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the massive dollar printing / stimulus did more to flat out devalue the dollar than anything our government has done previously. i am not denying that bush was incredibly bad for the country, but what has THIS government done to fix it? i submit that they have just made an already bad situation worse and they are already talking about yet another stimulus program.
Yes, "devalue the dollar" is such a scary phrase, isn't it. Well, nothing will do more to undermine future confidence in the dollar than even more unemployment and even more businesses being forced to close. Those are the sorts of things that would make the situation worse. Neither this administration nor that in any other country dealing with a stimulus package has any program in place to encourage additional unemployment and further business closings. All are pointed in exactly the opposite direction. Currency markets are flexible and fluid. They react to who in a relative sense is seeing more results. Even if everyone's results were good in an absolute sense, the country earning an A- for progress would see its currency rise in the short-term, and the one with just a B or a B+ would see its currency fall. The US is the largest economy by far in the world. It was also the one most impacted by the colossal mess-up of the past eight years. We are too big and too hurt to be the ones earning the A-'s for a while. We will have to settle for those B/B+ sort of scores. There is no sense at all however in going around calling a B or B+ an F.
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Originally Posted by floridasandy
over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital. The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade ago.
Who cares. The situation ten years ago was not fixed and neither is the situation today. We are all playing for ten years from now. The Chicken Littles of the world are meanwhile not the ones who end up solving the world's problems. Most often all they do is make a lot of noise and get in the way.
the same people who got us into this mess are certainly not the same people who are going to get us out of this mess. so far no one has been able to prove that piling on more debt solves a debt problem (although we have a government in place which clearly sees it as the solution to our problem). i guess there are people who really think that we can print our way out of this economic crisis, while allowing wall street corruption to exist simultaneously.
We don't have a debt problem. We have a demand problem that in the short-run can only be addressed through debt. That debt is a key part of what has stood between this and other developed economies and a global depression. Heading off that depression will leave in its wake debt-to-GDP ratios that are uncomfortable over the long-run, but well short of critical levels. We and others have been far beyond this point before and lived to tell the tale. Stabilize, recover, repair...pretty simple formula.
never in the history of the world have we had this toxic derivative debt exposure. i guess we will just have to disagree what the problem is and what the solution is, and time will sort it out.
i do think that denninger summed it up pretty well back around february:
We've got over a trillion in trash on our balance sheet now, which we promised would fix the problem but it didn't do jack. That's because nobody in their right mind will borrow money when the economy is in the tank and debt levels are above sustainable maximums. The only borrowers are people who are deadbeats, and that doesn't help. Instead of clearing this out by forcing the bankrupt to take their medicine our "solution" is to attempt to devalue the currency by explicit monetization.
never in the history of the world have we had this toxic derivative debt exposure. i guess we will just have to disagree what the problem is and what the solution is, and time will sort it out.
Love the word "toxic", don't you. Most of these derivatives have nothing to do with debt. They are essentially side bets on what will or won't happen with respect to some underlying asset. There is a price at which I can profit by selling notes based on whether you will or won't use the word "toxic" again more than five times in your next hundred posts. This is more akin to bookmaking however than to finance, and in a very simple sense, that is exactly what Wall Street was trying to do.
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Originally Posted by floridasandy
i do think that denninger summed it up pretty well back around february:
Quote:
We've got over a trillion in trash on our balance sheet now, which we promised would fix the problem but it didn't do jack. That's because nobody in their right mind will borrow money when the economy is in the tank and debt levels are above sustainable maximums. The only borrowers are people who are deadbeats, and that doesn't help. Instead of clearing this out by forcing the bankrupt to take their medicine our "solution" is to attempt to devalue the currency by explicit monetization.
What was it he actually said again??? This is a bunch of undefined pop argot and jargon assembled into a paragraph of meaningless mumbo-jumbo. I get the point that he thinks doing nothing while Rome is burning is a better thing than fiddling, but beyond that basically dumb idea, I don't see very much being put into play here.
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