Re: US DOLLAR CRASHING. DUMP IT QUICKLY1

Social Americans <[EMAIL PROTECTED]> wrote in message news:<[EMAIL PROTECTED]>...
> E. Barry Bruyea wrote:
> 
> > On Thu, 27 Nov 2003 22:06:09 +0800, "Yamashita"
> > <[EMAIL PROTECTED]> wrote:
> > 
> > 
> >>The US Dollar is on the verge of crashing. The expected windfall from the
> >>invasion of IRAQ did not materialise to give the Americans the psycclogical
> >>boost to their faltering economy. 
> 
> It is supposed to be a psychological boost for other countries around 
> the world to buy, hold and use dollars.

Not anymore. 

-----------------------
Foreign Lenders Bolting? + Trading Notes

By: Rick Ackerman, Market Wise Black Box 
 
How much longer will foreigners continue to support America's $1.5
billion-a-day borrowing habit?  Figures released by the Treasury
Department yesterday indicate they may already have turned off the
credit spigot.  Net capital inflows into the U.S. plummeted from $50
billion in August to $4.2 billion in September, implying that foreign
investors have recently begun to direct their surplus funds elsewhere.
 Sales of Treasury bonds accounted for nearly $20 billion of the
slippage. While foreigners bought a net $25.1 billion of Treasurys in
August, their purchases in September netted out to just $5.6 billion. 
The reversal was even more decisive in the mortgage markets, where
they sold a net $3.2 billion of Fannie Mae and Freddie Mac paper after
buying $8.9 billion of it the previous month.

 

Because the selling has been mostly from private accounts and hedge
funds rather than by central banks, it is unlikely the trend can be
reversed by mere political jawboning. It is global market forces at
work, after all, and the selling could intensify beyond remedy if
perceptions of the dollar should take a serious turn for the worse.
With the current-account deficit expected to reach $550 billion this
year, foreign credit has become essential to America's day-to-day
business. The trade deficit has burgeon steadily since the early
1990s, but the offset of increased foreign lending has prevented it
from becoming a crucial problem.

Recovery in Jeopardy

Until now, that is; for, our dependency on foreign money to bridge the
gap between what Americans earn and what they spend has grown to the
point where even a relatively small shift out of dollar assets by
global investors could jolt financial markets badly enough to derail
the U.S. economy. Meanwhile, significant buying of U.S. assets by the
Japanese has long been an important prop for the dollar.  Most
recently, the Japanese bought a net $20 billion worth of our bonds and
equities in September, impelled by the need to boost exports with an
undervalued yen. They are acting in self-interest, of course, but
their motive could take an ugly turn toward self-preservation if the
rest of the world should start dumping dollars. That is one reason why
I will continue to recommend gold assets, and to regard each and every
dip in the price of mining shares as an opportunity.