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  • Jonathan Bernstein counters the counter-arguments raised by dollar bulls: 8 comments
    Jun 30, 2009 8:02 PM

    Jonathan Bernstein brilliantly counters the counter-arguments raised by dollar bulls:

    Plenty of people try to tell us that this overhang is “not a problem.” They say that the world is used to running on dollars. Governments, banks and corporations are used to doing dollar based transactions, they tell us. Moreover, no other currency can match the deep and liquid market that Treasurys afford. Even though the Eurozone is a huge economic bloc, Eurobonds issued by Italy, for example, are not the same as Danish or German government bonds. So everyone agrees that a complete transition to a new currency regime would take time, but is that truly a reason for doing nothing? It may be that today the dollar is the best place to park wealth, but sooner or later the countries with wealthy central banks will find a way to put their money where they want to. If we don’t make the dollar more attractive, foreigners will eventually take their money elsewhere. It’s that simple. <snip>

    Our press also lulls itself into complacency regarding large dollar holders such as the Chinese. It would be hard for China to sell in size, dollar bulls say. The market couldn’t absorb that selling, the dollar would crash, and the Chinese would themselves wipe out the value of their own dollar holdings, bulls argue.

    My fourth reason for ongoing dollar weakness: we don’t have a strategy for maintaining the dollar. We just keep hoping that China and our other trading partners will continue to do what suits us. That’s irrational. Other countries that hold dollars will act in their own interest. We should figure out what that is likely to be and prepare accordingly.

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Comments (8)
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  • optionsgirl
    , contributor
    Comments (5027) | Send Message
     
    Good article, L4D. In the meantime, it's probably time to pick up uup for a short trade up! Long term, our national dollar assures its continued debasement.
    There is a song written in 1894, called 2 little maids. Here's the refrain:
    I don't want to play in your yard,
    I don't like you anymore,
    You'll be sorry when you see me,
    Sliding down our cellar door,
    You can't holler down our rainbarrel,
    You can't climb our apple tree,
    I don't want to play in your yard,
    If you won't be good to me!
    30 Jun 2009, 08:25 PM Reply Like
  • Living4Dividends
    , contributor
    Comments (1220) | Send Message
     
    Author’s reply » Thanks OptionsGirl.

     

    I am rewriting the article as we speak so it will look different

     

    Hey - you changed your avatar. Is that a cat ?
    30 Jun 2009, 08:32 PM Reply Like
  • Living4Dividends
    , contributor
    Comments (1220) | Send Message
     
    Author’s reply » Oops, sorry, I am rewriting something else, not the ABOVE. The above was written by Bernstein. I stored in my instalog for future use. If you want to thank the author, it is better to do it under his article.
    30 Jun 2009, 08:34 PM Reply Like
  • optionsgirl
    , contributor
    Comments (5027) | Send Message
     
    I never read any of his articles before. He is well worth reading! Thanks-
    That's optionsdog, thanks for asking.
    30 Jun 2009, 09:00 PM Reply Like
  • Living4Dividends
    , contributor
    Comments (1220) | Send Message
     
    Author’s reply » I like the eye better, but I am sure you have your reasons
    30 Jun 2009, 09:09 PM Reply Like
  • Living4Dividends
    , contributor
    Comments (1220) | Send Message
     
    Author’s reply » PS- Optionsgirl, congratulations on making Top 20 ! (Even if you did take my spot! he-he).

     

    For that I gave you a bunch of thumbs ups !!!
    30 Jun 2009, 09:11 PM Reply Like
  • optionsgirl
    , contributor
    Comments (5027) | Send Message
     
    I've been voting you back up. It's so funny- make a sarcastic comment, and you get 20 thumbs up. Write something analytical and thoughtful, and you get sucker punched! My conclusion is I am spending too much time commenting. It's a distraction because I'm friggin mad at the politics and economic direction . Here's a great quote from Mish Shedlock (hope it makes you laugh) on the Fed giving low or zero interest loans with a wide range of private assets, and the quality of the collateral:
    "Well, I’m still waiting for them to accept bellybutton lint & Beanie Babies".
    I do admit, that line deserves a thumbs up.

     

    On Jun 30 09:11 PM Living4Dividends wrote:

     

    > PS- Optionsgirl, congratulations on making Top 20 ! (Even if you
    > did take my spot! he-he).
    >
    > For that I gave you a bunch of thumbs ups !!!
    30 Jun 2009, 10:54 PM Reply Like
  • Living4Dividends
    , contributor
    Comments (1220) | Send Message
     
    Author’s reply » I agree - the whole thumbs up thing is bizarre. For example, I write negatively about Gold and I get a zillions thumbs down.

     

    1 Jul 2009, 08:41 AM Reply Like
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