Iran Leads The Attack Against U.S. Dollar

Face it, The U.S.'s economy is the only economy in the world that can run in the red and it actually helps the rest of the world's economies...without our orders for goods running ahead of domestic purchases countries around the world would fold.


Your citizens' dependence on borrowed capital will be your undoing my friend. Personal debt levels in your great country (I happen to like you guys, OK?) are way too high! Real estate has been carrying your economy, not real growth, and Bush knows it. Your people are relying on borrowings to sustain their consumption. The only way to hedge against a recession is to start a war, and where are you now? Review the Vietnam war era and there are some eery similarities.

Your subprime lender market is going to blow soon. With it, will come thousands of bankruptcies, and an implosion of the real estate market. Real incomes will decline due to layoffs, and you will see a dramatic increase in welfare cases. Canada has no such problem, since we have different lending regulations and a tighter monetary market. I know because I have been in the money business for over 25 years. If I were you, I would move to cash to take advantage of coming real estate bargains in your country soon.

Let just say in the event that the dollar looses enough value. This can benefit the US economy. In the late 60 lots of business in the US move to countries like China and India because of the cheap labor and cost. If the dollar loses enough value. Why wouldn't past business return to the US? I mean labor would be cheaper and cost would be cheaper. This will increase the employment rate in the US and strengthen the economy. We wouldn't need to import so much products from other countries like China because it would say, "made in the USA".

But then again, I don't see this ever happening because the US has the biggest influence in the world. China's economy may catch up with the US and then stable out, but that's where it would end. And even if China's economy catches up with the US. This would mean business in China would move to other countires like India or Africa for cheaper cost. Everything has to balance out eventually.

Like the OP said, the Dollar is being devalued by design...part of the brilliant strategy to smooth out an unsustainable current account deficit. The idea is for the fall to be orderly...the infamous soft landing. In fact, China and Japan have actually been cooperating in the effort, at least up until those pesky trade sanctions.

Now Granted, a weaker Dollar helps US exports, which means an increase in US manufacturing jobs, but for the average American, this benefit will be will be offset by the loss of purchasing power. This is particularly hard on the elderly and others depending on fixed incomes to survive...and most unfair to the few old school Americans that have scrimped, and actually managed to save a few Dollars.

Ruling elites love the easy credit, and recycled dollars that come with deficits...that's how $ gets funneled into T-bills, US securities (stock market), and asset bubbles. That's what funds tax cuts, unpopular wars, and other government shortfalls...but most importantly, this is how wealth is transferred from one class to another. When a country has to intentionally debase it's own currency in order to decrease it's debt-load, somethings wrong, and ultimately it's the dwindling middle class that pays the price.

In the past, foreign investment favored the US as a safe, and profitable place to do business...why?...a growing economy...relatively stable currency...and political capitol in the form of well managed foreign policy...for the most part, people respected us. Well, the Dollar just fell through key support, data is weak (automobiles, manufacturing, and housing) indicating an economic slowdown, and our foreign policy is a disaster. Our ace-in-the-hole is the US Dollar as the world's reserve currency, and woe be unto Iran, or any other country that threatens that relationship.

The Dollar began to slide on last weeks Chinese sanction announcement...then yesterday, the European Central Bank signaled the probability of a rate hike next session...the Dollar reacted immediately. The PPT will step in to defend at some point (80.00?), or they may need to initiate a correction before the end week, but it's only a stall...and the fact remains...the Dollar is going much lower. Already at 81.76 this am...yikes!

Got Gold...Silver?

I learned a bit more about the Chinese sanctions deal. Apparently the US paper manufacturer that originally filed the complaint with the Commerce Dept. is a company called Newpage. NewPage is owned by Cerberus Capital Management, a private equity group. John Snow, the former US Treasury Secretary under GWB, is the chairman of Cerberus...small world.


Peace &
Good Fortune
OBE1