gabe borenstein

Deleveraging Pushes the Dollar Up

The theory that the leveraging is responsible for the dollar strength is a sheer nonsense.Explanation for the dollar momemtum is much simpler.
As the subprime issues destabilized financial equilibrium (U.S)and destabilized the U.S economy, most speculators/ investors did not realize the implications of the American turmoil on the global economies and finacial system.Untill September of 2007 some mega short dollars posittons were driving force behind the dollar weakness reinforced by the universal perception that the U.S is no longer the economic/military/fina... force that it once was -ie statement from the German leader.ship. As U.S problems emerged -but were and are effectively addressed ,two things had happened .
a) Europe ,Asia and the Emerging Market zone have sequentially imploded (that is not over yet ),while the U.S economic /financial system is exhibiting the signs of stability on the way to a mega market/economic non-inflationary rebound(disposable income has been decimated suficiently enough to make consumers more averse to excessive debt).
b) unprecedented global flight to quality driven by the realization of the "masses" that only U.S can restore global stability in the economic/financial/mar... had driven the dollar to the current levels assisted by the record dollar shorts.
The dollar momentum is not over as the U.S economy is heading for the record rebound in the period ahead -not reflected in the dollar levels yet .
It is conceivable that the dollar is heading for historical highs.
The FED ,the Treasury ,the Congress and the Administration had created unprecedented catalyst for the most dynamic and noninflationary record economic rebound .
The incredible recovery ahead will make bears wince with a pain.