I know a lot of folks don't think the dollar's collapse effects them. They couldn't be more wrong. But like losing everything in the housing collapse, it'll just have to kick 'em in the head, then maybe they'll understand.
You have been warned. PIMCO's Bill Gross in his April report:
But with the U.S. Fed now almost done and the BOJ removing quantitative easing and threatening a tightening cycle of their own, the carry trade and importantly the existing level of the U.S. dollar vs. the Yen and almost all currencies is at risk.
As global real interest rates converge, the export potential of comparative economies should begin to dominate exchange values and it is there, of course, where the U.S. is so critically deficient.
Japan as we all know is an export powerhouse. Less well known is the ongoing ability of Germany as the center of Euroland to command global market share. The ascendancy of China’s production for export is of course unquestionable. That leaves the U.S. with its increasingly hollowed out manufacturing core as the near certain loser in currency valuations going forward. To be blunt, the dollar must go down as it loses its carry.
April 25, 2006
When this man talks, you should listen - here comes the dollar collapse
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6 comments:
fully agree. That is why I trade currency to protect my financial assets against a declining dollar.
David
Bubble Meter Blog
A lot of central banks would like to lighten up on their dollar holdings.
A US attack on Iran with nuclear bunker-busters would give a lot of those people the cover they need to dump a few billion of those dollars....
If enough dumping occurred, the dollar could start into a powerful decline which would create a rationale for even more dollar dumping...
Before you know, we are back to double-digit interest rates.
And yet another serious screw-up for W.
"A weaker dollar will make US manufacturing more attractive, as it will become more expensive to outsource jobs overseas."
Utter nonsense. Stop watching CNBC and do some critical thinking of your own. Chindians make about 1/10 the wages Americans do..even if they cut the dollar in half the manufacturing base is not going to be rebuilt in the U.S.
Truth: Many major high-tech venture capitalists now are REFUSING to fund startup companies, unless at least half or more of their technical companies are *already* pre-outsourced. (almost always to China + India).
Not surprisingly a large fraction of the executives and managers of these companies are originally from China or India (as well as the venture capitalists themselves) and have many connections "back home" to make this easy.
A weaker dollar will make US manufacturing more attractive, as it will become more expensive to outsource jobs overseas.
What US manufacturing?
Our manufacturing sector is hollowed out and dying a slow death...
That's a basic misconception - manufacturing has grown as a percentage of overall GDP (compared with service) in the last few years.
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