What's Up Now with the U.S. Dollar? [View article]
I do admit I'm conspiratorially minded, especially when markets become "harmful" to the US or world economy. With oil at $140 plus, some believe the US Dollar was goosed up by Governments, to burst the oil/commodity bubble.
$140 Dollar oil was bad for everyone but a few companies who didn't need THAT much money, and enemy-states like Iran, Venezuela, and a newly hostile Russia, etc. $140 oil was bad for China, and Japan, and the US, who could intervene in the currency markets.
I'm just an average Joe the Plumber, but others have speculated about other factors temporarily driving the US Dollar higher besides Central Bank Intervention: big unwinds of the "carry trade" (borrowing in US Dollars or Japanese Yen to buy higher yielding currencies or assets), or unwinding of other positions that require settlement in US Dollars.
It's way too complex for me.
But a higher dollar was needed to burst the commodity bubble and, this is important, to satisfy our Creditors. The US has trillions in outstanding Debt (bonds). The holders of those bonds (denominated in US Dollars), were, no doubt, none too happy to be watching the value of their assets decline with the Dollar.
Let's say you're China. You hold, by some accounts, over one Trillion Dollars in US Debt. Over the past decade, or so, the value of the US Dollar has declined about 50% against the Euro. That kind of sucks. You're holding bonds yielding, what, 5% or less, and if you wanted to sell them and convert the cash into Euros, or Swiss Francs, you can only buy half of what you could have bought ten years ago?
Or if you wanted to convert your dollars into Gold you could only buy one third the gold you could have bought ten years ago?
That's one crappy bond. Would you buy more US Bonds? Not likely. Then what happens? US Interest rates shoot up, the US economy slows even more, and your exports (remember, you're pretending to be China), take a dive.
Now you go into recession and those millions of people who need work making goods have no jobs. That can't happen if you're China.
So, you have to support the US Bond market, keep US interest rates reasonably low to support the US Consumer, and, help drive up the value of the US Dollar so you're not losing so much money on your Trillions in US Bonds.
And that is precisely what has happened. The markets hit a "pain threshold" over the summer of high commodity/weak dollar, central banks put their heads together, and starting intervening, the dollar rose, commodities fell, and, our creditors were less unhappy.
When Lending Standards Really Changed [View article]
Cramer asserted that there was a "land shortage" in 2005 on Mad Money. I watched it with my own eyes. He referred to builders and developers with large land holdings as "land banks." He referred to Sear's Holdings as the "next" Berkshire Hathaway and promised Eddie Lambert would monetize Sear's real estate and build a Berkshire-style holding company.
Cramer similarly had asserted that there was a "stock shortage" in 1999.
What's Up Now with the U.S. Dollar? [View article]
$140 Dollar oil was bad for everyone but a few companies who didn't need THAT much money, and enemy-states like Iran, Venezuela, and a newly hostile Russia, etc. $140 oil was bad for China, and Japan, and the US, who could intervene in the currency markets.
I'm just an average Joe the Plumber, but others have speculated about other factors temporarily driving the US Dollar higher besides Central Bank Intervention: big unwinds of the "carry trade" (borrowing in US Dollars or Japanese Yen to buy higher yielding currencies or assets), or unwinding of other positions that require settlement in US Dollars.
It's way too complex for me.
But a higher dollar was needed to burst the commodity bubble and, this is important, to satisfy our Creditors. The US has trillions in outstanding Debt (bonds). The holders of those bonds (denominated in US Dollars), were, no doubt, none too happy to be watching the value of their assets decline with the Dollar.
Let's say you're China. You hold, by some accounts, over one Trillion Dollars in US Debt. Over the past decade, or so, the value of the US Dollar has declined about 50% against the Euro. That kind of sucks. You're holding bonds yielding, what, 5% or less, and if you wanted to sell them and convert the cash into Euros, or Swiss Francs, you can only buy half of what you could have bought ten years ago?
Or if you wanted to convert your dollars into Gold you could only buy one third the gold you could have bought ten years ago?
That's one crappy bond. Would you buy more US Bonds? Not likely. Then what happens? US Interest rates shoot up, the US economy slows even more, and your exports (remember, you're pretending to be China), take a dive.
Now you go into recession and those millions of people who need work making goods have no jobs. That can't happen if you're China.
So, you have to support the US Bond market, keep US interest rates reasonably low to support the US Consumer, and, help drive up the value of the US Dollar so you're not losing so much money on your Trillions in US Bonds.
And that is precisely what has happened. The markets hit a "pain threshold" over the summer of high commodity/weak dollar, central banks put their heads together, and starting intervening, the dollar rose, commodities fell, and, our creditors were less unhappy.
But what do I know. I'm just a Joe the Plumber.
When Lending Standards Really Changed [View article]
Cramer similarly had asserted that there was a "stock shortage" in 1999.
The Death of Stocks [View article]