Bush’s Chernobyl Economy; hard times are on the way
By Mike Whitney
11/08/06 "Information Clearing House" -- -- In the next few months, a financial crisis will arise somewhere in the world which will jolt the American economy and trigger a swift and precipitous decline in the value of the dollar.
This is not speculation; it will happen and there is nothing that the Bush administration can do to stop it.
All of the traditional supports for the dollar have been removed by a shrinking economy, a massive $800 billion account deficit, dramatic increases in the money supply, and the reckless manipulation of interest rates.
Now, the noose is tightening. Our foreign trade partners can see that we are bobbing in an ocean of red ink and are refusing to buy back our debt in the form of US Treasuries. This is a death sentence for the dollar. It means that in a matter of months the once-mighty greenback will crash through the floor and free-fall through open space.
Mike Swanson of the WallStreetWindow explains the worrisome details related to last month’s trade deficit:
“Just a few days ago the US Treasury reported that the net capital inflows from the rest of the world into the US fell for a 6th month in a row. Private from abroad fell to $34.7 billion in August and from $72.9 billion in July. Asian central banks made up for the shortfall. If they hadn’t the current account deficit would have exploded. The NY Times quoted Ashraf Laidi, a currency analyst at MG Financial Group as saying, “foreign central banks saved the dollar from disaster. The stability of the bond market is at thee mercy of Asian purchases of US Treasuries.”
Swanson poses an interesting theory, but it can’t be verified since we the Fed stopped printing the M-3 which would provide the relevant facts about the current cash inflows.
Jim Willie of GoldenJackass.com, offers an entirely different theory in his recent article “Spent Dollar Momentum”. Willie opines:
“Behind the scenes are the many illicit London-based firms busily buying US Treasury Bonds with freshly-printed money from the Dept of the Treasury. Their tracks are covered by the blackout on the money supply statistic. (M-3) An isolated US government with a well-oiled printing press as the primary support device makes for a dangerous currency situation.”
Willie’s theory jives nicely with the US Treasury’s figures on the “Foreign Financing of US Government Debt” (June 2006) Surprisingly, between 2005 and 2006 our friends in the United Kingdom purchased another $142 billion of USD bringing their stockpile of dollars to $201.4?!?
Why?
Why would UK investors suddenly stock up on dollar assets when everyone else in the currency market is moaning about the greenback’s systemic problems?
Could it be that banks in the UK are just hiding the paper trail for friends in America who want to forestall a collapse in the dollar until after the election?
Of course there is another explanation for the irregular activity in cash inflows, (purchase of US Treasuries) that is, that we’re still living in a "faith-based" Wonderland where foreign trading partners are only too happy to buy an endless supply of worthless paper from a well-meaning giant who is busy spreading democracy to the "great unwashed" in developing world. >>>cont
LinkHere
11/08/06 "Information Clearing House" -- -- In the next few months, a financial crisis will arise somewhere in the world which will jolt the American economy and trigger a swift and precipitous decline in the value of the dollar.
This is not speculation; it will happen and there is nothing that the Bush administration can do to stop it.
All of the traditional supports for the dollar have been removed by a shrinking economy, a massive $800 billion account deficit, dramatic increases in the money supply, and the reckless manipulation of interest rates.
Now, the noose is tightening. Our foreign trade partners can see that we are bobbing in an ocean of red ink and are refusing to buy back our debt in the form of US Treasuries. This is a death sentence for the dollar. It means that in a matter of months the once-mighty greenback will crash through the floor and free-fall through open space.
Mike Swanson of the WallStreetWindow explains the worrisome details related to last month’s trade deficit:
“Just a few days ago the US Treasury reported that the net capital inflows from the rest of the world into the US fell for a 6th month in a row. Private from abroad fell to $34.7 billion in August and from $72.9 billion in July. Asian central banks made up for the shortfall. If they hadn’t the current account deficit would have exploded. The NY Times quoted Ashraf Laidi, a currency analyst at MG Financial Group as saying, “foreign central banks saved the dollar from disaster. The stability of the bond market is at thee mercy of Asian purchases of US Treasuries.”
Swanson poses an interesting theory, but it can’t be verified since we the Fed stopped printing the M-3 which would provide the relevant facts about the current cash inflows.
Jim Willie of GoldenJackass.com, offers an entirely different theory in his recent article “Spent Dollar Momentum”. Willie opines:
“Behind the scenes are the many illicit London-based firms busily buying US Treasury Bonds with freshly-printed money from the Dept of the Treasury. Their tracks are covered by the blackout on the money supply statistic. (M-3) An isolated US government with a well-oiled printing press as the primary support device makes for a dangerous currency situation.”
Willie’s theory jives nicely with the US Treasury’s figures on the “Foreign Financing of US Government Debt” (June 2006) Surprisingly, between 2005 and 2006 our friends in the United Kingdom purchased another $142 billion of USD bringing their stockpile of dollars to $201.4?!?
Why?
Why would UK investors suddenly stock up on dollar assets when everyone else in the currency market is moaning about the greenback’s systemic problems?
Could it be that banks in the UK are just hiding the paper trail for friends in America who want to forestall a collapse in the dollar until after the election?
Of course there is another explanation for the irregular activity in cash inflows, (purchase of US Treasuries) that is, that we’re still living in a "faith-based" Wonderland where foreign trading partners are only too happy to buy an endless supply of worthless paper from a well-meaning giant who is busy spreading democracy to the "great unwashed" in developing world. >>>cont
LinkHere
posted by Kangaroo Brisbane Australia at 4:38 AM
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