Saturday, September 27, 2008

A US$ Collapse is a Certainty... Its only a matter of when

The citizens of the U.S. are going to experience a SIGNIFICANT crisis in confidence of their currency, the US$.

This will not start here in America.  The beginning of the collapse will be initiated by the folks financing the U.S. Trade & Budget deficit (which is really just financing an unsustainable American lifestyle), the spiral downward from there will likely be breathtaking.  

This does not mean the Euro is the answer.  All currencies can lose purchasing power together.

Look folks, long before it happened I published that Fannie & Freddie, Lehman, and Washington Mutual would not survive the summer, and I was close... WaMu did make it into the Fall.  I got a nice email from a reader complimenting me on my calls, and asked me how I could see this but the folks in Washington did not.  Well, I am going to let you in on my secret...

I CAN COUNT, and I have worked on Wall Street for the past 20 years or so.

That's it, that is my secret.  Then, in addition to that rather unremarkable talent, I actually READ the copious data available to the public.

Unfortunately, the VAST majority of the guys voting on the "Paulson Plan" as I write this, are innumerate (mathematically challenged), and have no background in finance, and the American voter is somewhat less informed than our elected representatives.  This is not meant to demean their specific talents - I am sure they have them.  They simply do not have the core competency necessary to do the right thing in this particular area - WHATEVER that is.  

This will be a long, slow, grinding, lurching train wreck, irrespective of the Paulson Plan.  It will be a short drop to the end of the rope in the plan's absence.

Good Luck!

Mentatt (at) yahoo (d0t) com

6 comments:

Anonymous said...

In the case of a dollar collapse-

How does the US go about purchasing 5 billion bbls/yr of foreign crude oil when the USD is not accepted in payment? Oh, in gallons that is 210 billion gallons/year of crude from overseas.

How do we finance our $10 trillion plus USD Fed budget deficit when we no longer get Reserve Currency rates? And finance the current acct deficit? And a lot of other financing needs as well. We are absorbing 80% of the world's savings- which will stop dead with a USD crash. And we have little or no savings of our own.

What happens to imports? ie we import 95% of our shoes from mainly Asia. We no longer have any shoe factories here. Much the same goes for critical stuff like auto parts, alternative energy goods, and medical supplies.

we are freakin doomed.....

Bureaucrat said...

Um, oil is mostly traded in U.S. dollars, and so far, Canada, S Arabia, Mexico, Venezuela and Nigeria (our 5 biggest suppliers) apparently don't mind taking dollars, probably cause they have expensive economies & governments to prop up. For all their whining, they actually like the dollar a lot (so far).

I think Jeffers is underrating his ability to see the dollars for the pennies. ;) If you multiply the average house price ($300,000) by a million people who shouldn't have gotten a mortgage at all, it is considerably more than ten million people with $10,000 balances on their credit cards. When Jeffers says "it's the housing, stupid," he ain't kidding. We are in this mess not because too many people bought too many pairs of jeans at the Gap, but instead because half a million dollars was loaned on a home which will never be paid back, a problem 100 times greater than the jeans problem. That is where Jeffers saw the dollars while others were concerned about the pennies.

Anonymous said...

>For all their whining, they actually like the dollar a lot (so far).<

Yeah, the Saudis love having the US destabilize their region and set half of the ME aflame. And selling their valuable and eminently marketable oil for depreciating dollars just warms their little hearts.

And what was that 911 thing all about with the Saudi hijackers?

But why oh why are they doing all these energy & trade deals with the Asians since we are such good chums? Maybe they see the end of US superpower and dollar reserve status and want to forge links with the new Asian global economic epicenter? And because those corrupt Saudi monarchists know that they will soon need a new protector if they wish to avoid attending their own beheadings.

And no more humiliating threats and warnings from Condi or Cheney would be a relief!

Oh, Mexico and Venezuelan oil imports to the US are crashing at a 30% yearly rate and will soon be history.

Greg T. Jeffers said...

Bureaucrat:

Um, until a few weeks ago American's were more than willing to deposit their money in Washington Mutual and trade with Lehman Brothers.

Things change. Seeing the change before others do is how one makes profits and avoids losses.

Bureaucrat said...

That's why I'm here, GTJ. I want to learn how to better predict the future and see things others don't, and make some $ in the process. :)

Bureaucrat said...

(Oh, and defend the Federal government, for which I work, and is not nearly as bad as all the curmudgeons on your blog say. Dumb, true, but our heart is in the right place. ;) )