Asbytec

Greenback's Slumped on the Canvas

Hmmm...the 19th century belonged to England because of it's economic and military empire. The sun never sat until the 20th century. The US, same economic and military empire in the 20th century. Will china have some global military reach this century?

I imagine China's resources are largely untapped and it has massive human resources. It's production is unequaled today. But, one problem is China has not a sufficient middle class, yet. And is still, best I can tell, a command economy (with a free market interface.)

Interesting thought, though...

Greenback's Slumped on the Canvas

The "beggar they neighbor" has begun. Has the eventual collapse of all (most) fiat currencies begun as well? "All fiat currencies fail, and all currencies are fiat."

It's like having that root canal, it'll hurt but not after it's over. And when it's over, my bet is the dollar will be on the top of the heap. I think most central banks believe that, too. I suspect that's why none bought into the euro in mass while it was $1.26. Sure, there is some diversification...but not a wholesale flight from the dollar some have speculated.

Scary times. The greenback is certainly on the canvas with the euro moving in for the choke hold. But, the euro just does not have the demographics or might to supplant the dollar. The EU could never support huge trade imbalances with China.

Memories Are Short, Trends Are Strong: Still Bullish on the Dollar

I, too, am dollar bullish and have been for quite a while (index back in upper 70 territory) despite Fed liquidity injections. The dollar has lost over 30% of it's value over the last few years. It's due for a rebound. Here's why.

My understanding of the credit crisis leads me to believe our money supply is winding down, though I have not seen any figures (up 38%?) Credit is tight and Chinese exports are down. Less dollars are finding their way into the forex. Dollar based safe havens are all the rage, and hedge fund pay outs have a long way to go, yet.

I perceive a long and deep recession coming. Continued market volatility will provide some emphasis on dollar strength, as the author points out. And I see volatility well into 2Q, possibly beyond. The Fed rate is 1%, there is not much room for further cutting and still the markets have not shown many signs of strength.

The euro and the GBP have clear downward trends. The pound is currently in the $1.52 level, the euro at $1.25. Both have continually broken their support levels. Who would have thought that? And the Euro Zone is probably going to ease further as this recession begins to really hit hard next year...maybe through all next year.

The dollar index is again over 87, as of this writing. I read somewhere if it broke resistance at 86, then the trend will become firmly bullish. That has happened.

Lastly, Obama is probably going to advocate a strong dollar policy.
www.guardian.co.uk/bus...

So, I can think of many reasons to be bullish on the dollar, and fewer reasons not to. Though, the dollar will peak sometime. When? Why? And what signs will tell us? Those are the questions. I suspect not for a long while.