Rumors Of The Dollar's Demise Have Not Been Greatly Exaggerated

Tyler Durden's picture

As the trading day rolls to a close, the trade once again is sell dollars, buy everything else. It is no surprise that stocks are trading where they are courtesy of an insane printing press operator and it being the third lowest volume day of the year, but now the buying spree has shifted into 10 Year US Treasuries as well. Nothing can stop the systemic annihilation of the dollar at this point absent a major exogenous event, or constipated European bureaucrats saying enough before one Euro can buy a few hundred million portraits of George Washington.

In the meantime, is anyone trading at all anymore?

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Project Mayhem's picture

Stock market crash might save lol-dollar for a little while

deadhead's picture

+1

sooner or later they are going to have to do it or it will be done for them.

great Week in PM article today, PM.  I thoroughly enjoy it.

food for thought for the next one....look at Einhorn's speech today (marketwatch had it) about currency crisis.....perhaps we get another asian contagion out of the land of the setting sun???

lizzy36's picture

thought about buying spy odd lot but was frontrun by jpm.......

chet's picture

All my positions are up!  I'm an investing genius!  I'm going to borrow on my credit cards and buy anything that moves!

On a serious note, I think they will have to try a save on the dollar eventually.  But only when we're truly at the precipice.  So is that 72?  Dunno.

As PM says, they'll crash the market.  Maybe try to reflate yet again after that.

jm's picture

Can't save the dollar and keep interest rates next to nothing. 

They defend the dollar and the whole thing goes up in flames.

The dollar is expendable.

 

mdtrader's picture

Look at all these rumors surrounding me every day.

 

Lycurgus's picture

There is still no real alternative to the dollar at this stage of the game. 

The dollar will soon rally (next 1-2 months) causing a halt to the equities climb.

Chumly's picture

causing a 38.2% retracement or something like that, I'm sure.

Anonymous's picture

That's great and I was taking a vacation to FL next week too.
Well not any more....

Mark Beck's picture

I guess I would ask what actions are the FED taking to protect the dollar?

Fed funds rate increase? No

Tightening on any outstanding securities? No

Discontinuing to buy long term Treasuries? OK for now. But the QE damage is done.

Discontinuing to buy MBSs, No

It seems to me that the FED is interested in a program of real estate debt deleverage, and in general, banking debt relief, in an attempt to reverse the fall in housing price. Unless this asset class shows a marked imporvement in price, relative to the debt exposure, the FED cannot prevail without risking a currency crisis.

Another question I have been trying to answer is what does the FED do with the interest income from is huge MBS portfolio. My assumption is that the MBS is structured much like an CDO.

So what happens to the interest?

ozziindaus's picture

Any prevailing interest is most likely being offset by more defaults. Add to that the sinking MBS value due to diving home prices, iliquid market for Toxic assets, a tighening housing market and an overabundence of vacant homes, the FED can do nothing but sit on this steaming POS. Debasing dollars to reinflate the housing bubble sounds extreme.

Anonymous's picture

Between HFT, insider-trading HFs, and government-sponsored mispriced risk... why would I try to trade this?

Until the system is less rigged, I'm not playing (since frankly, it'll never be completely unrigged).

Anonymous's picture

Between HFT, insider-trading HFs, and government-sponsored mispriced risk... why would I try to trade this?

Until the system is less rigged, I'm not playing (since frankly, it'll never be completely unrigged).

Cognitive Dissonance's picture

The words "third lowest volume day of the year" speaks volumes, pun intended.

peterr's picture
peterr (not verified) Oct 19, 2009 7:05 PM

Maybe the dollar will get a bid if we get some bad earnings?

Goldman and Bank of Amerika run the markets along with Geithner, and beagle boy Ben. There is no free markets, only welfare capitalism and socialism for capitalism.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news

Anonymous's picture

I get sick of all this "death of the dollar" end of the world crap. It is still above last years low and until it breaks through that, there are no technicals to support that claim. In a world awash with credit (sorry, they actually are NOT printing them) there is NO BETTER OPTION. There is too much debt denominated in dollars for it to collapse. Until these debts are discharged, credit DEflation will continue and the dollar will rise in value. "The Federal Reserve System works only with credit." Just look at the charts (Aug08-Mar09) and tell me that it can't (or won't) happen again. Dollar 96 in 6 months.

Anonymous's picture

You can't see beyond your nose if you can't see the dollar rising.

Emmanuel Goldstein's picture

Yeah, rising up to $2 a pound again,

Stuart's picture

It's all about confidence and Uncle Sam is flat freakin' broke and the whole world knows it.  What is it about that, that people don't get when they wonder why the dollar is falling.   Rates have to rise, but if they do, now that Uncle Sam has even more debt, it would hasten the suicide.  Would you loan money to your neighbour if you knew there was a fat chance in hell of ever getting paid back?   I sure wouldn't.   

estaog's picture

Does anyone have that quote from GW Bush after 911 when he told people the solution was to get out their credit cards and spend money? Something about being able to solve the US's problems through consumption. Hmmm I can't find it now.

Cheeky Bastard's picture

this is what he said ( not a word about " go out and spend " directly, but the message is the same )

"Get down to Disney World in Florida, take your families and enjoy life, the way we want it to be enjoyed." 

Cognitive Dissonance's picture

I can't find the direct quotes but he also said that the "terrorists want to destroy our way of life" and then went on to describe our way of life as basically consumption, though he didn't use those exact words.

At some point, either when he spoke or later, I definitely remember him saying something along the lines of "so get out and visit the mall, take that vacation" etc.

 

Anonymous's picture

Very sad indeed. http://nexalogic.com/currency.html shows graphically the daily and YTD performance of all currency ETFs on the market versus the USD.