So I don't think there'll be a sudden collapse in the USD unless Japan, China or the Saudis make a run for the door. Which is exactly why they don't bolt. Even those who are disinvesting - sombody has to be for the USD to continue its now-record decline (we are now around its mid-90s' lows, now question is, will it blow through those lows?) - will do so gradually, precisely so as to get out without advertizing what they are doing and suffering even greater losses.
I guess the wild card is the Saudis. Something "bad" happening there could cause a panic, I suppose. But that is one reason the 7th Cavalry (quite literally in the case of one combat unit) is in Iraq.
Platinum > $800, gold sticking > $400 / oz, oil now $32, basic commodities in general going up and up...inflation is on its way. (That's another reason that guy on the back of this weeks Barrons could be right - basic steel going up means US steel becomes profitable again). But the general price tsunami hasn't hit yet. That's another variable that needs to change.
And history will be mose vengeful this time around.
>10 years after Nixon and Vietnam first devalued then floated the dollar,
>history looks set to recur with a vengeance. However, Japan and China
>continue to throw good money after bad buying US securities and nobody
>answers and few even ask the question what their plan B is when the global
>dollar casino stampedes. How are they covered? Futures contracts? If
so, who
>gets burned instead?
>
>What exactly do you guys see happenig to Asian dollar holdings in the event
>of rapid erosion of the dollar? I think it's inconceivable that China and
>especially Japan should go on banking on the US and not hedge against the
>imminent dollar collapse.
>
Well Japan did get hit in the previous USD collapse at end of the
Eighties, but the LDP lackeys bit the capitalist seppuku blade like
Uncle Shogun's loyal samurai. I think they will again, but I doubt
whether the Japanese political economic regime will survive a second and
quite likely more severe shock this time around, as they survived the
last one in the mid 1990's.
China has no choice but to hold USD, since it is bootstrapping its manufacturing by exporting to the US market, and the EU market won't allow itself to be such a substitute, so China can't just swap into euros with shutting down its prime export market. So, whereas the Japan regime will choose to take the hit (and that's the point about Japan at this conjuncture - it _does_ have the choice to save its own ass here, though the USD would collapse and with it, the current Chinese expansion, although the Japanese regime _also_ has the choice of substituting itself as an importer and partially bailing the Chinese out - and this is happening to some extent already) - the Chinese will have to take the loss. The question is will the Chinese state have the resilience to survive such a shock. That's an open question: I could imagine a civil war. Now, we know Sam wnats that, but would Japan want that? Again, Japan's the pivot. For now
Which might be a good reason for Sammy letting his dollar go limp, especially as he compensates with a gun to Saudi-OPEC's head. That's three birds with one stone: Japan is finally bankrupted, China collapses in civil war and Shogun Sam has a free hand to stomp its boot on OPEC's neck. The EU will be hemmed in and internally divided using its British, Spanish, Italian and Polish Trojan Horses (who will all compete to be Sam's 'favorite' Trojan). The only loose cannon left would be...Russia. The final pivot.
Excuse me while I finish the Powerpoint presentation ;-) It will be posted shortly...
Plenty of room for things to get worse, much worse. Espcially with Sams' mad nuclear suicide bomber-state loose in the Middle East. Best to change Hillary Ahab's course now, before it's too late.