X Post: My thoughts on the coming dollar collapse

[ubiestmea]

You're ignoring the forex market, according to the most recent Foreign Exchange Committee Volume Survey there was $12,981,915,000,000 of volume in the 21 trading days in April 2007.
http://www.newyorkfed.org/fxc/volume...survey2007.pdf

If you were a foreigner with dollar exposure concerns would it make more sense to hedge or even get net short the dollar in a very liquid market or start buying US companies and real estate just before the US goes into a serious recession?

How do you consider buying US companies and real estate as “getting out of dollars”, what do you think you will get paid with when you sell them?

[MrBlue]

The Japanese were going to buy up everything in the 80s but we're still here.

It's also not the first time the dollar has dropped like this. A few good years and no one will even remember this 'crisis'.

[Borodog]

[ QUOTE ]
You're ignoring the forex market, according to the most recent Foreign Exchange Committee Volume Survey there was $12,981,915,000,000 of volume in the 21 trading days in April 2007.
http://www.newyorkfed.org/fxc/volume...survey2007.pdf

If you were a foreigner with dollar exposure concerns would it make more sense to hedge or even get net short the dollar in a very liquid market or start buying US companies and real estate just before the US goes into a serious recession?

[/ QUOTE ]

Getting something for your dollars is better than getting almost nothing for your dollars. Owning a company or real estate, especially if you try to bet on companies that are unlikely to flat go under in a recession (like the NASDAQ), is better than holding onto dollars or waiting for those dollars to crash in value before unloading them. And trying to sell of dollar holding for Euro or Yen would likely kick off the crash of the dollar.

[ QUOTE ]
How do you consider buying US companies and real estate as “getting out of dollars”, what do you think you will get paid with when you sell them?

[/ QUOTE ]

But you can sell them much later, once the situation has stabilized. Again, it's not a matter of making money. It's a matter of stopping bleeding.

The scenario I am describing has largely already happened in the late 70s and early 80s. Remember when everyone was hysterical that foreign companies were buying up American companies and real estate? The Japanese owned skyscrapers, companies, you name it. This happened because: There were a lot of dollars in foreign hands, the dollar was weak internationally, and since the US was already *in* recession, there was little direction to go but up for surviving US companies. Hence foreign investment went through the roof.

[ubiestmea]

[ QUOTE ]
Getting something for your dollars is better than getting almost nothing for your dollars. Owning a company or real estate, especially if you try to bet on companies that are unlikely to flat go under in a recession (like the NASDAQ), is better than holding onto dollars or waiting for those dollars to crash in value before unloading them. And trying to sell of dollar holding for Euro or Yen would likely kick off the crash of the dollar.

[/ QUOTE ]

Look at a chart, the dollar has been going down for quite awhile. Do you think that banks and business haven’t noticed yet and they will all suddenly realize it at the same time? Banks and business are constantly monitoring and adjusting their currency exposures through the forex market. What do you think accounts for the almost 13 trillion in monthly forex volume?

[ QUOTE ]
But you can sell them much later, once the situation has stabilized. Again, it's not a matter of making money. It's a matter of stopping bleeding.

The scenario I am describing has largely already happened in the late 70s and early 80s. Remember when everyone was hysterical that foreign companies were buying up American companies and real estate? The Japanese owned skyscrapers, companies, you name it. This happened because: There were a lot of dollars in foreign hands, the dollar was weak internationally, and since the US was already *in* recession, there was little direction to go but up for surviving US companies. Hence foreign investment went through the roof.

[/ QUOTE ]

Over the years, Japanese investors have established a strong presence in the United States. Japanese FDI in the United States surged in the 1980s and continued to increase in the 1990s. In the 1980s, Japanese investors acquired such high-profile U.S. assets as Columbia Pictures, Rockefeller Center, and Pebble Beach Golf Course. These investments followed surges in Japanese investments in the United States by Japanese consumer electronics firms and auto producers. (Many of these acquisitions were not profitable for Japanese investors.)

http://www.fas.org/sgp/crs/row/RL32649.pdf

[Borodog]

[ QUOTE ]
[ QUOTE ]
Getting something for your dollars is better than getting almost nothing for your dollars. Owning a company or real estate, especially if you try to bet on companies that are unlikely to flat go under in a recession (like the NASDAQ), is better than holding onto dollars or waiting for those dollars to crash in value before unloading them. And trying to sell of dollar holding for Euro or Yen would likely kick off the crash of the dollar.

[/ QUOTE ]

Look at a chart, the dollar has been going down for quite awhile. Do you think that banks and business haven’t noticed yet and they will all suddenly realize it at the same time?

[/ QUOTE ]

Isn't that what crashes are made of?

[ QUOTE ]
Banks and business are constantly monitoring and adjusting their currency exposures through the forex market. What do you think accounts for the almost 13 trillion in monthly forex volume?

[/ QUOTE ]

I'm sure this is true. But that doesn't mean there won't be a dollar crash.

[ QUOTE ]
[ QUOTE ]
But you can sell them much later, once the situation has stabilized. Again, it's not a matter of making money. It's a matter of stopping bleeding.

The scenario I am describing has largely already happened in the late 70s and early 80s. Remember when everyone was hysterical that foreign companies were buying up American companies and real estate? The Japanese owned skyscrapers, companies, you name it. This happened because: There were a lot of dollars in foreign hands, the dollar was weak internationally, and since the US was already *in* recession, there was little direction to go but up for surviving US companies. Hence foreign investment went through the roof.

[/ QUOTE ]

Over the years, Japanese investors have established a strong presence in the United States. Japanese FDI in the United States surged in the 1980s and continued to increase in the 1990s. In the 1980s, Japanese investors acquired such high-profile U.S. assets as Columbia Pictures, Rockefeller Center, and Pebble Beach Golf Course. These investments followed surges in Japanese investments in the United States by Japanese consumer electronics firms and auto producers. (Many of these acquisitions were not profitable for Japanese investors.)

http://www.fas.org/sgp/crs/row/RL32649.pdf

[/ QUOTE ]

Again, I'm sure this is true. But That doesn't prove there isn't a strong uptick in foreign investment happening right now (and not in treasury bonds, either), which is an observable consequence of my hypothesis.

These two points actually seem to *support* my hypothesis rather than argue against it.

[ubiestmea]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Getting something for your dollars is better than getting almost nothing for your dollars. Owning a company or real estate, especially if you try to bet on companies that are unlikely to flat go under in a recession (like the NASDAQ), is better than holding onto dollars or waiting for those dollars to crash in value before unloading them. And trying to sell of dollar holding for Euro or Yen would likely kick off the crash of the dollar.

[/ QUOTE ]

Look at a chart, the dollar has been going down for quite awhile. Do you think that banks and business haven’t noticed yet and they will all suddenly realize it at the same time?

[/ QUOTE ]

Isn't that what crashes are made of?

[/ QUOTE ]

Yes that is what crashes are made of, but everyone from Warren Buffet to thousands of posters on internet forums have been calling for everything from a sell off to a crash for over a year now. There has been no shortage of stories in every form of media predicting the demise of the dollar. Every crash I am aware of came as a surprise, can you point to a single instance of a crash that occurred after it was publicly called for by so many people for so long a time?

[kyleb]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Getting something for your dollars is better than getting almost nothing for your dollars. Owning a company or real estate, especially if you try to bet on companies that are unlikely to flat go under in a recession (like the NASDAQ), is better than holding onto dollars or waiting for those dollars to crash in value before unloading them. And trying to sell of dollar holding for Euro or Yen would likely kick off the crash of the dollar.

[/ QUOTE ]

Look at a chart, the dollar has been going down for quite awhile. Do you think that banks and business haven’t noticed yet and they will all suddenly realize it at the same time?

[/ QUOTE ]

Isn't that what crashes are made of?

[/ QUOTE ]

Yes that is what crashes are made of, but everyone from Warren Buffet to thousands of posters on internet forums have been calling for everything from a sell off to a crash for over a year now. There has been no shortage of stories in every form of media predicting the demise of the dollar. Every crash I am aware of came as a surprise, can you point to a single instance of a crash that occurred after it was publicly called for by so many people for so long a time?

[/ QUOTE ]

dotcom

[eastbay]

[ QUOTE ]
Every crash I am aware of came as a surprise, can you point to a single instance of a crash that occurred after it was publicly called for by so many people for so long a time?

[/ QUOTE ]

Umm, housing? The calls for a sharp decline started around 2003 and didn't materialize until last year or this year, depending on the market.

.com also comes to mind. A lot of people were saying "hey wait, this doesn't make sense, this can't be sustainable" and it took several years for everybody else to "get it."

eastbay

[Fishhead24]

.......and housing is expected to keep declining well into 2008 and beyond.

[adios]

[ QUOTE ]
Getting something for your dollars is better than getting almost nothing for your dollars. Owning a company or real estate, especially if you try to bet on companies that are unlikely to flat go under in a recession (like the NASDAQ), is better than holding onto dollars or waiting for those dollars to crash in value before unloading them.

[/ QUOTE ]

Basically this has been the case for a long time and it's nothing new. In the long run when hasn't been better to own stock (bet on companies) or invest in real estate than hold cash???? There are times when it's better to hold cash than own stock and/or real estate. If your timing is accurate enough you'll make even more of a fortune.