Dollar's difficulty continues

[UpInArms]

http://www.chicagotribune.com/business/chi-0411270229nov27,1,7800794.story?coll=chi-business-hed

(free registration or try www.bugmenot.com)

The dollar fell against the euro for a seventh straight week, its longest losing streak in 10 months, over concerns foreign investors and central banks may reduce holdings of U.S. assets.

Bank of England Chief Economist Charles Bean said international investors are unlikely to keep buying U.S. assets indefinitely, resulting in a "possibly substantial" drop in the dollar. The U.S. currency fell to a record Friday after China Business News reported that Chinese central bank official Yu Yongding said his country had trimmed its holdings of U.S. Treasuries. He later denied making the statement.

"What we're seeing now is far more than just speculation; these are real fundamental shifts in portfolio allocations from official and private entities, and that could continue and see the dollar selling accelerate," said Derek Halpenny, a currency strategist at Bank of Tokyo-Mitsubishi Ltd. in London.

<snip>

"There's no reason to be brave right now" and buy dollars, said Robert Sinche, head of currency strategy at Banc of America Securities LLC in New York. Given the "tacit approval" from policymakers that the dollar needs to drop, "why would you get on the other side of it?"

<snip>

"The real risk is that the sharper and the quicker the dollar falls that these investors pull out pretty quickly from U.S. markets," said Mitul Kotecha, global head of currency research in London at Calyon, the investment-banking unit of Credit Agricole SA.

...more...

and http://www.ameinfo.com/news/Detailed/49432.html

Markets set to push dollar lower

The US dollar fell against all other majors weighed down by concerns over the massive US trade deficit, lack of action among US policy-makers to slow the dollar's slide and speculation that some central banks are increasing their euro holdings.
The week ahead will be the busiest of December, with a raft of U.S. and European economic numbers on the calendar. U.S. payroll numbers are sure to take centre stage as markets seek confirmation of a pick up in job creation.

With the dollar's fall against the Japanese yen and euro, analysts said the spectre of currency intervention by Japanese and eurozone authorities has grown.

The markets are in the mood to push the dollar to the pressure points of both the ECB and BOJ. The European Central Bank meets on Thursday and attention will be on euro's export-damaging rise against the dollar.

...more...

[meti57b]

1. a serious question(s) ....

The republicans undoubtedly have no desire to lose any of their wealth. What are they thinking in letting the dollar fall like this? Is it their not wanting to give up their tax cuts and massive spending on the war? Don't they surely know this is leading to a disaster that even they surely don't want? What is going on there?

[UpInArms]

3. I believe it's called

the "Too Stupid to Breathe" syndrome.

The idiots have bought into "deficits don't matter", coined by RayGun and reiterated by FUCheney.

Perhaps we survived the last time that they drove the dollar into the ground (under RayGun), but then the situation was a bit different.

At that time, we were not carrying $7+ Trillion in debt (we were, in fact, the largest creditor nation) and we did not have a massive trade deficit.

The switch to the largest debtor nation has changed the equation substantially but these morons don't seem to notice that this is a problem.

When the banks shut off our credit (and they will) there are definitely going to be repercussions felt around the world.

[ozymandius]

7. UIA, I forgot about the politicians who created this mess.

I am reminded of that moviefrom some years ago with Danny DeVito - "Other People's Money". DeVito's character epitomizes the worst of human character as he sought self-gratification through bilking people of their assets. Like a politician who cares more about the pork projects that will ensure re-election, the ends justify the means. Now if this means that the children and grandchildren of those left with the bill are unable to afford to shop at the Goodwill, so be it. Too stupid to breathe is spot on in this case. This level of callousness renders these people, in my book, beneath polite society. They should be shunned and spat upon wherever they go.

[davekriss]

42. Trouble Ahead

I honestly think Gee Dubya and clan are well aware of the risk of "the banks shut(ing) off our credit...". We already see an example of their risk mitigation in Iraq, who (unfortunately for them) had the temerity to price their oil in Euros in 2001. Expect the global extortion and violent intimidation to continue.

The fact that most of the world's oil is priced in dollars, and only by buying dollars can an importing nation meet its inelastic internal demand, has been a godsend to the American economy. It artificially buoys a currency that otherwise, due to our unending fiscal recklessness, would have fallen the way of wheelbarrows of Wiemar Republican marks or Argentina's peso long ago. Russia's recent announcement that it would restructure a portion of its reserve holdings by selling off dollars, some portion of around $235 billion, pales in comparison to the effect of petrodollars. So over the next 4 years this will go ignored while we repeat another Iraq or two or three. Folks, I say welcome to Fortress Earth, all hail the New Imperium (and note I say that with venomous sarcasm)!

USG foriegn policy is in major part about punishing those that show signs of opting out of neo-liberal arrangements that benefit the owning class (this the legacy of Nitze, Kennan, et alia). We don't invade Panama, escort a leader out of Haiti at gunpoint, mine the harbors of Nicaragua, or march into Baghdad because anyone in the know perceives them, in themselves, to be a geniune threat. It's all about crushing the example of alternate models. The capitalist says Greed is Good in one breath and whispers apathy is better in the next -- it's all the more easy to exploit those who have no hope for a better future!

(I digress, but one shivers at the symbolism of re-appointing Elliot Abrams, Otto Reich, John Negroponte, and, though now gone, John Poindextor to positions of power, these shatterers of dreams from the American Holocaust in Central America. Recall the sight of storm-troopers at the FTAA meetings in Miami in 2003? Jack London's The Iron Heel made real. "Alternate" will be brutally repressed wherever it is seen.)

But it gets worse. This is an interim step. The neoconservatives truly intend to usher in the New Imperium, a Pax Americana of order enforced by the barrel of the gun. The rest of the world knows it and stays up late at night thinking about ways to mitigate their own risks. Unfortunately, the real fun is just ahead. Global conflict is possible -- whether "cold" or "hot", World War might be ahead. And nothing in the Bush Doctrine (the NSS) or in Bush actions lead me to think this regime recoils one bit from such a prospect.

Recall O'Neil releasing the Treasury study which stated the U.S. faced $44 trillion in obligations over the next 75 years? O'Neil was fired for letting that slip out and replaced with the more sufficiently Orwellian Snow. No over-extended hegemon on earth has ever met an obligation so huge -- and I mean huge in relative terms, not just in the absolute. We face 4.4x our yearly GDP in obligations coming due in the next 75 years, and the borrowing has only accelerated.

The traditional ways to repudiate such debt? War. More war. And even more war. Or rising interest rates which slow the domestic economy, reduce internal consumption, and thereby decrease the standard of living for many. Or currency deflation, which in effect exports some of the pain onto other nations by inflating imports into the U.S., allowing U.S. industry to fill the gap but also allowing the rest of the world to buy our assets at bargain basement prices. We see Bush is trying all of the above. For us as a nation it is a mess. There is no easy way out of the Debt Trap we find ourselves in. Note, however, that you and I -- we are the "left behind". Our "raptured" elites will not share our pain, they've already steeled their financial fortresses while increasingly abandoning the rest of us to our fate.

Understand that a thin sliver of U.S. and global elites inordinately benefited during the run-up of these huge debts. The top of the food chain snaps up those Treasury Bonds, which will be paid for by future tax-based revenue streams, while at the same time Reagan-Bush-Bush (RBB) lowered the top marginal tax rates on earned income, dramatically lowered rates on capital gains and dividend income, and eliminated the estate tax, thereby yielding these top groups proportionately more income to buy even more bonds.

And who pays? Why you and me, of course; every dollar not collected from top groups will be collected from us in some form of decreased quality of life -- either because our tax rates will have to be held higher than they otherwise would, thereby decreasing consumption; or because social investment in everything from education to social security will have to decline in face of rising yearly interest payments. In effect, during RBB, the elites threw themselves huge parties on borrowed money and left the rest of us with the bill.

It is theft, pure and simple, theft from the people, theft decades in the making, aided and abetted by an entrenched machinery (the Rovian Wulitzer, black box voting, packed courts, a complicit Religious Right, an impeachment, repudiation of a Fairness Doctrine, etc.). Stopping this domestic theft, and the global rape, is a difficult prospect not easily achieved.

So note, Agent Mike, and all you Patriot Actors lurking in the background, I say: All hail the New Imperium of the Fourth Reich! Praise be the Pax Americana! Folks, it has already happened (so nice of you to catch on)! All we have next is to watch how the rest of the world responds. And ya' better hold onto your seats because it'll be quite the ride!

What sphinx of cement and aluminium bashed open their skulls and ate up their brains and imagination?

Moloch! Solitude! Filth! Ugliness! Ashcans and unobtainable dollars! Children screaming under the stairways! Boys sobbing in armies! Old men weeping in the parks!

Moloch! Moloch! Nightmare of Moloch! Moloch the loveless! Mental Moloch! Moloch the heavy judger of men!

Moloch the incomprehensible prison! Moloch the crossbone soulless jailhouse and Congress of sorrows! Moloch whose buildings are judgement! Moloch the vast stone of war! Moloch the stunned governments!

Moloch whose mind is pure machinery! Moloch whose blood is running money! Moloch whose fingers are ten armies! Moloch whose breast is a cannibal dynamo! Moloch whose ear is a smoking tomb!

Moloch whose eyes are a thousand blind windows! Moloch whose skyscrapers stand in the long streets like endless Jehovas! Moloch whose factories dream and choke in the fog! Moloch whose smokestacks and antennae crown the cities!

Moloch whose love is endless oil and stone! Moloch whose soul is electricity and banks! Moloch whose poverty is the specter of genius! Moloch whose fate is a cloud of sexless hydrogen! Moloch whose name is the Mind!

---from Ginsberg's Howl

(HA! Meanwhile we tiny termites continue to eat away at the foundations!)

[ozymandius]

4. Looks like the wealthiest are making an omelet.

This has the ring of permanency about it - not just a short term adjustment. The "haves" and "have mores" (see my post #2) tend to be diversified in tax sheltered dollar assets as well as in foreign assets. So a decline of the dollar remains acceptable, IMO, as foreign holdings increase in value.

[meti57b]

11. That would explain it to me...

they invest in foreign assets. But is it that likely that business class and upper-middle class republicans are adequately invested in foreign assets to protect themselves?

Also, the republican politicians would suffer loss of popularity and electability from the consequences of financial disaster to the republican masses. So why would republican elected politicians support this?

What happens to the republican "small business" owners in a collapse or semi-collapse of the dollar?

Thank you.

[ozymandius]

12. Metals can offset foreign assets.

Both George Soros and Warren Buffett are heavily invested in metals and euros.

I know a small business owner who voted for Bush because he believes that Bush will work to protect his business and allow him to pay fewer taxes. When I pressed him for the reasoning behind this - he could only speak to the perceived notion that Republicans are good for business. His point-of-view was not based on hard data. This disconnect, I suspect, is rampant.

[meti57b]

13. Thank you for that. I'm starting to get some context for the situation.

oh .. one other question ... what would explain the business section of, for example, The Los Angeles Times ... who reports the liberal viewpoint in their editorial pages, ... is not reporting on the consequenses of the steadily falling dollar

[ozymandius]

19. I don't exactly know.

Business pages seem to be consistent cheerleaders. At the same time, business pages tend to be notoriously short sighted.

[meti57b]

21. thank you

[tsuki]

15. The wealthy have already anticipated the drop. They

are diversified.

[DBoon]

18. There are 2 types of Republican

1. Those wealthy and sophisticated enough to move out of dollars, hedge their portfolios. Likely they moved out months ago.

2. Religious fundamentalists who believe Jesus will take care of them. Who cares about foreign currency markets when the rapture is due any day now?

[Voltaire99]

40. "Getting theirs" while the rest of us pay

What is bad for America isn't necessarily or entirely bad for the greedy elites who are to blame for our economic decline.

Even if devalued currency reduces their own piles, they will still have piles. Their piles grew astronomically in the 90s.

Meanwhile the weakening of ordinary citizens' wealth will only strengthen the elites' positions in our society. Consider the Depression: the fattest cats weathered the storm, and people were at their mercy. (Until FDR stepped in; but moves have been taken in our system to prevent such temerity again.)

So a kind of Nero strategy is seen here: fiddling while the dollar burns. Reaganism's intention to bankrupt the federal government remains an essential plan in their all-for-us, fuck-the-rest worldview; they will scupper the ship of state as long as they have gold-plated lifeboats.

There is also incompetence to consider. This gang is very bad at just about everything. But again, they are insulated from the shocks that could tear our society apart, and in the pits of their dark laissez-faire souls they know it.

[ozymandius]

2. Why would anyone try to stop the slide, indeed?

The momentum toward devaluation is too great. What troubles me about the dollar's fall is the inclination to keep the dollar weak for an indefinite amount of time. That is the simplest procedure for reduction of our trade and budget deficits. In essence, this is cooking the books. At the same time, a devalued dollar increases wealth concentrations in the smallest percentage of our population through this segment's propensity for overseas holdings.

So why would anyone even think of attempting to slow the dollar's decline? The U.S. government does not want this to happen. And overseas investors seem to be turning away from the dollar as a financial safe haven. Even Sysiphus would not undertake up this challenge.

[UpInArms]

5. it all reminds me of the fall of the Roman Empire

good morning, Ozy! :hi:

[ozymandius]

8. Good morning UIA!

:donut: :donut: :donut: :donut:

Good to see you again with your shoulder against the wheel. :hi:

[54anickel]

39. The War To Save The U.S. Dollar

The WMD that this mal-admin has been "tracking down" are the weapons that are trying to bring an end to dollar hegemony.

The War To Save The U.S. Dollar
http://www.trinicenter.com/oops/iraqeuro.html

Dollar hegemony had it's beginnings in the 70's with the "oil crisis" and the deal we struck with OPEC, they could have their little cartel, but in return they had to agree to the idea of the petro-dollar. Dollar hegemony got an extra boost in the 90's with the Mexico bailout (which in turn bailed out private investment firms). Gingrich and Dole were involved in that decision, Rubin and Greenspin at first rejected the idea as it was against the constitution.

The US is finally going to face the comeuppance that has been due for quite some time.

I've posted this link before, but it bears repeating.
http://www.atimes.com/atimes/China/FK06Ad01.html

snip>

The ESF was established by Section 20 of the Gold Reserve Act of January 1934, with a $2-billion initial appropriation. Its resources have been subsequently augmented by special drawing rights (SDR) allocations by the IMF and through its income over the years from interest on short-term investments and loans, and net gains on foreign currencies. The ESF engages in monetary transactions in which one asset is exchanged for another, such as foreign currencies for dollars, and can also be used to provide direct loans and guarantees to other countries. ESF operations are under the control of the secretary of the treasury, subject to the approval of the president.

ESF operations include providing resources for exchange-market intervention. The ESF has also been used to provide short-term swaps and guarantees to foreign countries needing financial assistance for short-term currency stabilization. The short-term nature of these transactions has been emphasized by amendments to the ESF statute requiring the president to notify Congress if a loan or credit guarantee is made to a country for more than six months in any 12-month period. Short-term currency swaps are repurchase-type agreements through which currencies are exchanged. Mexico purchased dollars in exchange for pesos and simultaneously agreed to sell dollars against pesos three months hence. The US earned interest on its Mexican pesos at a specified rate.

It was Bear Stearns chief economist Wayne Angell, a former Fed governor and advisor to then Senate majority leader Bob Dole, who first came up with the idea of using the ESF to prop up the collapsing Mexican peso. Bear Stearns, a Wall Street giant, had significant exposure to peso debts. Senator Robert Bennett, a freshman Republican from Utah, took Angell's proposal to Greenspan and Rubin. Both rejected the idea at first, shocked at the blatant circumvention of constitutional procedures that this strategy represented, which would invite certain reprisal from Congress.

Congress had implicitly rejected a rescue package that January when the initial administration proposal of extending Mexico $40 billion in loan guarantees could not pass. The chairman of the Fed advised Bennett that the idea would only work if Congress's silence could be guaranteed. Bennett went to Dole and convinced him that the whole scam would work if the majority leader would simply block all efforts to bring this use of taxpayers' money to a vote. It would all happen by executive fiat. The next step was to persuade Dole and his counterpart in the House, Speaker Newt Gingrich. They consulted several state governors, notably then Texas governor George W Bush, who enthusiastically endorsed the idea of a bailout to subsidize the border region in his state. Greenspan, who historically opposed bailouts of the private sector for fear of incurring moral hazard, was clearly in a position to stop this one. Instead, he used his considerable power and influence to help the process along when key players balked. Moral hazard infected not only the banking system, but also the political system making a mockery of the constitution. Few in Washington were prepared to be reminded that it was this kind of systemic corruption in the name of the common good that had brought down the Roman Empire.

The peso bailout would lead to a series of similar situations in which influential private financial institutions knowingly got themselves into future trouble in order to maximize their short-term profit, vindicating the moral-hazard principle predicting that market participants will take undue risks in the presence of bailout guarantees. As Thailand, Indonesia, Malaysia, South Korea and Russia stumbled into financial crisis, culminating in the collapse of hedge fund giant Long-Term Capital Management (LTCM), which played key speculative roles in precipitating the crisis by achieving fantastic returns to begin with, Greenspan moved to increase dollar liquidity to support the distressed bond markets. At the helm of LTCM was yet another former member of the Fed board, former vice chairman David Mullins, to plead for help from his former Fed colleagues.

more...

[Wright Patman]

6. Robert Rubin,

Clinton's treasury secretary, really did have a "strong dollar" policy and it paid off in terms of the great stock market boom of the 1990s. It is amazing that people do not realize that the stock market ALWAYS does better under Democratic administrations.

It is counterintuitive, but it is true. The last time we had a deliberate policy of driving down the dollar, it ended in the stock market crash of Oct. 19, 1987, a 22.3 percent decline in one day.

The difference this time is that China's yuan is pegged to the dollar and so no amount of dollar devaluation will do anything to improve the trade deficiit. The oil prices will adjust upwards and the entire American nation (at least all those who are not "hedged") will be permanently poorer.

We will come more and more to resemble Brazil economically, with a wealthy "have more" class and very few "haves" below them. No, we are looking at about 200 million permanent "have nots" in this country. That is why the police state must clamp down and more Patriot Acts are on the way.

[ozymandius]

10. I have a favorite adage that addresses these issues.

"How many times do you have to be hit over the head before you realize who's hitting you."

During Rubin's tenure, we could afford a strong dollar policy. Snowjob's duplicitous strong dollar song-and-dance is confusing. It also paints him and this administration as incompetent.

I suspect that when all is said and done we will resemble a cross between pre-Chavez Venezuela and with Argentina's debt problems.

[fedsron2us]

34. China holds all the trump cards

Dollar devaluation will have little impact on the current account deficit whilst the yuan is pegged to the dollar. It is true American exports will be cheaper in Europe but then so will those goods made in China. As the USA has lost so much of its manufacturing base the Chinese are going to be able to benefit from these currency fluctuations more quickly than Americans. The main problem for Beijing is that a fall in the dollar is going to stoke up inflation in China. One factor most of the economic pundits ignore is that Europe with its ageing population and high unemployment rates is not going to be able to consume goods on anything like the scale of the US. This makes a world wide recession within the next 12 months a virtual certainty.

[salinen]

9. There is an ace in the hole

America will become a member of OPEC as soon as those Saddam sympathizers are rooted out and shot in the head.

[jamesinca]

14. The slide is not going to slow from lower import prices

WASHINGTON - The World Trade Organization (news - web sites) imposed penalties Friday on U.S. exports ranging from apples to textiles, escalating a trade dispute the Bush administration has struggled to defuse by unsuccessfully urging Congress to repeal legislation aimed at protecting American steelmakers.

The administration signaled it would accept the penalties short term, but also warned that the United States would aggressively protect its own trading interests and expects fair treatment from the WTO.

"We've worked hard to comply with the WTO," President Bush (news - web sites) said, speaking to reporters in Crawford, Texas. "It's important that all nations comply with WTO rulings."

Bush said he has worked with Congress "to get in compliance," and "we expect the WTO as well to treat our trading partners as they treat us."

more: http://story.news.yahoo.com/news?tmpl=story&ncid=716&e=...

[UpInArms]

16. the endless conundrums

Why does the right support the WTO, NAFTA and GATTS but despises the UN?

[jamesinca]

17. NAFTA, GATTS, and the WTO

allow for outsourcing and it will eventually turn millionaires into billionaires. The U.N. takes from their war glory and possibly a defense contractors no bid deal. It is all about greed!

[foo_bar]

20. Iraq is now an "emerging market"

Have we ever invaded a place that had McDonalds?

[ozymandius]

22. Great point!

If the country hosts a McDonald's - an armed invasion would not be necessary.

[Pallas180]

26. Bush is hilarious. He and the other oil families ARE the WTO so of course

they'll cooperate....it makes the bankers richer and the man in the
street...the man in the street , literally.

WE, America, has been G-8'd by the bushes

[cliss]

23. Aha! Here's the wording I've been looking for:

"Given the tacit approval from policymakers that the dollar needs to drop". As all eyes were riveted on John Snowjob, he smiled and repeated his oft-said message of "supporting a strong dollar" while the dollar fell to its knees, keeled over and is now in critical condition.

Meanwhile, "Dr." Snow smiles and repeats his mantra. The rest of the world has gotten the message. translation = we're going to stand by and let the dollar practically go into rigor mortis. Laissez-faire, you know!

As everyone is scratching their head, wondering how far this will go, I have perceived 2 enormous benefits for doing this:

1) It will improve our current balance of trade deficit. Imports will go way down. I fully expect wonderful stores like Cost Plus and Pier 1 Imports to go out of business. We'll look better in our governmental accounting, but it will be "Chainsaw Al" style, meaning it won't be true growth or correction. It's just shifting resources and.....shifting the problem on to someone else. Plus, you can get your revenge on Jacques Chirac, all in the same move.

2) We shift our problems onto the rest of the world. Other countries are holding a huge portion of our debt. As they hold these debts, they continue to shrink in value. Last week, one country look at its portfolio. It might be worth $44 billion. This week, it's only worth $38 billion. Think of it like the US sweeping out its house, and blowing the dust and dirt onto everybody else.

What gets me is that one of the biggest losers in this shell game is going to be Republican supporters who import from other countries. Wal-Mart comes to mind. Think of all the stuff they import from China. Now as long as the Renminbi is tied to the dollar, I guess it will be OK. But the minute they cut their currency loose from us, watch out. Wal Mart will become Walled-up Mart.

[sandnsea]

24. I don't know

I kind of had the impression that bottom line buying and selling stopped being the primary source of income for these major corporations years ago. In fact, if you go back to the late 1800's, the first rule of business is not profit, it's control the market. Anyway, they have such a huge profit margin on these products that they can afford some dollar fluctuation. Alot of these corporations sell more overseas than they do here, so they get a little hidden profit when they convert back to dollars. They're invested in all sorts of things as well. Sometimes I think they are really money changers with their core business set up as nothing more than seed money. And China? Maybe they figure China is finally economically strong enough to overtake the US as the main market. They've been telling us for several years that Americans need to stop thinking they have a right to jobs. Maybe this is an intentional way of shaking a few more of us down to the bottom of the barrell in their big scheme of global corporatization. I don't know, just blabbering. But I think we need to stop looking at this as if corporations still depend on the US for survival. I'm not sure they do.

[Pallas180]

27. From Cliss's post above:

Last week, one country look at its portfolio. It might be worth $44 billion. This week, it's only worth $38 billion.

Another Bush family wonderful way to make friends and influence people.

And those dumb bastids in the WH and DC don't think there will be
retaliation????

[rustydad]

25. Critical imports

Many of the imports that drive up the current trade imbalance can be curtailed for a time with little adjustment in life style for the middle/low working classes. Most widgets from wally mart are garbage soon enough anyway, bound for the landfill. But oil, well that's a different story. We need to import 60%+ of our oil which mostly goes into transportation needs. As the infrastructure in the US is hugely dependent on cheap oil here is where the SHTF. As we cannot quickly adjust to more fuel efficient transportation systems our need for oil will not be reduced. Prices will soar for two reasons. One is that as the dollar falls in world currency comparisons the oil exporting countries will simply charge more in dollars. Second we are entering the period of demand exceeding supply. Possibly we are at peak oil world wide. In any case the exporters will control the price, essentially selling what there is to the highest bidder. With a falling dollar can we outbid Europe, China, even India for the share of oil we need? Not likely. The high cost of oil (my guess is $100+ a barrel end of 2005) will ripple through the economy driving inflation ever higher. Cost of our exports will decline because of the weak dollar but that decline will be offset by higher fuel costs. So we will not return to balance of trade positive. This all has the smell of a vicious circle that spirals down, down, down. Is there a bottom? and if so how hard do we hit it? Bob

[Pallas180]

28. Don't know about $100 a barrel - remember we've taken over

Iraq for its oil - and the pipeline is already built to the ports across Afghanistan to Turkey, so that may offset some high oil prices.. then there's the Caspian Sea oil which is the real reason for
the war...to get at that largest untapped pool (second largest in world?)..and don't forget the warmongers are eyeing Iran's oil...

Why allow illegals crossing the borders from Mexico? I just found out this weekend, that if they agree to go into the army for three years they automatically will receive US citizenship.

So - no problem - if we don't have enough Americans to use as cannon fodder, we'll switch the Mexicans over from landscaping illegals to
Army illegals and a free pass.

[Pallas180]

29. My next question for the little guys like most of us - Is it too late to

get into metals or Euros?

I knew this was coming for more than a year and didn't do anything about it.

Now what can Alice and Ralph middleclass do to hedge their meager funds?

[VegasWolf]

30. That is a good question, I'm waiting for a pullback form the

intense selling/shorting of the dollar and corresponding
increases in metals. They have been hard and heavy this
last few months. I hate to buy at a premium and then lose
profit immediately. Anybody selling good crystal balls?

[rustydad]

32. If,if,if

If the USA goes into inflation/depression/stagflation, whatever you call it, the result may be that the world goes down with it. In that case metals along with almost every other commodity will fall due to demand destruction. Things to invest in are good fertile land, a small farm in say Oregon or Washington State. Tools. A good bicycle, blankets, seeds, practical cloths/shoes. Medicines. Toilet paper. Beans and rice in rat proof containers. Rat traps and good recipes for rat meat. And lots of good books for the spare time that will be plentiful. Bob

[fedsron2us]

35. Investing in indidvidual commodities is a very dangerous game

and is certainly not for amateurs. If you do fancy dabbling in that area you would be far better advised to hold interest bearing cash desposits in a currency of a country that is rich is raw materials but has little in the way of government debt. The Australian and Canadian dollars are two of the most obvious examples. Holding money in such liquid assets would mean that you could escape the market much more quickly should it turn against you. Even more sensible would be to invest your dollars in those practical goods such as clothes, essential tools etc that you know you are going to need in the next few years. Many of these items will soon be much, much more expensive.

[VegasWolf]

37. Clothes, tools, etc. Sounds like an Armageddon situation. I don't

think it will be THAT bad. Our standard of living
will certainly be lower that EU countries or China,
but we will still have more money than Mexico, but
a whole lot less than Venezuela. Watch for Cuba to be
the next big biotech and pharma havens.

[fedsron2us]

43. Inflation not armageddon

Your dollar is going to buy less in the future. It may be better to spend it now on items you know you are going to use.

[rustydad]

31. Do you really think.....

....that bushco took is into Iraq to get cheap oil? Not so. Oil is traded on the open market and prices are set by bidders and contracts. Iraq oil will not be coming to your local Exxon station at a bargain basement price. Now the profits from Iraq's oil, well that's a different equation. The profits may flow to bushco and his cronies like Halliburton and Carlyl for sure. Bush cares about how much us poor working folks pay for gas about as much as he cares for the grunts gitting shot to hell in Iraq. Zero. By the way the pipeline to Turkey from the Caspian is not to carry Iraqs oil. In fact so far Caspian oil is a bust. Exxon just folded their tent and left. Not a good investment at all. Bob

[NickB79]

33. Those sources of oil are not feasible any longer

We invaded Iraq, but they blow up the pipelines we build and maintain every few weeks, cutting Iraqi oil exports significantly. The Caspian Sea oil reserve has been re-evaluated over the past two years and it has been determined that the oil contained there is mainly low-grade, high-sulfer oil ill-suited for refinement into gasoline. Neither source will be able to prevent the coming of Peak Oil.

[Pallas180]

36. No one I think in their right mind would put money in the stock market at

this point in time.

the question is about the metals market.

and the Euro. hmmm, maybe the yen?

Are you all saying if the US goes down, which it will and is going to,
then the Euro and gold and silver will be worthless too?


When currency is devalued, people have always gone to gold and silver.


But someone mentioned a pullback from the sell off of the dollar. Does anyone really think there's going to be a pullback from that?

Tools?

What tools?

Gardening tools. Planting what used to be known in WW2 as a Victory Garden, and then the women canned the vegetables?

Might be a good idea to learn some canning methods, which really means bottling.

Rat meat. Not a chance. Go vegan. And stock up, yes on canned foods, rice and beans, spices and herbs and water I guess.

Plant fruit trees.

Nope, not a pretty picture.

The question remains about buying gold, silver, and Euros.

[westcoastbias]

38. Well said, Any skeptics should read Hubbert's Peak

The peak of world oil production will occur this decade, most likely next year.

http://www.princeton.edu/hubbert/

[Pallas180]

41. On Gold: Former Secretary Robert Reich & Paul Krugman say:

http://www.tompaine.com/articles/debtor_nation.php