If USD collapses

[Aussie]

That would be one of the best things that can happen to both the US and World economies. There is one bill in Congress, sponsored by one of the very few sane American politicians (Ron Paul) to make the Fed more transparent. However, obliteration of the Fed would be better.

100% agree patsy. However, along with the Bank of England, the US Federal Reserve System is the jewel in the crown of the international banking cartel. It is the (waning) financial power behind western global dominance including the World Bank and the IMF.

I suspect we will have officially arrived at the end of the world before they will allow the most lucrative banking franchise in history to be disbanded . . . most likely it will only be replaced by a new "global" central bank. This is in progress and we are likely to see it sooner rather than later. Everything seems to be on an accelerated timetable.

[ananda77]

...since October 2007, the financial and economic system has disintegrated with lightning speed as exorbitant debt levels started to unravel; many millions of people are facing and are fighting to avoid rock bottom

...I simply cannot imagine how much more misery an unmitigated impact (central bank actions to date) of the global debt destruction would have caused;

...people can be and have been mislead, but people are no idiots they can not be coerced further into debt slavery -DO THE RIGHT THING- and they have started SAVING (the kick-ass strategy against debt slavery); topping that

...SOARING GLOBAL UNEMPLOYMENT, FALLING WAGES, EXORBITANT CONSUMER AND BUSINESS DEBT, as well as HUGE PRODUCTIVE OVERCAPACITY -the flagpoles of global debt destruction-

...HYPERINFLATION - YOU KIDDING?? GET REAL!! LET CASH BE KING

...wonder what John Key, who correctly said: "You Can't Spend Your Way Out of the Crisis." has in mind;
maybe, here in New Zealand, instead of seeing companies laying off workers by the thousands and thus compromising the delivery of goods and services and their international competitiveness, we will see companies holding on to the workforce, albeit on reduced wages -if necessary- ;
in that way, as John Key reckons, we might have a chance... "that when the world starts growing again we can be running faster than other countries we compete with."

Kind Regards

[ananda77]

...there are possibly only two ways how to finance the US deficit:

1- The federal deficits could be financed by further flight from equities and other investments. The next financial shock could arise from commercial real estate. Stores are closing in shopping centers, and vacancies are rising in office buildings. Without rents, the mortgages can’t be paid.
Another scare and another big drop in the stock market will set off a second "FLIGHT TO QUALITY" and finance the budget deficits (buying up treasuries >to be on the safe side, the safest way would be to buy the shortest term treasuries)

2- The Federal Reserve will buy most of the new bonds and create demand deposits for the Treasury. In effect, the money supply will grow by the amount of Fed purchases of new Treasury debt. Printing money to finance the government’s budget normally leads to high inflation and high interest rates.
The initial impact of the announcement of the Fed’s plan to purchase existing debt was to drive up the bond prices. However, if the reserves poured into the banking system by the bond purchases result in new money growth, and if the Fed purchases the new debt issues to finance the governments’ budget deficits, the outlook for bond prices and the dollar becomes poor.
source: http://vdare.com/roberts/090319_bailout.htm

...looking at the long term trajectory of equity markets as well as the fact that the Fed's intention remains to keep interest rates at their lowest possible level for a prolonged period of time, it looks most likely that 1- should be the preferred strategy to tackle the deficit problem...

Kind Regards

[peat]

from the ABN Amro Daily mail

China’s central bank

proposed replacing the US dollar as
the international reserve currency with a new global system
controlled by the International Monetary Fund. In an essay
posted on the People’s Bank of China’s website, Zhou
Xiaochuan, the central bank’s governor, said the goal would
be to create a reserve currency “that is disconnected from
individual nations and is able to remain stable in the long
run, thus removing the inherent deficiencies caused by
using credit-based national currencies”. Analysts said the
proposal was an indication of Beijing’s fears that actions
being taken to save the domestic US economy would have a

negative impact on China

[Nevl]

from the ABN Amro Daily mail

China’s central bank

proposed replacing the US dollar as
the international reserve currency with a new global system
controlled by the International Monetary Fund. In an essay
posted on the People’s Bank of China’s website, Zhou
Xiaochuan, the central bank’s governor, said the goal would
be to create a reserve currency “that is disconnected from
individual nations and is able to remain stable in the long
run, thus removing the inherent deficiencies caused by
using credit-based national currencies”. Analysts said the
proposal was an indication of Beijing’s fears that actions
being taken to save the domestic US economy would have a

negative impact on China

Proving that old saying" if you owe the bank $1 you have a problem, if you owe the bank $1trillion then the bank has a problem"

China feeling a bit nervous about its unhedged exposure to the US debt market I think. This could be a massive transfer of wealth back to the US from China. How ironic. Proof that the market will even out in the long run. The US $ is on a long term downtrend needed to rebalance its economy and fix up its trade deficit. The Chinese cannot extract all their money and will be watching as each year another 10% of their wealth dissapates.

[airedale]

So is it possible that in a few years we will see " made in America" instead of "made in China" on everything that we buy.?

[Aussie]

. . . This could be a massive transfer of wealth back to the US from China. How ironic . . .

Not sure that I understand that logic. I thought a massive transfer of wealth from China to the US had already taken place via US$2 Trillion worth of USD's and bonds that China owns.

Am I missing something here? If the USD loses it's status as the world's reserve currency and if China and other central banks start moving out of their substantial USD positions, what will be heading to the US will be a massive wave of inflation as all those un-needed, freshly de-valued USD wash back up on the shores of America.

So is it possible that in a few years we will see " made in America" instead of "made in China" on everything that we buy.?

I seriously doubt that. It will take America decades to rebuild what has been destroyed in their manufacturing sector.

[ananda77]

Stocks Will Drop; Banks Will Go Belly Up - Roubini

...Deflationary Forces:

-lingering for as long as three years
-U.S. government bond yields will remain low and American house prices will fall as much as 20 percent in the next 18 months
-dollar will INITIALLY benefit as investors seek a safe haven in the U.S currency
-China’s call for the creation of a new international reserve currency a “pie in the sky idea” that’s unlikely to gain traction any time soon.
-a political call and in a nut shell - it ain’t going to happen any time soon
http://informationclearinghouse.info/article22302.htm

Kind Regards

[winner69]

Couldn't help but laugh reading this from that site ananda mentioned above

How the Scam Works

By MICHAEL HUDSON

March 27, 2009 "Counterpunch" -- Newspaper reports seem surprised at how high banks are bidding for the junk mortgages that Treasury Secretary Geithner is now bidding for, having mobilized the FDIC and Fed to transfer yet more public funds to the banks. Bank stocks are soaring – thereby bidding up the Dow Jones Industrial Average, as if the “financial industry” really were part of the industrial economy.

Why are the very worst offenders – Bank of America (now owner of the Countrywide crooks) and Citibank the largest buyers? As the worst abusers and packagers of CDOs, shouldn’t they be in the best position to see how worthless their junk mortgages are?

That turns out to be the key! Obviously, the government has failed to protect itself – deliberately, intentionally failed to do so – in order to let the banks pull off the following scam.

Suppose a bank is sitting on a $10 million package of collateralized debt obligations (CDOs) that was put together by, say, Countrywide out of junk mortgages. Given the high proportion of fraud (and a recent Fitch study found that every package it examined was rife with financial fraud), this package may be worth at most only $2 million as defaults loom on Alt-A “liars’ loan” mortgages and subprime mortgages where the mortgage brokers also have lied in filling out the forms for hapless borrowers or witting operators taking out mortgages at far more than properties were worth and pocketing the excess.

The bank now offers $3 million to buy back this mortgage. What the hell, the more they bid, the more they get from the government. So why not bid $5 million. (In practice, friendly banks may bid for each other’s junk CDOs.) The government – that is, the hapless FDIC – puts up 85 per cent of $5 million to buy this – namely, $4,250,000. The bank only needs to put up 15 per cent – namely, $750,000.

Here’s the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.

The more the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85 per cent. So the strategy is to overpay, overpay, and overpay. Paying 15 per cent is a small price to pay for getting the government to put in 85 per cent to take the most toxic waste off your books.

The free market at work, financial style.

http://informationclearinghouse.info/article22306.htm

[Craig3215]

Posted a new Martin Armstrong Article here
http://www.traders-talk.com/mb2/inde...owtopic=103994
too big of a file to attach on sharetrader