Anyone Else At The Panic Point On The Dollar?
 

If my parents are old enough to take money out of thier retirement annuity, I'm really thinking of asking them to put it all into commodities and foriegn CDs.

I'm flat out scared at this point. Our CPI statistic might as well have been scribbled in cryon by a child and the person in charge of our central bank is f-ucking insane.

Re: Anyone Else At The Panic Point On The Dollar?
 

I totally agree with you. I am super bear on the dollar and would not hold assets that are denominated in the currency. And yeah, Bernanke is insane. I don't know what he is thinking! Anyway, I don't see a reason to invest in the US and I don't know why people do it at this point.

Re: Anyone Else At The Panic Point On The Dollar?
 

The smart money trade is actually on a stronger dollar going forward.

Re: Anyone Else At The Panic Point On The Dollar?
 

Agreed, we have finally reached the point where everyone and their mother is talking about the weak dollar. It's declined significantly over the last few years, my bet is the easy money has been made.

Re: Anyone Else At The Panic Point On The Dollar?
 

i read a lot on kitco forum about how the dollar is doomed, the financial sector doom has still a long way to go, and is only the first of many sectors that will plummet.

i know i am a newbie, but i dont think just becuase everyone knows about the weakness of the dollar means that it'll get stronger. everyone knew about the financial sector crashing months ago as it was coming on the news, but it's still heading downwards. sure the easy money is gone, but it doesnt mean that it wont continue and wont be profitable imo.

ill try and copy and paste some articles and other explanations as to why people are thinking that the dollar if going to go busto.

Re: Anyone Else At The Panic Point On The Dollar?
 

any thoughts on the British pound? most of my money is in England.

Re: Anyone Else At The Panic Point On The Dollar?
 

If everyone already knows that the dollar is going to get weaker, the price would already be at that weaker level. For every person who sells a dollar, there has to be someone on the other end who is buying. If we all know its going weaker who is going to be buying? In 2005 for example, the US was still the same debt machine that it is today, but the dollar had a pretty good bounce. If that happens in 2008, and you buy today you'll be screwed.

The point is, no one really knows. Its good to stay diversified.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
If everyone already knows that the dollar is going to get weaker, the price would already be at that weaker level. For every person who sells a dollar, there has to be someone on the other end who is buying. If we all know its going weaker who is going to be buying? In 2005 for example, the US was still the same debt machine that it is today, but the dollar had a pretty good bounce. If that happens in 2008, and you buy today you'll be screwed.

The point is, no one really knows. Its good to stay diversified.

[/ QUOTE ]

Of course this is true however, there are a couple of reasons why I would not hold dollars. First of all, I think the Fed is doing a horrible job and I am pretty sure that the numbers they are providing are not true. In other words I think the situation is worse than they say. Second, the reason the dollar has stayed strong is because of the foreign investments. However, I think partially due to the weakening dollar and partially due to the turmoil in the financial markets foreign investors will invest in what they perceive to be less volatile markets such as the eurozone. All in all I think this will lead to further depreciation in the dollar. At least that's the way I see it.

Re: Anyone Else At The Panic Point On The Dollar?
 

By the way, I a pessimist by nature and am almost always bearish to the financial markets. Just so you know...

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
[ QUOTE ]
If everyone already knows that the dollar is going to get weaker, the price would already be at that weaker level. For every person who sells a dollar, there has to be someone on the other end who is buying. If we all know its going weaker who is going to be buying? In 2005 for example, the US was still the same debt machine that it is today, but the dollar had a pretty good bounce. If that happens in 2008, and you buy today you'll be screwed.

The point is, no one really knows. Its good to stay diversified.

[/ QUOTE ]

Of course this is true however, there are a couple of reasons why I would not hold dollars. First of all, I think the Fed is doing a horrible job and I am pretty sure that the numbers they are providing are not true. In other words I think the situation is worse than they say. Second, the reason the dollar has stayed strong is because of the foreign investments. However, I think partially due to the weakening dollar and partially due to the turmoil in the financial markets foreign investors will invest in what they perceive to be less volatile markets such as the eurozone. All in all I think this will lead to further depreciation in the dollar. At least that's the way I see it.

[/ QUOTE ]

Right, but my point is, what do the buyers of the dollars you're selling see? Don't you think they know all this information too. What if the dollar has already been oversold by everyone who was thinking what you are thinking last year? See my point?

Re: Anyone Else At The Panic Point On The Dollar?
 

I'll panic when I go to the corner store and they ask to be paid in euros.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
If my parents are old enough to take money out of thier retirement annuity, I'm really thinking of asking them to put it all into commodities and foriegn CDs.

I'm flat out scared at this point. Our CPI statistic might as well have been scribbled in cryon by a child and the person in charge of our central bank is f-ucking insane.

[/ QUOTE ]

And this, my friends, is when the worst is over. When the late comers start to really panic.

Re: Anyone Else At The Panic Point On The Dollar?
 

I see your point, and the dollar is probably bound to rally for a little while just due to people reversing their dollar shorts.

I do realize that they have this information too. The difference is that they don't use it:) They believe the Feds forecasts. They believe that the weak dollar is good for the US. They don't think the current situation is bad for the US economy. I guess it all comes down to how much foreign capital you can attract in the future. If the markets go on a rally than the dollar will probably appreciate. However, I do not think this is the case and that is why I would not hold dollars.

The same would for example stand for the S&P500. If I was American I would have shorted the S&P500 because I see a lot of problems ahead. However, a lot of investors that are a lot smarter than me are long. People are bound to take different positions. Some will be right and some will be wrong. At the end of the day you just have to process the information the best you can and go with your decision.

Re: Anyone Else At The Panic Point On The Dollar?
 

I've been short USD with my own money the whole time people have been saying "the sub prime problem is contained". It has saved my skin, and I think it will continue to save my skin.

Re: Anyone Else At The Panic Point On The Dollar?
 

Being a contrarian works when you've got solid analytical reasons why the rest of the market is in a frenzy. By contrast, there is no reason to be buying the dollar. Leaving aside that disaster in the domestic financial markets, my personal opinion is that people haven't fully gotten thier head around the fact that the CPI is being manipulated. That insulting 0.8% CPI in Q3 really woke me up and got me digging on the subject. Eventually people are going to realize it is being systematically understated (some do, hence the last five years).

As for diversification I'm an American citizen who lives hear, gets paid in dollars, etc. I have a HUGE exposure to dollars in my life, this is good diversification. If I'm wrong that would be FANTASTIC. I'll take a 20% decline in my commodities holdings before a hyperinflationary depression.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
Being a contrarian works when you've got solid analytical reasons why the rest of the market is in a frenzy. By contrast, there is no reason to be buying the dollar. Leaving aside that disaster in the domestic financial markets, my personal opinion is that people haven't fully gotten their head around the fact that the CPI is being manipulated. That insulting 0
.8% CPI in Q3 really woke me up and got me digging on the subject. Eventually people are going to realize it is being systematically understated (some do, hence the last five years).

As for diversification I'm an American citizen who lives hear, gets paid in dollars, etc. I have a HUGE exposure to dollars in my life, this is good diversification. If I'm wrong that would be FANTASTIC. I'll take a 20% decline in my commodities holdings before a hyperinflationary depression.

[/ QUOTE ]

Great post! I also strongly believe that inflation is a huge danger and can't for the life of me understand why the Fed doing anything about it. Still, it's good to see that others are thinking in the same lines and that I'm not delusional... [img]/images/graemlins/smile.gif[/img]

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
If everyone already knows that the dollar is going to get weaker, the price would already be at that weaker level.

[/ QUOTE ]

That's right,except "everyone" doesn't already know the dollar is going to get weaker. People routinely underestimate how bad things are going to get, and come to believe that the worst is already past. But, they often don't understand that things can continue to get worse for quite a bit longer than they thought.

Things can get quite a bit worse for the dollar, because the economy in the US will likely get quite a bit worse over the next several years. I'm not saying the dollar will keep going down, but I don't think the dollar is pricing in everything that can wrong by a long shot. There are too many reasons to not buy the dollar and buy other higher yielding currencies.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
I'll panic when I go to the corner store and they ask to be paid in pieces of silver .

[/ QUOTE ]

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
That's right,except "everyone" doesn't already know the dollar is going to get weaker. People routinely underestimate how bad things are going to get, and come to believe that the worst is already past. But, they often don't understand that things can continue to get worse for quite a bit longer than they thought.

Things can get quite a bit worse for the dollar, because the economy in the US will likely get quite a bit worse over the next several years. I'm not saying the dollar will keep going down, but I don't think the dollar is pricing in everything that can wrong by a long shot. There are too many reasons to not buy the dollar and buy other higher yielding currencies.

[/ QUOTE ] But there is no real economic evidence in this post.

The only evidence apparent to me is that imports are flat while output and exports are skyrocketing. Europe can hardly afford to import lots of goods into the US anymore, nor compete with US imports into their domestic markets. Companies that ignore this are being censured strongly by the business press for missing out on staggering cost savings.

If nothing else we have far and away the best freight infrastructure on Earth (every other country is completely lol except a couple in Asia) and an extremely well educated and skilled workforce. And we a like to be paid in dollars. And that's not going to change any time soon.

Please explain to me how American labor productivity has collapsed in the last few months and maybe I'll heed your conclusions. The fact that people routinely underestimate problems is just as irrelevant as the fact that people routinely overestimate problems, unless you have some basis that the whole market (not just some people) are underestimating the problem.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
That insulting 0.8% CPI in Q3 really woke me up and got me digging on the subject. Eventually people are going to realize it is being systematically understated (some do, hence the last five years).


[/ QUOTE ]

Can you elaborate on this. I agree that the CPI has been understated. What I haven't seen evidence for is the conspiracy-theory aspect. Who has both the motive and the power? Who is putting pressure on whom to understate it? Why has there not been a scandal or even a hint of a whistle-blower?

I know all about the core inflation thing, but that was a long time ago.

Re: Anyone Else At The Panic Point On The Dollar?
 

To what extent do Fed rate cuts impact the dollar? Is another rate cut in December priced in?

Re: Anyone Else At The Panic Point On The Dollar?
 

I'm not panicked.

Not by far.

I'll tell you why....

The financial markets are a system. That system has feedbacks. Right now, American products are looking really good overseas. Capital equipment manufacturers are reporting really good overseas sales. Farmers are raking it in with cheap American food exports. The dollars outside the borders will flow back into the capital markets. There will be no capital shortage and everything will be fine.

The economy is diverse and robust. The sub-prime crisis is the result of a bunch of money spewing banks making bad decisions. Who is really going to be hurt by the value of their house dropping 5%? Really? Think about that. There has been excess supply in the housing market for a long time and a correction is way overdue. There are plenty of other sectors in the economy that see opportunity and are roaring right along. This is all a cycle. It will pass.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]


The financial markets are a system. That system has feedbacks. Right now, American products are looking really good overseas. Capital equipment manufacturers are reporting really good overseas sales. Farmers are raking it in with cheap American food exports. The dollars outside the borders will flow back into the capital markets. There will be no capital shortage and everything will be fine.


[/ QUOTE ]

Yes but you can argue that this system is the reason why the American standard of living must decline. All things being equal, there is no reason why an hours work by a person in America should allow him more purchasing power than a similar person doing a similar job in Romania. But of course historically all things haven't been equal.

But that's not the natural state. The more you allow free trade, the more you allow the water to find its own level, the more that everybody will have equal purchasing power. This means Americans losing some, and other countries gaining. In a state of equlibrium, that farmer exporting cheaply will make the same amount as a Chinese farmer.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
[ QUOTE ]
That's right,except "everyone" doesn't already know the dollar is going to get weaker. People routinely underestimate how bad things are going to get, and come to believe that the worst is already past. But, they often don't understand that things can continue to get worse for quite a bit longer than they thought.

Things can get quite a bit worse for the dollar, because the economy in the US will likely get quite a bit worse over the next several years. I'm not saying the dollar will keep going down, but I don't think the dollar is pricing in everything that can wrong by a long shot. There are too many reasons to not buy the dollar and buy other higher yielding currencies.

[/ QUOTE ] But there is no real economic evidence in this post.

The only evidence apparent to me is that imports are flat while output and exports are skyrocketing. Europe can hardly afford to import lots of goods into the US anymore, nor compete with US imports into their domestic markets. Companies that ignore this are being censured strongly by the business press for missing out on staggering cost savings.

If nothing else we have far and away the best freight infrastructure on Earth (every other country is completely lol except a couple in Asia) and an extremely well educated and skilled workforce. And we a like to be paid in dollars. And that's not going to change any time soon.

Please explain to me how American labor productivity has collapsed in the last few months and maybe I'll heed your conclusions. The fact that people routinely underestimate problems is just as irrelevant as the fact that people routinely overestimate problems, unless you have some basis that the whole market (not just some people) are underestimating the problem.

[/ QUOTE ]

I can't prove the market is underestimating the problem just as you can't prove the opposite. My point is that there are a lot of serious economic problems in this country which may not be reflected in what the dollar is trading at, especially since some of them are longer term issues. There's data out the wazoo to substantiate the claim that we have these problems, but that's not really necessary. My point is that it's not at all impossible that the dollar doesn't reflect all the problems out there.

Re: Anyone Else At The Panic Point On The Dollar?
 

http://www.europac.net/whitepapers/T...bout%20CPI.pdf

Being able to misreport CPI is a HUGE asset to the government and the people who run it. They can get exceedingly rich of this great fraud.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
By contrast, there is no reason to be buying the dollar.

[/ QUOTE ]

I have read rumors from the standard rumor-mongers (Economist, WSJ) that the dollar is undervalued based on purchasing power parity.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
I can't prove the market is underestimating the problem just as you can't prove the opposite.

[/ QUOTE ]

The only fact is that the market price at the moment is correct, since the market is always right.

Re: Anyone Else At The Panic Point On The Dollar?
 

Depends how they calculate it. I don't believe the CPI. Inflation is 5-6%. And it is only that low because half our inflation is being exported to foriegners.

Re: Anyone Else At The Panic Point On The Dollar?
 

disjunction, my claims exactly and the american standard of living has peaked and over time will erode towards the waters level. it will take a long time i hope but needs to be prepared for.

there has to be many ups and downs as capital flows to the best buy. so right now tons of money is coming in from europe and others to purchase the great american products and services. this holds a so called bottom on the dollar and the economy.

the next hit could be a transition away from u.s. dollar based oil and world goods.

the final hit if it ever comes is when the u.s. is no longer needed for world protection. that is the main thing that keeps our dollar up and respect for our wishes.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
http://www.europac.net/whitepapers/T...bout%20CPI.pdf

Being able to misreport CPI is a HUGE asset to the government and the people who run it. They can get exceedingly rich of this great fraud.

[/ QUOTE ]

I agree with everything in there that says there has been stealth inflation. But I don't understand it when they refer to "the government" like it is one person. Who specifically, is it a power-mad Bernanke trying to overstep his authority? This is all an elaborate ruse to cut Social Security? Because the dude counting the price of hamburgers has no interest in the rest of the government, nor does his supervisor.

There is an alternate hypothesis here -- the government is dumb. I think I agree with "geometric weighting" more than the old system. The drawback is it ruins our ability to compare to the past.

The reason I asked this is because I have 5% of my savings in TIPS. I had been assuming the stealth inflation would find its way into the real numbers at some point.

Re: Anyone Else At The Panic Point On The Dollar?
 

I'm not a conspiracy nut myself. Rather, I think random players acting on thier own self interest can create these situations. There is no smoke filled room where people decided to issue $480 trillion in credit derivatives, or create the subprime market, or print money like crazy. Individual actors just kept pouring it on out of percieved self interest.

If you want a real inflation hedge I recommend commodities.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
I'm not a conspiracy nut myself. Rather, I think random players acting on thier own self interest can create these situations. There is no smoke filled room where people decided to issue $480 trillion in credit derivatives, or create the subprime market, or print money like crazy. Individual actors just kept pouring it on out of percieved self interest.

If you want a real inflation hedge I recommend commodities.

[/ QUOTE ]

inflation is a global phenomenon. the best inflation hedge you can get is an unhedged global inflation linked bond allocation. commodities help but i don't think can be expected to hedge your overall inflation exposure as well as a global IL bond allcoation.

however, commodities are easy to get while IL bonds are tough to get.

Barron

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
[ QUOTE ]
That's right,except "everyone" doesn't already know the dollar is going to get weaker. People routinely underestimate how bad things are going to get, and come to believe that the worst is already past. But, they often don't understand that things can continue to get worse for quite a bit longer than they thought.

Things can get quite a bit worse for the dollar, because the economy in the US will likely get quite a bit worse over the next several years. I'm not saying the dollar will keep going down, but I don't think the dollar is pricing in everything that can wrong by a long shot. There are too many reasons to not buy the dollar and buy other higher yielding currencies.

[/ QUOTE ] But there is no real economic evidence in this post.

The only evidence apparent to me is that imports are flat while output and exports are skyrocketing. Europe can hardly afford to import lots of goods into the US anymore, nor compete with US imports into their domestic markets. Companies that ignore this are being censured strongly by the business press for missing out on staggering cost savings.

If nothing else we have far and away the best freight infrastructure on Earth (every other country is completely lol except a couple in Asia) and an extremely well educated and skilled workforce. And we a like to be paid in dollars. And that's not going to change any time soon.

Please explain to me how American labor productivity has collapsed in the last few months and maybe I'll heed your conclusions. The fact that people routinely underestimate problems is just as irrelevant as the fact that people routinely overestimate problems, unless you have some basis that the whole market (not just some people) are underestimating the problem.

[/ QUOTE ]

Yea, but the problem with the dollar are inherent to the dollar itself not the economy in which it is used as an exchange.

In essence (it is of course more complex than this) the dollar is cheap because there is an over supply of dollars.

If foreign governments decide to release their reserves of dollars this supply will increase thus driving the price down even further.

Re: Anyone Else At The Panic Point On The Dollar?
 

TIPS and such would be great if they weren't lying about CPI, which TIPS are based off of.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
TIPS and such would be great if they weren't lying about CPI, which TIPS are based off of.

[/ QUOTE ]

so then you're implying that every government in the world that issues IL bonds lies about its inflation index?

because a global IL bond index would be not dependent on any one country.

Barron

Re: Anyone Else At The Panic Point On The Dollar?
 

I always find it interesting when everyone is short the dollar. I have been short for nearly a year now and I am not looking to build my position or anything. Very seldomly has every bit of the media been clamoring the same thing and it to happen as said. I highly doubt that any "crash" or "recession" will live up to current expectations. Eveyone thinks the sup-prime crisis is such a huge issue, but in reality it is only a small part of the housing market.

Although in the last couple of years over 10% of mortagages were subprice, out of all US mortgages, approximately 2% are subprime. Out of these, only approx. 13% have defaulted. So the total mortgage defaults in the US is well under 0.5%. Yes this does hurt some and the issues the banks are having with CDO's and MBS's hurts more, but this in not some catastrophic financial event.

To be honest, I am not buying back dollars or unwinding my other trades in foreign markets or commodities, but I begin to reevaluate when every market pundit is saying to make these exact trades. I recently saw a Jay-Z video where he throws Euro's in the air instead of dollars. Typically when this type of thing hits mainstream culture (e.g. the Grandma buying tech stocks) it probably is not as attractive as everyone is convinced it is.

Re: Anyone Else At The Panic Point On The Dollar?
 

You just have too look at the fundamentals. When everyone was buying tech there was no fundamental basis for it. The US dollar has huge fundamental problems that aren't going away.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]


The only fact is that the market price at the moment is correct, since the market is always right.

[/ QUOTE ]

LOL.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
I always find it interesting when everyone is short the dollar. I have been short for nearly a year now and I am not looking to build my position or anything. Very seldomly has every bit of the media been clamoring the same thing and it to happen as said. I highly doubt that any "crash" or "recession" will live up to current expectations. Eveyone thinks the sup-prime crisis is such a huge issue, but in reality it is only a small part of the housing market.

Although in the last couple of years over 10% of mortagages were subprice, out of all US mortgages, approximately 2% are subprime. Out of these, only approx. 13% have defaulted. So the total mortgage defaults in the US is well under 0.5%. Yes this does hurt some and the issues the banks are having with CDO's and MBS's hurts more, but this in not some catastrophic financial event.

To be honest, I am not buying back dollars or unwinding my other trades in foreign markets or commodities, but I begin to reevaluate when every market pundit is saying to make these exact trades. I recently saw a Jay-Z video where he throws Euro's in the air instead of dollars. Typically when this type of thing hits mainstream culture (e.g. the Grandma buying tech stocks) it probably is not as attractive as everyone is convinced it is.

[/ QUOTE ]

people are only pricing a small fraction of the problems. to think the problems only exist in sub-prime is part of the problem.

the problem extends through the entire loans market. credit cards, prime mortgages, equity financing, etc.

Re: Anyone Else At The Panic Point On The Dollar?
 

[ QUOTE ]
I always find it interesting when everyone is short the dollar. I have been short for nearly a year now and I am not looking to build my position or anything. Very seldomly has every bit of the media been clamoring the same thing and it to happen as said. I highly doubt that any "crash" or "recession" will live up to current expectations. Eveyone thinks the sup-prime crisis is such a huge issue, but in reality it is only a small part of the housing market.

Although in the last couple of years over 10% of mortagages were subprice, out of all US mortgages, approximately 2% are subprime. Out of these, only approx. 13% have defaulted. So the total mortgage defaults in the US is well under 0.5%. Yes this does hurt some and the issues the banks are having with CDO's and MBS's hurts more, but this in not some catastrophic financial event.


[/ QUOTE ]

The real problem is housing itself. You're right that subprime is a small part of the housing market, which just means that it is a small part of the problem. If you think housing as a whole is fine, you should be buying every housing-related stock, since the market certainly doesn't agree with you by a wide margin.