all the same.

Auditor #9 wrote:

cactus flower wrote:

Lads, if any of you out there are dealing with a nasty financial crunch, don't do anything foolish, we will be there for you if you want to talk about it, not like those nasty people at Propertypin who just point and laugh.

This is what someone posted on the pin just as the ISEQ heads for 5500. Evil schadenfreudic bastards. Cool image all the same.

Aaaaargh Auditor, I didn't want to see that. As Youngdan reminds us, when depression hits, the politicians reach for war. We will have a job on our hands to keep them in order.

The internet doesn't break if there's a nuclear war, right?

(sorry, this is way off-topic - I should moderate myself)

Far be from me to be pessimistic so I would opine that millions of lives are being saved as these markets fall. This is the only thing that can prevent a big war. Why there is even a chance that Ireland might send the Europe lovers into exile and stand on it's own 2 feet for a change. Just watch Chief Yellow Jacket blame everyone but himself for this disaster as he looks to Trichet. He did not have the brains to screw like Blair and collect millions for selling out his country for money to build a road through Tara. Today he will be in the Whitehouse with some grass when he should be in the Bighouse cutting grass.

It is somewhat surprising that the metals did not pull back more in the last while. It has been noted before that when the rates are to be cut the dollar is bid up and gold sold down in the days prior. Then we return to near before on the cut. So we await the gold action if the cut is a full point as some hope for. The long bonds are selling today and pushing up rates.

youngdan wrote:

Far be from me to be pessimistic so I would opine that millions of lives are being saved as these markets fall. This is the only thing that can prevent a big war. Why there is even a chance that Ireland might send the Europe lovers into exile and stand on it's own 2 feet for a change. Just watch Chief Yellow Jacket blame everyone but himself for this disaster as he looks to Trichet. He did not have the brains to screw like Blair and collect millions for selling out his country for money to build a road through Tara. Today he will be in the Whitehouse with some grass when he should be in the Bighouse cutting grass.

Would be interested in your views on how our little and exposed economy could "stand on its own two feet".
The strategy so far seems to be to tie ourselves tight to someone elses coattails and hang on tight for the ride.
Given the divergent spiralling paths of the two coat owners, the US and UK, it should be an interesting one.

Daunted by all this high-falutin' talk of markets and deflation, I remembered an article that translated all this into everyman terms: As Jay-Z disses the dollar, how much is 50 Cent worth in euro?

I liked the bit about crack dealers only accepting euros now. The end is nigh I tells ya!

Cactus. The mantra is that Ireland could not survive outside the EU. Well how do countries with less advantages than Ireland survive. The country is going down the tubes not only economically but everyother way as well. Now it will have to pay in to keep a vast buerocracy fed in Europe. Get out now and try to revive agriculture and tourism which I understand to be dead. Wind power and brain industry is the way to go. But most importantly if the country does not control the value of it's own currency it will be priced out as is now happening with the Euro. Ireland is going down the tubes. I am in Massachusetts and who from here is going to visit Ireland with the Euro at 160 and rising and transport costs the way they are.

This is what all the bigshots are saying - doesnt sound pretty

http://www.independent.co.uk/news/business/analysis-and-features/the-financial-crisis-how-bad-is-it-797119.html

Quote :

The financial crisis: How bad is it?





As the global markets reel
from one calamity after another, nobody can be sure when the turmoil
will end. Leading figures from the worlds of finance and economics
offer their analysis of the deepening crisis






Tuesday, 18 March 2008




Alan Greenspan, former chairman, US federal reserve

"Particularly hard hit will be much of today's financial risk-valuation
system. It will eventually fail and a disturbing reality will be laid bare
... It is important, indeed crucial, that any reforms in ... the structure
of markets and regulation do not inhibit our ... safeguards against
cumulative economic failure: market flexibility and open competition."

Robert Rubin, Former US Treasury Secretary

"I believe the risks are serious enough to call for substantial
additional action in the mortgage area, assuming that measures can be
adopted that, when the pros and cons are weighed out, are sensible. With
respect to economic risk ... I have been around financial markets for a long
time and I believe we are in somewhat uncharted waters."

Lawrence Summers, former US treasury secretary

"The underlying illness is serious financial problems and a major credit
crunch. That means doing things about mortgages. That means infusing capital
into financial institutions. It's a near-certainty [the US] is in a
recession and there is a real prospect that it could be a serious one
without strong policy action."

Alan Blinder, former economic adviser to President Clinton

"The Fed has been playing the equivalent of Whac-A-Mole as financial
turmoil keeps cropping up in unexpected places – yet many of the problems
are beyond its reach. Whether we'll have a technical recession remains to be
seen. Even if we don't, we're skittering along at very minuscule growth
rates."

Terry Smith, chief executive, Tullett Prebon

"I have been working in finance in the City and worldwide for 34 years
and I have never seen anything like this. I don't think anybody alive has
seen events of this seriousness and magnitude affecting the markets ... High
interest rates didn't cause this problem, so lowering them isn't going to
solve it. It is hard to see exactly what tools the authorities do have."

Vince Cable, treasury spokesman, Liberal Democrats

"The longer the credit crunch grips the money markets the more likely it
is we will see bank failures and the more serious the repercussions will
become on the wider economy. There is now a serious danger that higher costs
of borrowing falling on consumers and business will cause an even more rapid
slowdown in growth than currently forecast."

George Magnus, senior economics adviser, UBS

"How close is the financial industry to recognising the full value of the
writedowns? I'd be surprised if we were more than a third of the way
through. Once this gathers momentum it is very difficult to stop. The
economic implications are far worse than people think, and the policy
solutions far more dramatic."

Richard Bernstein, US strategist, Merrill Lynch

"The demise of Bear Stearns should be viewed as the first of many. Assets
remain overvalued, earnings momentum is weak and sentiment is catching on as
to how broad and deep the credit market bubble has been. In the 1989-1991
cycle, about 25 per cent of financial sector companies went away via merger,
acquisition, or bankruptcy."

Stephen Lewis, economist, Insinger de Beaufort

"Many of the biggest market makers in the credit area have been severely
damaged and that has severely reduced their capacity to take risk, any sort
of risk. Capital is very scarce because so much of it has gone to fund the
write-downs. Managers are very averse to taking any kind of position in the
market that might go the wrong way and wipe out a bit more of their capital."

Nouriel Roubini, Professor of economics, Stern Business School

"This is the most radical change and expansion of Fed powers and
functions since the Great Depression: essentially it now can lend unlimited
amounts to non-bank, highly leveraged institutions that it does not
regulate. [By doing this] ... the Fed is taking serious financial risks."

Julian Jessop, Chief international economist, Capital Economics

"[The US Federal Reserve's measures underline] both the seriousness of
the financial crisis and the Fed's determination to pull out all the stops
to prevent it from getting any worse. The most worrying aspect is that the
Fed felt it could not wait until its scheduled one-day meeting tomorrow."

Tim Steer, fund manager, New Star Asset

"It's time for the banks to face reality. This crisis is of the banking
sector's making and it is high time banks faced up to their combined
responsibilities, put their collective heads together and found a way out of
it. Magic wands, like those waved by Bernanke are all very well, but aren't
a lasting solution."

Melanie Mitchley, director, Callcredit

"This should be a real wake-up call to consumers. People need to start
thinking about how the reality of the credit crunch is going affect their
own financial situation ... A quarter of all UK consumers have become more
concerned about their finances and confidence has been shaken. Consumers
need to move from the buy now, pay later attitude to the save now, buy later
mentality."

Stephen King, MD, economics, HSBC

"It's as if financial investors have almost given up on America. In the
early 2000s, they gave the US economy the benefit of the doubt, replacing
equities with investments in new, mortgage-backed securities. These were
ultimately no more than loans to a housing market which turned to dust."

Philip Shaw, chief economist, Investec

"The Bank of England's actions highlight the extent to which the UK is
vulnerable to the dislocations in credit markets. The thinking is that if
technical measures to reintroduce liquidity to markets fail, the MPC could
cut the bank rate more aggressively."

Reporting by Simon Birritteri

What's the mood among regular people, youngdan? How are they responding (if at all)?

youngdan wrote:

Cactus. The mantra is that Ireland could not survive outside the EU. Well how do countries with less advantages than Ireland survive. The country is going down the tubes not only economically but everyother way as well. Now it will have to pay in to keep a vast buerocracy fed in Europe. Get out now and try to revive agriculture and tourism which I understand to be dead. Wind power and brain industry is the way to go. But most importantly if the country does not control the value of it's own currency it will be priced out as is now happening with the Euro. Ireland is going down the tubes. I am in Massachusetts and who from here is going to visit Ireland with the Euro at 160 and rising and transport costs the way they are.

So we should leave and take our fisheries with us?.... Would they let us go?

Most people here do not grasp the relationships between cause and effect. Few people ask where the money for universal health care is to come from or where the money spent on the war came from. Because the war cost has been borroweed the effect has been hidden. The dollar drop never enters their mind. I paid 8 dollars for a pound of turkey breast the other day but to explain that to someone would be likely to have ended me in a mental hospital. Things like food and petrol that were always very cheap here are now rising. Petrol is 3.25 a gal but today I saw diesel at over 4 dollars. That is a outlandish price here. The economy here is about 6 month ahead of Ireland. I feel regular people are in dire straits here but this has not shown in political anger yet. The work situation for Irish in construction has never been as bad but this is also due to Brazilian competition as well as a real estate crash. The day that the US has difficulty in their treasury bond auctions because of lack of foreign interest is the day that the Iraq war will end because if people had to open their wallet overtly rather than the hidden way at present few would think it worth it. Fantasy continues today once again.