Re: IMF: Bird flu could trigger global recession
Re: IMF: Bird flu could trigger global recession
Binkerbear said:
I don't have enough insight to make a bet on the dollar's move but remember that the Fed significantly increased in money supply in advance of Y2K. With this threat being having far more devastating potential, would that not mean huge increases (maybe already planned) throughout a pandemic ?
The easing of foreign lending to the US is my point which is in concert with Fl1.
This to me is a crack in the wall of impenetrability...in terms of necessity to genuflect to the US dollar.
I fully understand that nobody really wants their money in a 3rd world country. I've been to enough to know this is nearly universal, unless business is booming for the entrepreneur in which case they're torn between expansion and capital preservation. My point is that when the US dollar is shunned, and interest rates go up, the shunning process is a psychological waterfall and the first water over the edge tells everyone else they too can safely go over the edge. Yes, rates will rise. And yes, they'll put their money in euros, gold, aussie and kiwi dollars, and into oil. They, those investors, to me clearly have no investment model which causes them to shun all else and invest in gold. But they're acting traditionally and what we're seeing, we're seeing. I see this is as the first sign of the discounting of the integrity of the dollar. Fl1, I believe, sees the US dollar as the default only serious choice, as does the IMF. I don't. I see that statement as obvious; so I look around it at what really will drive the markets...as I think that nearly every economist who holds a job as such is merely a steaming pile of ignorance; this does not include Fl1 as she's entrepreneurial, directing her own ship of fate.
Folks, gold is at $599.50. Silver's nearly $13. Interest rates are rising and the precious metals are near their 24-25 year highs, on a long term recovery trend. But, but, but, but... stutter the economists, "Precious metals earn no interest, carry a steep opportunity cost, and that opportunity cost is going up as interest rates rise." This must mean, in their peabrain thinking, that precious metals prices must decline. As that is not occurring, the message here is, "If you see an economist on the road, kill him/her." They're telling the lumpen's how to die. So, they deserve no better.
The IMF says both things... a rush to strong, deep, developed economies as a storage location for hot money...and > "In the worst case scenario, the shift in asset allocation caused by an outbreak of avian flu could trigger a disorderly unwinding of current global financial imbalances, the report warns. This phenomenon could be "very nasty," Hausler told Tuesday's press launch -- substantially worse than an unraveling caused by other factors such as a turning of the credit cycle -- with potentially very negative consequences for global financial stability."
I interpret this obvious observation as extremely negative for the US dollar. The US is the one country with the largest current global financial imbalance. Isn't that correct? So, hint hint, and kick in the shin, who is the IMF talking about? Let's see, it must be Tonga.
What's a disorderly unwinding of imbalances look like? That's the $64,000 Question. DEAR READER, PLEASE SPECULATE HERE.
I think it's gonna look like an abandonment of dollars and a rush into "the alternative" and that alternative is not the euro, and may be oil, and most certainly are the precious metals. Interest rates will skyrocket in the USA; the Feds will have no possible chance to get ahead of this; Ben at the Fed will not be able to print money as that will compound the problem, just like in 1923 Germany; housing might rise due to inflation, but I think it will instead surprise everyone and real estate in the USA will collapse in value as the owners get squeezed by both interest rates and the dramatic rise in oil from the USD$60's to the USD$90's (looked at the cost of gasoline lately?) and go bankrupt. The IMF is advising the lenders, "Hey, don't foreclose as that will make things worse." Talk about the lenders being held out as dummies!
I don't know how this will pan out yet, but I believe firmly in what I've just written. And of course, I welcome alternate views, to challenge my own thinking and persuade me and us with theirs.
Thx
