U.S. Dollar vs. the Law of Gravity

Stay tuned, folks - take your Prozac and fasten your seatbelts! The battle of the century has begun. In one corner we have the challenging U.S. dollar tag team of Bernanke and Paulson, who we understand have been taking steroids to improve their talking abilities. Their worthy, and still unbeaten, opponent is the Law of Gravity - who in this match is teamed with "world opinion". "W-O" had been expected to serve as a referee but instead chose to side with the "L-o-G", so this match will proceed without a neutral party in the ring.

There you have it - the ultimate in historical fights to the finish, where one contestant or the other succumbs or else capitulates. We have seen the early rounds, and already there is much B&P blood on the canvas, not to mention that which has been splattered on spectators closest to ring-side.

Odds-makers have made "L-o-G"/"W-O" the favorite in this monetary Superbowl, though sideline speculators have had some success manipulating market indexes like the Dow and S&P 500 into some wild daily and intra-day swings (see June 5, 6, 12).

With no rules and no timekeeper, it is anyone's guess as to when this match will end.

We expect it to drag on, through November, and well into 2009. Much like the dance marathons of old, where exhaustion claimed the participants and the last couple standing was awarded the prize, the winner here will be determined by capitulation, that point at which the loser no longer can rise from the canvas to accept more pain and punishment.

When this moment is reached, one of these events will have occurred:

a) unlikely but possible: the B & P team will have resurrected the "gold standard";

b) more likely: the B & P team will have linked the dollar to the euro;

c) less likely, but still a probability: the B & P team will concoct a new North American currency called the "Pelican", from the dollar, the peso, and the loonie.

d) somewhat likely: the Mid-East oil potentates, having bought most of U.S. real estate and corporations, have now purchased the U.S. Congress in order to halt the annual deficit and continuing erosion of the dollar.

Readers are encouraged to contribute their own scenarios. From our viewpoint, there is still much to worry about, and little hope on the horizon. Bettors are still short the dollar, and long on oil, gold and natural resources. Astute investors should be carrying some SDS, DXD, SFK, SJH in their portfolios.

Disclosure: long

Comments

[EUARTE]

Saudi Arabia has already purchased Congress.

The only other explanation is that Congressmen (and the ladies are included big time) are venal, unpatriotic and more than a little dumb.

Hmmm. Perhaps the Saudi's are not to blame.

[Fritz Hottinger]

Euarte - - - can't say Congressman/women are dumb - - - they know how to work the system - - - look how long they have been able to retain their seats at the table with:
promises to their constituents, to be paid for from the Federal Treasury
(read: print more paper dollars)

tap the special interest groups for re-election funds;

pay-off the special interest groups with legislation favors, crop price supports, tariffs on competition, etc, etc.

It is us voters who are dumb - - - we keep sending them back to DC.

Maybe if there were a general housecleaning, with new faces, we would see an improvement. However, can't believe the CHANGE Obama is promising is what we are seeking - - - his promised CHANGE scares me because it will turn the country socialistic.