Bloomberg reports that famed investor/fund manager Jim Rogers is moving entirely out of US $. He depicts the US as in the process of losing its reserve currency status (a theme familiar to readers) with dire consequences for the currency’s performance. From Bloomberg: Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all […]
Read more...The Financial Times reports that the G-7 meetings this weekend did not even address one of the two main issues on the agenda, the dollar, and along with the concurrent IMF meetings, featured a good deal of acrimony and disarray. Exactly what you don’t need with a crisis looming. From the Financial Times: After Friday’s […]
Read more...While the G-7 may shy away from trying to bolster the dollar, the newly bold Alan Greenspan isn’t afraid to step into the breach. From Bloomberg: Former Federal Reserve Chairman Alan Greenspan doesn’t expect a rapid decline in the dollar should nations sell more of their holdings of U.S. Treasuries, according to people attending a […]
Read more...In an odd happenstance of timing, the IMF published a report on Wednesday that declared the dollar to be overvalued. As we have noted before, this isn’t the first time they’ve come to this conclusion (they issued a similar finding at the beginning of August). That view, by the way, isn’t one that has made […]
Read more...Remember basic macroeconomics? The current account, which consists primarily of trade in goods and services, is supposed to be offset by the capital account, which is largely capital transfers but also includes the purchase or sale of “non-produced goods” like mineral rights and intellectual property. And the story of the US has been that our […]
Read more...I’ve been having so much with SIVs that I am late to this piece from Bloomberg. It describes how Paulson will face a great deal of criticism from his G-7 peers this week due to his stance on regulation (more accurately, the desirability of a lack thereof) and the dollar. The writer believes Paulson is […]
Read more...Yale Professor Jeffrey Garten has long argued that letting the dollar fall will do little to remedy America’s chronic balance of payments deficit. In a recent Newsweek article that picks up on themes he presented in a 2004 New York Times op-ed, namely, that America is so addicted to imports that a big fall in […]
Read more...George Magnus, the UBS economist who popularized the term “Minsky moment,” has a thoughtful comment, “The credit crisis: why it is still too early to relax,” in today’s Financial Times. The article expresses doubts about the beliefs that undergird the current optimism in the financial markets, namely that the credit crisis is pretty much over, […]
Read more...A very good post by Menzie Chin at Ecnobrowser explores the meaning of an expression often used by regulators, traders, and the media, the strength (or weakness) of a currency. Chin tells us (and I hope I am not oversimplifying a lucid explanation) that it really signifies two things. The first meaning is the value […]
Read more...In an interview published in today’s Financial Times, soon-to-retire IMF managing director Rodrigo Rato declares the dollar to be undervalued. Now we have noted that some technically minded traders see the dollar as oversold at current levels. But “oversold” is not the same thing as “undervalued.” Oversold suggests that there will be a near-term rebound, […]
Read more...The Financial Times notes in a story today,”Credit squeeze pushes ECB to peg rates,” that the European Central Bank refrained from its inclination to increase rates to combat increasing inflation. One has to wonder whether the failure to increase rates is out of the recognition that a hike would put more downward pressure on the […]
Read more...In a further blow to the dollar’s standing, Vietnam and Qatar both announced that they are cutting their holdings of dollar assets. Note that this isn’t merely “diversifying away from the dollar” which could be accomplished by effectively reducing ongoing dollar purchases (both run trade surpluses which oblige them to buy dollars) via exchanging them, […]
Read more...Although I’m not keen about the dollar’s prospects over the next 2-3 years, a Bloomberg story says that it appears to be oversold relative to the euro. However, this view is based on technical analysis, which some dismiss as a close cousin to astrology. From Bloomberg: The euro’s record-setting rally may not extend through the […]
Read more...It seems peculiar indeed that a sea change in the world economy, namely, the decline of the international funds flow generally called “global imbalances,” has gotten so little attention. “Global imbalances” refers to capital flows from high savings countries such as China, Taiwan and Japan, funding current account deficits (meaning consumption) in the US. They […]
Read more...Like our own Fed governors in the run up to the FOMC meeting that produced a 50 basis point Fed funds rate cut, so too have European Central Bank been sending mixed signals on domestic versus international priorities in their interest rate policies. But their actions are the mirror image of ours. For them, member […]
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