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Simon Black: "The Market Is Telling Us That The Dollar Is Finished"

Tyler Durden's picture




 

Some unpleasant perspectives for dollar bulls (and manna from heaven for the M.E. genocidal maniacs) from Sovereign Man's Simon Black.

The market is telling us that the dollar is finished

There’s major shift occurring right now in financial markets.

Sure, the food and freedom riots that are spreading across the globe
are a major indicator that civil unrest follows very closely behind
resource shortages and economic turmoil… but there’s something else that
I’ve noticed recently– it’s a sea change in the financial system.

In the past, major crises normally caused investors to seek safe
haven assets, and everything else equal, the dollar would rise. They
call it a ‘flight to safety’, and investors would flock towards the
perceived stability of US Treasury securities.

In 2008, for example, the Lehman collapse spurred the market to go
rushing into the dollar. The pound, euro, S&P, oil, and gold all
went into freefall, and the dollar surged. Anyone holding cash felt
pretty smart, and the market paid tribute to the US dollar as the
world’s safe haven currency.

There were a lot of reasons for why this happened. The US government
likes to claim that it has never failed to pay on its debts. Of course,
even the most cursory analysis would lead one to conclude that they
trade debt for inflation… and more debt.

Regardless, when financial markets were collapsing in 2008, investors
made a rational decision to accept negative real rates in the dollar
(effectively paying a fee to hold short-term treasuries) over other
currencies and asset classes.

It was the lesser of all evils at that particular moment and should not be conflated with ‘confidence’.

The other big reason for the dollar’s 2008 surge was that many of the
world’s financial markets were leveraged to the hilt… in dollars. When
Greenspan started slashing rates in 2001, investors around the world had
been able to borrow cheap US dollars and park them in higher yielding
assets abroad.

This global carry trade helped produce huge returns in emerging
financial markets as investors borrowed four to six times their dollar
equity at 2% to 8% and invested in China at 20%+.

When those markets began to melt down, however, the dollar loans
needed to be repaid, and investors went rushing back into the dollar.

The dollar sat atop its altar for about six-months from September
2008 through March 2009, at which point risk tolerance reversed and the
dollar began steadily losing ground again.

When European sovereign debt woes surfaced later that year (and in
earnest in early 2010), the dollar surged once again… but that time it
was a little different.

Sure, the dollar rallied against the euro and other European
currencies… but gold rose as well. I remember writing about this last
year, suggesting that the simultaneous rise in both the dollar and gold
indicated the market’s changing attitude towards what it considered a
‘safe haven.’

Clearly the dollar was beginning to fall out of favor.

Fast forward to today. Mubarak. Gaddafi. Khalifa. Al Said. Ben Ali.
Etc. There is no shortage of turmoil right now… yet we are seeing the
dollar get clobbered while gold, silver, and smaller currencies like the
Swiss franc rise. This represents a major shift in the way that the
market views risk.

It’s true that nothing goes up or down in a straight line… but long
term, the market is telling us that investors are washing their hands of
the dollar as a safe haven asset.

So what happens from here?

In the long run, the law of one price will prevail; the US dollar
cannot become so cheap relative to other currencies that a multimillion
dollar home in Malibu only costs the equivalent of six month’s wages in
Switzerland… or that a new Corvette equals the price of an electric
bicycle in Singapore.

Foreigners will swoop in and mop up US inventory long before that
happens, not to mention foreign governments will manipulate their own
currencies in order to avoid missing out on a 300 million-strong
consumer market.

We’re already seeing this now as the ridiculous game of international
capital controls tries to masquerade as a free market. I suspect the
regulatory environment will only worsen as the political lemmings follow
one another off the cliffside.

(yes I know it’s a myth, but so is the notion of fiat currency as sound money…)

What about commodities? Investors looking for safe haven assets may
opt for things like oil and wheat which have functional value… but I
suspect that governments will step in long before we see $200 oil to set
a ceiling price, or begin attacking speculators once again.

Ironically, this makes precious metals among the most attractive safe
haven alternatives– the fact that they have no real functional value is
a net positive.

As a caveat, I am not a gold bug, but the regular lamentations by the
PM bears (gold is just a paper weight that has no function, you cannot
eat gold, you cannot fill your gas tank with gold, there is no way to
value gold, etc.) may turn out to be beneficial.

It is simply BECAUSE you cannot eat gold, cannot fill your gas tank
with gold, etc. that governments will be more concerned about regulating
high oil, wheat, and soy prices. If gold has no real benefit to the
masses, the political consequences of high gold prices are less
significant.

In other words, $20 wheat means blood in the streets. $2,000 gold
only makes for pithy headlines, and its significance is easily dismissed
when highly regarded sages like Warren Buffet dispute the notion of
holding precious metals (nevermind he bought oodles of silver in the
late 90s).

We’ll talk about this much more on this later, especially why the
euro will likely fall first, and how the renimbi will continue to rise
as an alternative reserve currency.

 

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Mon, 02/28/2011 - 13:48 | 1004245 Turd Ferguson
Turd Ferguson's picture

The chart is telling you that, too, Simon.

Mon, 02/28/2011 - 13:55 | 1004274 egdeh orez
egdeh orez's picture

Calls for "Dollar is dead" is premature.

Dollar is dead only if the fed (and the banksters) want it to die.  If the fed wants a strong dollar, it has an ace up its sleeve.  All it has to do is remove the swaps with the European banks and the dollar would surge.  Of course, this would be accompanied by utter chaos in the financial world.

Mon, 02/28/2011 - 14:02 | 1004297 Burnbright
Burnbright's picture

It is true that the dollar top calling is premature but the FED has no control at this point. Anything Ben does at this point is going to destroy the U.S economy.

Mon, 02/28/2011 - 14:07 | 1004307 Shell Game
Shell Game's picture

True that.  It is more like the dollar is dead but it just doesn't know it yet, a zombie currency if you will. 

Mon, 02/28/2011 - 14:06 | 1004309 surfsk8sno
surfsk8sno's picture

The dollar is dead when the Asians, and Arabs want it to die

Mon, 02/28/2011 - 14:16 | 1004336 Burnbright
Burnbright's picture

Bingo, only trouble is that all the individuals within these governments have been benefiting directly by being bought out essentially at the expense of their own populations. Whole world is smoking while the dollar burns, the masses can't suffer any more loss. We have reached the threshold.

Either governments around the globe dump the dollar or they will be disposed.

Mon, 02/28/2011 - 14:22 | 1004351 MolotovCockhead
MolotovCockhead's picture

Calls for "Dollar is dead" is premature.

No, it's not dead.....it's on intravenous drips and Ben Bernanke is celebrating!!

Mon, 02/28/2011 - 14:26 | 1004368 A Man without Q...
A Man without Qualities's picture

"Dollar is dead only if the fed (and the banksters) want it to die.."

This is the nuance most Dollar bears fail to understand.  The global financial system is inherently unstable owing to the tendency to borrow short term and lend longer term, to earn the easy money from the carry.  The Fed controls short term lending rates and quantities, so the Fed and the US banks can pull the rug out from under the feet of the market anytime they want (of course, this is mutually assured destruction.)  


Mon, 02/28/2011 - 14:30 | 1004380 piceridu
piceridu's picture

 

If you knew you were going to die soon and you had one month to prepare. Let’s say you had to prepare a vault with a time lock that would only open 10 years from the date of your death. Let’s say you had 2 million dollars in 100 dollar bills and what you left in the vault was solely for your 2 young children…. But you had a choice to put the U.S. dollars in the vault, or convert them into Swiss Francs, or any other paper currency from around the world or 1,400 ounces of gold. What would you put in the vault?

 

Mon, 02/28/2011 - 15:56 | 1004646 Montecarlo
Montecarlo's picture

Clearly you would choose Gold and Silver.

Mon, 02/28/2011 - 21:09 | 1005573 Nobody special
Nobody special's picture

Ain't that the best way to put it.  You ever considered selling treasuries?  /sarc

Mon, 02/28/2011 - 22:40 | 1005771 Dooud
Dooud's picture

The only thing you could be "certain" would have positive value would be the gold. There is a risk that "any" current fiat currency may not even exist. This is a good question because it cuts to the essential value of gold. A poor second choice would be blue chip stock, but its hard to pick any which are certain to survive AND outperform gold in the next 10 years.

 

Tue, 03/01/2011 - 08:30 | 1006465 XPolemic
XPolemic's picture

Personally I would put seeds, plus a little essay explaining how all the great fortunes of the world have been made due to the great stupidity of the average person.

Mon, 02/28/2011 - 14:38 | 1004402 jus_lite_reading
jus_lite_reading's picture

I concur. Although the dollar is on its way out eventually, that day is not today. The Euro will crash and burn first, with such suddeness, that even Dr. Deficit himself will be calling up Axel Weber for answers.

Once the liquidity swaps with the ECB end, the EU will descend into chaos and the world will follow. Either that, or WWIII. Pick your poison.

Mon, 02/28/2011 - 15:07 | 1004505 Imminent Crucible
Imminent Crucible's picture

"All it has to do is remove the swaps with the European banks and the dollar would surge"

You misunderstood the purpose of the dollar swap lines.  They were not instituted to cheapen dollars in Euro markets. They were put in place to provide dollar liquidity to support Treasury purchases by Euro central banks.

How do you think that the U.K. was able to double its U.S. T-bond holdings while in the midst of a govt debt crisis that requires them to lay off 20% of public-sector employees?

Terminate the dollar swap lines and the dollar collapses.

Mon, 02/28/2011 - 15:26 | 1004572 egdeh orez
egdeh orez's picture

This is one possible, but unlikely, outcome.

Think back to '08... dollar liquidity was non-existent... dollar was going through the roof... european banks were about to go belly-up... YET, everybody was buying Treasuries because this was the flight to safety play.  The dollar swap saves the euro banks and lightens the dollar/liquidity crunch.

Mon, 02/28/2011 - 16:10 | 1004698 ConfusedIdiot
ConfusedIdiot's picture

Agreed EO. Odd your junking as the swap lines are as reported by TD in ZH. Need only look at the swap line carried with Mex to see how this is being played. Regards CI.

Bloomberg

Fed Extends Swap Lines With ECB, Other Central Banks

December 22, 2010, 8:17 AM EST

Mon, 02/28/2011 - 17:57 | 1005075 malek
malek's picture

You sound like The Bernank "I could raise interest rates within 15 minutes."

Yeah, yeah. But it will never happen.

Mon, 02/28/2011 - 14:10 | 1004317 Pladizow
Pladizow's picture

The death of the $ is the desired outcome.

You cant have a NWO with a super power in it.

Mon, 02/28/2011 - 14:37 | 1004401 Confuchius
Confuchius's picture

Pladizow;

What you say is true.

Add to that the 600 quadrillion of "derivatives" clutched sweatily by most of the world's banks and you have the necessary ingredients for an IED to end all IEDs.

Best to stand back and view the spectacle from the helm of your vessel, safely at sea with a year's provisions...

Mon, 02/28/2011 - 14:42 | 1004417 EscapeKey
EscapeKey's picture

Derivatives: $1qn.

Net notional: ~2%

Net notional of derivatives: $20tn.

Not that $20tn is a walk in the park, but please stop parrotting those ridiculous Max Keiser figures.

Mon, 02/28/2011 - 15:39 | 1004609 mick_richfield
mick_richfield's picture

Total Derivatives:                                 $1 quadrillion

Net notional value of Derivatives:        $20 trillion

Current value of All Investable Silver:  $21 billion

Popcorn:                                              Priceless

 

 

Fed delenda est.

Tue, 03/01/2011 - 01:38 | 1006195 Joseph Jones
Joseph Jones's picture

I agree: NWO requires no super power in it...they intended to destroy the USA all along. 

Mon, 02/28/2011 - 18:03 | 1005093 DeeDeeTwo
DeeDeeTwo's picture

What nonsense. "Flight to safety" happens when the stock market tanks. The stock market = summer 2007. When it finally collapses... USD will soar.

Mon, 02/28/2011 - 21:31 | 1005631 akak
akak's picture

Good luck with fighting the last war, General Petain.

Mon, 02/28/2011 - 13:51 | 1004256 Shell Game
Shell Game's picture

Ka-$-put

Mon, 02/28/2011 - 13:51 | 1004257 the rookie cynic
the rookie cynic's picture

Posted this on another article but it's apropos here as well:

It would appear that the dollar is no longer a flight to safety. If this were 10-20 years ago, these Middle East conflagrations would have pushed capital out of equities and into US treasuries and cash dollars. Dollar weakness on the heels of global "risk-off" conditions is a harbinger of further declines.  Add the fact that the dollar index just measures the dollar vs. other fiat currencies (and not hard assets) and you realize that the days of the dollar as reserve currency are numbered. It could take 5-10 years to roll out SDRs en masse, but that day is coming if the NWO and global banking cartel gets their way. http://therookiecynic.wordpress.com/2010/10/05/the-race-to-the-bottom-be...

Mon, 02/28/2011 - 13:52 | 1004261 redpill
redpill's picture

10-20 years ago?  More like *2* years ago.

Mon, 02/28/2011 - 13:59 | 1004283 unwashedmass
unwashedmass's picture

 

you can see this happening now. the euro is tanking but gold is holding steady and edging higher.

silver, JPM is sitting on it, barely holding it under 34......

we're gonna see these things become the "go to" in the flight to safety. you have to be brain dead to "flee to the dollar" for safety now...

Mon, 02/28/2011 - 14:17 | 1004342 the rookie cynic
the rookie cynic's picture

Good point. Black swans seem to be flying to safety of different climes since as recently as 2 years ago.

Mon, 02/28/2011 - 14:28 | 1004378 MolotovCockhead
MolotovCockhead's picture

Not too many years ago, when there's minor unrest in the middle east, you see the share market tumble world wide and the dollar rally but now the reverse is true. I think the dollar is sick!

Is it the new normal or are we seeing the unraveling of the Great Keynesian Experiment?! Don't care what the rest think....I am getting physical!

Mon, 02/28/2011 - 13:54 | 1004258 SilverRhino
SilverRhino's picture

Silver just broke 34.00 or at least is kissing it.

It is simply BECAUSE you cannot eat gold, cannot fill your gas tank with gold, etc. that governments will be more concerned about regulating high oil, wheat, and soy prices. If gold has no real benefit to the masses, the political consequences of high gold prices are less significant.

Is this man high or just incredibly foolish?  There's not a single sole proprietor / non-corporate business owner that I know that will NOT take PM's for services / goods.

Mon, 02/28/2011 - 13:54 | 1004270 Turd Ferguson
Mon, 02/28/2011 - 14:04 | 1004304 Harmonious_Diss...
Harmonious_Dissonance's picture

Giddy-up, shiny!

Mon, 02/28/2011 - 14:31 | 1004383 sunkeye
sunkeye's picture

luv it

 

Mon, 02/28/2011 - 14:22 | 1004350 Bob
Bob's picture

dup

Mon, 02/28/2011 - 14:23 | 1004359 Bob
Bob's picture

Thanks for the link, Turd.  I'm betting we don't see 32.5 again for a very long time.

Mon, 02/28/2011 - 14:24 | 1004366 purplefrog
purplefrog's picture

I don't know of a good place to put this questions, but what obstacles do I face taking my PMs to Mexico?

 

Mon, 02/28/2011 - 15:02 | 1004481 Harmonious_Diss...
Mon, 02/28/2011 - 16:22 | 1004745 ConfusedIdiot
ConfusedIdiot's picture

Hi Frog. I live in Mex and haul PM back and forth in my back pack. Going in ain't the issue. It's coming back to US of A you  got to be on record. If you are driving just hit the no declare lane and keep trucking. If flying write "lots of  silver dollars and gold coins - face value less than $10k". In Mex City Aduana will ask to see some but your listing means no problemo. In BJX aduana never looks as long as listed as I stated above. Reason is in Espagnol "less than 10k" fits the requirement and Aduana never exceeds the requirement - very bureaucratic down there.

Mon, 02/28/2011 - 14:06 | 1004306 velobabe
velobabe's picture

yeah my new found bro, walter, over @ Vanatta. sign was old and wore.

N O  C R E D I T   C A R D s

he will take silver coin. plus i told him the whole gov ponzi scam and he said he just read about it. i wised some people up this bright and beautiful AM.

he is going to buy some

silver coin, bitches†

Mon, 02/28/2011 - 14:10 | 1004320 NotApplicable
NotApplicable's picture

That's not his point. His point is that gold is a commodity that we do not depend upon to sustain life, so its price run is less of a consequence to a government "in charge" of things.

Mon, 02/28/2011 - 15:05 | 1004495 Ignatius
Ignatius's picture

+ 55,000

So few seem to get this.  Looks to be only about 1 in 50 herabouts.

"The road will seem so straight and fair to travel, you will kick yourself for stumbling through the brambles for so long, and wonder at their neighbors who stll can't see the path, though it is truly a freeway."  (Aristotle, courtesy of FOFOA)

But I repeat myself....

Mon, 02/28/2011 - 14:13 | 1004326 johnQpublic
johnQpublic's picture

i used to accept silver pre 64 and food for trade or barter at my autoshop

it actually started with a woman who made the best bread you've ever had,

and the girl who owned the health food store

bartered services with a doctor and a chiropracteur,landscaper,home improvement guy also

almost forgot the dog groomer,jewelry store owner and property lawyer, and a real estate broker too

win win for all involved

Mon, 02/28/2011 - 14:19 | 1004346 Burnbright
Burnbright's picture

Nice, I hate taxes.

Mon, 02/28/2011 - 14:52 | 1004449 MachoMan
MachoMan's picture

Used to?  Bartering is a mainstay of american small business...  when margins are compressed even more, expect more bartering...  I think you are going to see a return to your old ways...  and you won't be alone.

Mon, 02/28/2011 - 14:14 | 1004330 augmister
augmister's picture

When it all blows up, so will your precious shiny shiny.  In a Mad Max world, muscle and lead rule.  Get over it!

Mon, 02/28/2011 - 14:40 | 1004411 jus_lite_reading
jus_lite_reading's picture

Mad Max world will be the eventual outcome but I strongly believe that before that occurs, we will need some common exchange. Further, when humanity picks up the pieces, silver and gold will be the standard forever.

Mon, 02/28/2011 - 16:04 | 1004671 akak
akak's picture

Yes, of course augmister, there are two and only two possible futures: an infinite continuation of the status-quo, or else Armageddon.  How foolish of me to think anything else was conceivable or possible.

"Muscle and lead", huh?  I think you have been watching too many Mad Max movies.

Mon, 02/28/2011 - 16:38 | 1004802 Mike7.62
Mike7.62's picture

Really? I wonder why the Roman denarii and solidi were still valued as money hundreds of years after the fall of the Western Empire. People trade, no matter how bad things get, and PM's facilitate that trade.

 

As to muscle and lead ruling, high velocity cupronickel rules over any amount of unarmored muscle, as per Sam Colt's dictum, and those holding PM's usually have more than sufficient amounts of the former to deal with the latter, especially those who are muscle from the neck up. People trying to steal from others are looters, and will get a looters fate.

Mon, 02/28/2011 - 13:53 | 1004265 jtmo3
jtmo3's picture

All I can say is bull shit. We've seen this story more than once. Dollar will rise from the ashes when it's makers need it to.

Mon, 02/28/2011 - 14:04 | 1004300 Sudden Debt
Sudden Debt's picture

Yep, in about 1 week Europe will get som bad news and the dollar will spike back again.

This has happened about a dozen times already the last 3 years.

1,395 and I'm shorting the euro.

Remember, the euro and the dollar are staging a simultaneous crash.

Alies in war, alies in fraud.

Mon, 02/28/2011 - 14:38 | 1004396 Waffen
Waffen's picture

yes but the trend for all is down.. This is the managed decline of the dollar that George Soros talked about in 2009.

 

I hate to put on my tinfoil hat, but the person i thought was crazy Lindsey Williams continues to be correct in his predictions.   BTW, his statement from close to a year ago is when the Euro collapses you will have 2 weeks to get out before the dollar collapses.   Just keep that in your back pocket, incase this guy is correct yet again. 

 


Mon, 02/28/2011 - 20:41 | 1005514 IQ 145
IQ 145's picture

 Agreed. it's a wide trading range. Euro short time either here or very imminent

Mon, 02/28/2011 - 13:55 | 1004271 huggy_in_london
huggy_in_london's picture

naive.  The are trying to get the dollar lower, and its working.  And when, just like in the 70s its done what they want, they'll get it higher (imagine what happens when there is policy withdrawl).  There is no credible alternative tothe USD.  Sorry, but right now that's the facts!

Mon, 02/28/2011 - 14:16 | 1004334 bingaling
bingaling's picture

I got news for you it ain't the 70's , policy withdrawal is impossible and like Starsky and Hutch it will be replaced with something else .

Mon, 02/28/2011 - 14:53 | 1004447 huggy_in_london
huggy_in_london's picture

Junk-away ... but i am guessing most of you have no fucking clue what you are talking about.  Read the history, you might get some clues to the future.  Sorry if it disagrees with your positions.....

Mon, 02/28/2011 - 16:09 | 1004680 akak
akak's picture

Sorry, Huggy, it is you who is clearly the historically ignorant and blinkered one. Fiat currencies ALWAYS fail, and the dollar will be no exception.  In fact, it is already 96% of the way into the grave as we speak.  Reality has a way of demanding conformity from even your all-powerful central bankers.

Now be a good boy and go for a walk in London --- there are 718,432 surveillance cameras, and their watchers, just waiting to rob you of every shred of privacy.

Mon, 02/28/2011 - 16:30 | 1004768 huggy_in_london
huggy_in_london's picture

"Now be a good boy and go for a walk"

 

Go fuck yourself dickhead

Mon, 02/28/2011 - 16:42 | 1004813 akak
akak's picture

At least on your walk you'll be "Safe Beneath the Watchful Eyes".

Tue, 03/01/2011 - 13:37 | 1007652 BigJim
BigJim's picture

    Go fuck yourself dickhead

Hey! That's really clever! Did you come up with that one?

Mon, 02/28/2011 - 16:27 | 1004764 ConfusedIdiot
ConfusedIdiot's picture

Agreed Huggy. The buck is still backed by the only thing that matters in a post apocalypse scenario. Regards CI

Mon, 02/28/2011 - 21:04 | 1005563 Kayman
Kayman's picture

huggy...

I, for one, have read my History; I am not certain about you.

Surely a Brit can remember when Sterling reigned.  As the British Empire collapsed Sterling went with it.

Are you proposing a growing, job-creating American economy ?  If so, can I share what you are smoking ?

America has lost its engine and now is trying desperately to keep the empire together.  All the British bases that were exchanged for War materials to fight Hitler are now just another burden for a declining Empire.

Trade between any 2 Non-american countries can easily be done without involving the USD

This may not be the last Hurrah, but the USD has seen its best days. 

 

Mon, 02/28/2011 - 13:56 | 1004273 sunnydays
sunnydays's picture

The dollar index broke the 77 support level.

 

But look at the chart at opening yesterday in Asia - something very odd happened.  The dollar had a flash crash.  A message being sent?  It corrected fast, but it still crashed big time.   I wish I could put a picture in to show the crash, but it won't let me.

Mon, 02/28/2011 - 14:02 | 1004295 nwskii
nwskii's picture

I agree, that spike down hit 76. Its like telling their buddies 76 is where it will be at the end of the day, now it is 76ish

Mon, 02/28/2011 - 16:32 | 1004779 ConfusedIdiot
ConfusedIdiot's picture

Nii. Watching DXY for dollar relative strength is akin to watching Live hog futures for DBA. For $ value one needs use the Major Trading Partners weighted value. DXY does not even include 80% of $ trade partners - it's what it buys that counts. Regards CI

Mon, 02/28/2011 - 13:57 | 1004281 disabledvet
disabledvet's picture

markets can "price in horror" as well.  if a policy maker cannot see a "collapsed real estate market" being combined with "soaring lumber prices" as a problem then we obviously need new policy makers for starters.  who knows...maybe there will even be a discussion relative to "the policy."

Mon, 02/28/2011 - 13:58 | 1004282 Burnbright
Burnbright's picture

The top isn't in yet.

Mon, 02/28/2011 - 14:01 | 1004294 Henry Chinaski
Henry Chinaski's picture

I agree with Mr. Black.  Euro goes first.

Mon, 02/28/2011 - 14:03 | 1004299 Stares straight...
Stares straight ahead's picture

You can't eat gold??

Tue, 03/01/2011 - 13:40 | 1007657 BigJim
BigJim's picture

Relax, you can eat gold.

You just can't digest it.

Tue, 03/01/2011 - 13:53 | 1007714 Stares straight...
Stares straight ahead's picture

That's why my sh*t don't stink!

Mon, 02/28/2011 - 14:03 | 1004301 Caviar Emptor
Caviar Emptor's picture

Very negative sign that the dollar was not 'flight to safety' at the start of the Mid East Crisis. It tells me there's a pervasive lack of confidence in paper and more confidence in hard assets. A huge shift. 

But what's not a shift is the 30 year decline in value of the dollar. That's the result of unremitting twin deficits covered with relentless printing. 

Other issues: instability in energy markets is raising the prospect that the dollar's day as reserve currency are numbered. The world is rejecting the notion of having unstable commodities backed by and denominated in an unstable currency. Simple as that. When the dollar was stable and truly king, it worked. Now only gold or a basket of currencies backed with gold would provide stability. 

Mon, 02/28/2011 - 14:06 | 1004310 lynnybee
lynnybee's picture

Lindsey Williams said that the EURO would go first.    He said that when the EURO crashes, you have 2 - 3 weeks to get everything out of your bank accounts & it's over .

but, then, it's been over a long time ago ..... thank you, ROBERT RUBIN !

Mon, 02/28/2011 - 14:31 | 1004384 EscapeKey
EscapeKey's picture

I really wish people would stop listening to that opportunistic quack.

~

Mon, 02/28/2011 - 14:41 | 1004415 Waffen
Waffen's picture

trust me. I would like to discount Lindsey, but the guy was correct again.. for ex. he predicted the Middle East breakout before anyone was even talking about it.  He said that there would be a "non war" crisis in the middle east that would serve as a distraction. He brought this up in November.

 

The guy either really has insider knowledge or he is damn lucky.

Mon, 02/28/2011 - 14:47 | 1004430 EscapeKey
EscapeKey's picture

Oh FFS, he predicted the end of the world in 2010, then 2011, then 2012... he predicted the end of the world with regards to the Gulf oil spill (which he's gone completely quiet on now)...

The guy has an analytical mind, and uses it to piece together a statistically/theoretically probable future scenario, in order to cash in on the gullible by selling CDs/DVDs on his website. Hell, most of the regulars on ZH could piece together the same conclusion.

He probably knew Ken Fromm, and he probably was accidentally let in on some knowledge he shouldn't have access to, but even if you read his book you realize the guy knows jack shit about the oil sector. He essentially claims all the US oil problems can be sorted out by opening up untapped reserves (Gull Island), which according to his own book only amounts to an additional 2m barrels/day, during a time where imports run at 13m barrels/day.

And then he starts yapping about Bakken. Jeez, am I tired of sensationalist nonsense spawned about Bakken.

Mon, 02/28/2011 - 14:57 | 1004463 Waffen
Waffen's picture

The guy comes off as a full on charlatan to me, which is why i would expect him to be wrong more often, for example his ridiculous, gas bubble in the gulf that was going to explode and flood florid.   Or his cancer cure that is known by the elites kind of bullshit. 

 

However he was correct about the $50  $150 then back to $50.

He was right about the cost of oil staying around $80 for close to a year

He predicited the "crisis in the middle east"  he said ignore that and look to china.(which is still cryptic)

He now is prediciting it to go back to 150-200 by 2012.

 

So far he is correct about 70% of the time, which is pretty good for a charlatan.

 

I am not aware of him predicting end of world 2010,2011,2012, although I have only heard him on the radio since novmeber 2009.

 

 

Mon, 02/28/2011 - 15:01 | 1004472 EscapeKey
EscapeKey's picture

That's what I mean he's got an analytical mind. He's clearly an intelligent man, and clearly can derive future scenarios on past performances. No doubt he's an avid student of hostory.

But he also claimed McCain was going to win the election, but then backed down by saying "the elite doesn't always get what they want".

If only I had an undo button in real life.

Mon, 02/28/2011 - 15:21 | 1004553 Rusty Shorts
Rusty Shorts's picture

The "Elites" are always calling Lindsey up in the middle of the night with "new information", then,  "don't tell anybody, or we will have you killed"

 

Two weeks later, there is a new DVD on the subject.

Mon, 02/28/2011 - 17:06 | 1004892 FubarNation
FubarNation's picture

Weird how that always happens.  I guess it is by the providence of God.

Mon, 02/28/2011 - 19:52 | 1005420 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

That avatar has me lmfao.

Here I found it on the internet for people who can't see it:

http://4.bp.blogspot.com/_XDLnpGlOHFU/TC37pfSvBNI/AAAAAAAAFvI/_sYJy7LxjvE/s400/KaganNazi.bmp

Tue, 03/01/2011 - 13:46 | 1007682 BigJim
BigJim's picture

Careful. Any conflation of Zionists and Nazism - no matter what the Zionists do - is irrefutable proof of anti-semitism.

Natalie Portman told me so.

Mon, 02/28/2011 - 17:09 | 1004893 FubarNation
FubarNation's picture

dub

Mon, 02/28/2011 - 14:08 | 1004316 johnQpublic
johnQpublic's picture

zh needs a live ticker for the pm's, dollar, djia etc to facilitate real time discussion/bullshit sessions

Mon, 02/28/2011 - 14:14 | 1004331 Pladizow
Pladizow's picture

Good recomendation - shoot an email to zerohedge@gmail.com.

Mon, 02/28/2011 - 14:50 | 1004443 DoChenRollingBearing
DoChenRollingBearing's picture

Great idea johnQ.

And I just sent an email to ZH, thanks Pladizow.

Mon, 02/28/2011 - 14:28 | 1004379 dow2000
dow2000's picture

+1000

 

Mon, 02/28/2011 - 14:31 | 1004385 dow2000
Mon, 02/28/2011 - 14:13 | 1004325 DougM
DougM's picture

His last name is racist.  Please refer to him as Simon African-American

Mon, 02/28/2011 - 14:31 | 1004329 kaiten
kaiten's picture

The year for euro collapse was 2010. It didnt collapse, and now it´s not going to collapse anytime soon.

Mon, 02/28/2011 - 14:18 | 1004344 frankiegamwell
frankiegamwell's picture

"the simultaneous rise in both the dollar and gold indicated the market’s changing attitude towards what it considered a ‘safe haven.’"

 

Trying to wrap my head around that bit of logic

Mon, 02/28/2011 - 15:01 | 1004483 MachoMan
MachoMan's picture

Previously it's dollar up, gold down...  when gold AND the dollar went up during a panic, it showed the dollar was not the only flight to safety... 

Mon, 02/28/2011 - 14:21 | 1004352 Hondo
Hondo's picture

The market may be telling us the $ is finished but the Fed doesn't really give a rat's ass.....actually read Christina Romer's OP-Ed in yesterday's NYT (I think she is one of the worst so called economist of all time).  The Fed and the administration actually welcome the fall in the dollar all the while lying to the population that that isn't their goal...........well she said it was right there in black and white.

Mon, 02/28/2011 - 14:21 | 1004354 Caviar Emptor
Caviar Emptor's picture

Big stuff happening in Libya as Gadaffi military bombs rebels, US warship moves off coast. 

Mon, 02/28/2011 - 14:22 | 1004355 Oh regional Indian
Oh regional Indian's picture

Secoond the ticker suggestion from JohnQ upthread. It would be great.

And not sure if there is really even room for discussion for the dollar's long-term survival. Short alien interference, the puppy is too sick, eviscerated, hollow. 

Really hard to see through the fog, soo many viariables, all peaking and crashing...fast.

Maybe the need of the hour is steady hands, not nimble ones.

ORI

http://aadivaahan.wordpress.com/2011/02/27/the-fascinating-dr-chippalone/

Mon, 02/28/2011 - 14:56 | 1004456 DoChenRollingBearing
DoChenRollingBearing's picture

Steady strong hands holding gold and silver, thine time hath arrived.

Mon, 02/28/2011 - 14:23 | 1004360 newworldorder
newworldorder's picture

Full disclosure; I agree with everyone  on this board who detests our ponzi markets, catastrophic debt spending and the demise of the middle class. I am long PM and like most here would like to see an economicly strong America. But --

If not the dollar then what?

What is so large that can accomodate world access liquidity and safety? Can the world live with China providing the reserve currency, (or any other country/currency for that matter,) without the economic and military protection on the USA and its NATO allies.

Currently every currency exists in its present form, through the protection and guarantee the USA provides as the keeper of the peace. IF this guarantee goes away what have you got to take its place? The Chinese army and their system of government?

I don't have the answer to the dollar question and clearly the FED can't print forever, but what are the real world alternatives?

Mon, 02/28/2011 - 14:37 | 1004404 Henry Chinaski
Henry Chinaski's picture

somebody missed the Fight Club meme  >:|

Mon, 02/28/2011 - 14:47 | 1004428 kaiten
kaiten's picture

"If not the dollar then what?"

The answer is simple. World will look like pre-euro Europe. There will be few competing currencies(dollar, euro, yuan, yen, pound ...), but neither of them strong enough to become(stay) dominant.

Same in geopolitics. There´s no country strong enough to replace US as the world´s hyperpower, but as US is sliding down at one point it ceases to be dominant, i.e capable of being the world´s policeman. Militarily, but above all economically. 

Mon, 02/28/2011 - 15:04 | 1004490 MachoMan
MachoMan's picture

That would have to be the "new" dollar, because this one is toast...  once we lose reserve currency status, we're tits up... 

Mon, 02/28/2011 - 15:33 | 1004581 kaiten
kaiten's picture

Yeah, and Bernanke will rename it to peso.

Mon, 02/28/2011 - 15:05 | 1004498 AnAnonymous
AnAnonymous's picture

through the protection and guarantee the USA provides as the keeper of the peace.

 

Keeper of the peace? Sure, sure.

The US garantees the extortion scheme going on in the world, to the benefit of the US citizens. When people at the bottom can not follow the pace because too much is extracted from then at once, then the scheme is put under pressure.

It is not about an alternative as if it was a matter of choice. It is whether or not the Ponzi can be extended or not. Apparently, people at the bottom are showing signs of exhaustion and are rioting big time because you cant draw blood from stone.

Can people at the bottom take more pain or are they at the end of the rope?

Mon, 02/28/2011 - 18:11 | 1005125 UninterestedObserver
UninterestedObserver's picture

If you need clues look at the fall of Rome or decline of the British Empire

Mon, 02/28/2011 - 21:17 | 1005593 Kayman
Kayman's picture

I think we are in the "Nero fiddling" chapter...

Tue, 03/01/2011 - 00:33 | 1006052 Clockwork Orange
Clockwork Orange's picture

You mean 'Barak flying in his personal trainer' phase

Mon, 02/28/2011 - 20:55 | 1005537 sellstop
sellstop's picture

SILVER is the alternative. And will be.

gh

Mon, 02/28/2011 - 14:23 | 1004364 Point Being
Point Being's picture

BTFD.

Mon, 02/28/2011 - 15:02 | 1004484 baby_BLYTHE
baby_BLYTHE's picture

I just legally and lawfully signed up for my first online adult site (great variety. XX chromosome).

Used my checking account at my local credit union.

F*** you, Master Blaster!

Mon, 02/28/2011 - 15:05 | 1004492 EscapeKey
EscapeKey's picture

You paid for porn??

That's just about the strangest concept I've ever heard of here on ZH.

Mon, 02/28/2011 - 15:23 | 1004562 baby_BLYTHE
baby_BLYTHE's picture

I have to. people are tracking my ISP.

Everything is legit.

A word of caution to others.

FOLLOW THE RULES! Even if the big boyz don't

Bannana Republics, friendz.

If you are poor and broke, you have no representation for selective enforcement of the laws of this great nation.

One of my ex-military schoolmates (now a cop), stuCK it to these kids that pissed him off during youth (Clockwork anyone?).

Drugs were planted, heads rolled and families lives destroyed.

Keep drinking the booze! It is really great stuff

Tue, 03/01/2011 - 00:34 | 1006057 Clockwork Orange
Clockwork Orange's picture

You called?

Mon, 02/28/2011 - 15:24 | 1004569 Bob
Bob's picture

Threw me for a loop, for sure.  Wow.

Was that after paying ahead on his mortgage?

Mon, 02/28/2011 - 15:52 | 1004636 baby_BLYTHE
baby_BLYTHE's picture

There was a time in America where people would get together and drink alcohol (If it was legal at the time) and set afire their mortgage in celebration.

Today, people just want money!

Mon, 02/28/2011 - 20:20 | 1005463 Bob
Bob's picture

I don't know what is wrong with the money warrior thing; seems to me that what has changed is that now parties on both sides of transactions are serious players.  We used to be such naive consumers/marks. 

Let me ease your pain, though: Free porn at youporn.com.  Check it out . . . you'll probably cancel your porn subscription.  So I've heard. 

Put your money to good use! 

Mon, 02/28/2011 - 15:03 | 1004487 DoChenRollingBearing
DoChenRollingBearing's picture

Or you just BTF Spike, which has worked almost as well for non-timer Bearing.

I always bought when income came in.  Then for a day or a week, the price would go back down, only to rise ever higher.  I think it was RockyR himself who said he had similar experiences, buy, watch price drop a bit, then enjoy the majestic bull of PMs.

Mon, 02/28/2011 - 14:27 | 1004369 Canucklehead
Canucklehead's picture

Does anyone want to comment on the relevance of the eurodollar?  What about LIBOR?

How would these be affected by the loss of the dollar as a reserve currency?

Can international finance exist without the eurodollar?  Would a China-centric international reserve currency move the centre of global finance to China?  How would Britain maintain their FIRE tax base?

We won't live to see the day that the dollar is replaced by an SDR.  The SDR is basically something that can be corrupted by the banksters by paying a different set of hands than those presently manning the tiller.

BTFD

Mon, 02/28/2011 - 14:27 | 1004374 proLiberty
proLiberty's picture

"In other words, $20 wheat means blood in the streets. $2,000 gold only makes for pithy headlines,..."

No, $2,000 gold is a gold mine of tax revenue at 28%.  It is a way government can seize private assets without having to resort to an Executive Order.   Government will benefit from "liquidity" sloshing into PMs exactly in the same way it did when "liquidity" sloshed into Dot.Com stocks.  In that case, at the peak of that bubble, tax revenues were enough to more than balance the federal budget. 

See the last two paragraphs of Alan Greenspan's famous article, Gold and Economic Freedom.

 

Mon, 02/28/2011 - 14:58 | 1004469 Confuchius
Confuchius's picture

Whose IQ is in the single digits to pay TAX on Gold?

Ever.

Wake up!

Mon, 02/28/2011 - 15:05 | 1004493 SilverRhino
SilverRhino's picture

No, $2,000 gold is a gold mine of tax revenue at 28%.

Hello black market

Mon, 02/28/2011 - 18:18 | 1005157 malek
malek's picture

Sure, if the government still exists in the same way, you will have to pay 28% when realizing gains in the severely devalued (or the new?) currency.
If the stock market doesn't loose much real value, you might be better off with paying only 15% LTCG tax on the nominal price increase.

Pick your poison.
But whatever, it makes you a bit or a lot better off than the ones who lost 50%, 90% or 99% of their real net worth...

Mon, 02/28/2011 - 14:32 | 1004387 GOSPLAN HERO
GOSPLAN HERO's picture

Buy "junk silver" coins at your local antique mall!

I just traded fifty-six 1960s era proof pennys and proof nickels for several silver coins. 

 

 

 

Mon, 02/28/2011 - 14:34 | 1004389 lolmaster
lolmaster's picture

this is what happens when you get your news from pundits rather than guys actually in the market. when you see gold 36,000 ten you can start talking about the dollar dead. until then send this bum back to cnbs

Mon, 02/28/2011 - 14:37 | 1004392 falak pema
falak pema's picture

Your missing the point in this three cornered fight of beggar thy neighbor. Everybody in the world would like to see the USD disappear as reserve currency, given the chronic deficits of USA. China has to find alternative markets for its products, PRONTO. It has thus, as lead world asset holder, five years to create this alternative market, internally,  via alliances with S.E. Asia belt, with MENA/Africa, huge potential market, Brazil/Venezuela/Chile and with EU/Russia/Turkey, perceived as a new, emerging, stabilising axis for (R.M base + first world clients). Can it swing this strategic shift of getting EU to move away from USA? It will try by buying massively EU bonds. Will it succeed? Too early to tell. But the USA is shooting itself in the foot with QE-2. Unless it has another plan B which is war....who can tell...? Know thy adversary...is the key. Don't look at your own belly button...

Mon, 02/28/2011 - 15:08 | 1004517 AnAnonymous
AnAnonymous's picture

This scenario is viable and possible. But it will also be translated as a casus belli by the US, that will be short cut in the process, and insulated from international trading relations.

Mon, 02/28/2011 - 14:40 | 1004408 themosmitsos
themosmitsos's picture

Love Simon's stuff, but one clarification:

YOU *CAN* EAT GOLD. Fyi

Mon, 02/28/2011 - 14:48 | 1004432 Sudden Debt
Sudden Debt's picture

But you can buy the farm with it ;)

Mon, 02/28/2011 - 14:41 | 1004412 Frost
Frost's picture

Here in Croatia riots started today...and this is not Africa, it's Europe, we are neighbours of Italy and Austria...

http://www.youtube.com/watch?v=IP-YC3MasFw&feature=player_embedded

Mon, 02/28/2011 - 14:53 | 1004451 Sudden Debt
Sudden Debt's picture

Is that for real?

What's the cause?

 

Mon, 02/28/2011 - 20:54 | 1005535 IQ 145
IQ 145's picture

 the historical cause; the emotional cause; the real cause; the spin on the street cause; or the "officially santioned NATO propaganda cause ?

Mon, 02/28/2011 - 14:54 | 1004454 EscapeKey
EscapeKey's picture

I watched some similar clip yesterday, but the explanation on reddit was that it had something to do with extradition due to alleged war crimes + utterly corrupt politicians, and was most likely a one-off.

Here's the comment:

http://www.reddit.com/r/worldnews/comments/fta59/shit_hits_the_fan_in_croatia_riots_spread_to_the/c1ign1l

Mon, 02/28/2011 - 18:05 | 1004523 velobabe
velobabe's picture

did you see the white protestor, flashing his dick to the riot police.he was shaking and wiggling his dong.

Mon, 02/28/2011 - 16:16 | 1004721 falak pema
falak pema's picture

Croatia is tanking because of corruption, greed in a small little, pimple state. Why did they leave their Yugo. paradise? "divided we are always weaker, if only God etc. were not such a millstone". Cry people cry. Like falling leaves in autumn, its the crucible of bitter knowledge that comes after the storm.

Mon, 02/28/2011 - 16:49 | 1004840 FubarNation
FubarNation's picture

Here you fuckers eat my trash!

Mon, 02/28/2011 - 20:52 | 1005532 IQ 145
IQ 145's picture

 Geographically, at least.

Mon, 02/28/2011 - 14:51 | 1004440 falak pema
falak pema's picture

Twenty German economic professors ask Merkel to let the PIGS declare insolvency asap. The screw turns in EU. The fight gets hotter n hotter as the ME uncertainty gives head aches to strategic planners. The fog is sooooo heavy...

Mon, 02/28/2011 - 14:53 | 1004450 baby_BLYTHE
baby_BLYTHE's picture

3 calls from Switerland... no one picks up.

Ron Paul

Big week coming up on my Financial Services Committee. Geithner testifies Tuesday and Bernanke on Wednesday.

Mon, 02/28/2011 - 14:56 | 1004458 Frost
Frost's picture

It's for real. It's small riots for now, but there are more and more people on streets...

Cause is disastrous economic situation, huge debt, high unemployed rate, price of food and gas is rising, corrupted GOV...

Mon, 02/28/2011 - 14:58 | 1004466 baconator3000
baconator3000's picture

Wake me when the dollar falls below 70. 

 

 

Mon, 02/28/2011 - 14:59 | 1004471 baby_BLYTHE
baby_BLYTHE's picture

You ready to look like the White Knight from the 'Grail Room' from the 3rd installment of the Indian Jones franchise?

http://www.youtube.com/watch?v=36WEn-9zs1U

Mon, 02/28/2011 - 15:14 | 1004529 baconator3000
baconator3000's picture

Well Doctor Paul Krugman. PHD says the more QE we do the more jobs we create. That can only be better for the dollar right? QE2 created 3 million jobs

Mon, 02/28/2011 - 15:19 | 1004547 baby_BLYTHE
baby_BLYTHE's picture

why not (in hindsight) PRINT 50,000 dollars for every man, woman and child that has/had a pulse during the "Fright" back in 2008?

We would be at full employment now. No debts. No Wallstreet. No FED.

Mon, 02/28/2011 - 15:25 | 1004568 baconator3000
baconator3000's picture

because giving it the banks insured reponsible use. And so far I have seen indicticatios of banks abusing this cash, rather, loaning it out to the consumer sometimes...for a loss.. The consumer would just bought junk at walmart.

Mon, 02/28/2011 - 15:31 | 1004584 baby_BLYTHE
baby_BLYTHE's picture

People don't understand "money".

For many Americans, including many still alive that lived through HELL in the 1930s...

The definition of money has changed 2-3 times in their lifespan via Greenspan (it rhymed).

Seriously though, people are not bright (including me).

I would rather "fight it out" legally and lawfully. Fight Club should be real.

Mon, 02/28/2011 - 21:27 | 1005622 Kayman
Kayman's picture

bacon

Yer fergots ta puts yer /sarcasm/ on.

"banks insured responsible use".

Hahahahahahahahahahha

What a FUCKING JOKE.

Bonuses all around gentlemen, Bonuses all around.

Mon, 02/28/2011 - 15:01 | 1004479 defencev
defencev's picture

It is nonsense. Dollar is not dead. Any substantial change in current distructive fiscal policy of US government can make the Dollar as strong as one wish. I believe that after 2012

Presidential elections wewill have new President, new congress and thewilling to act.

Those who are saying it does not matter look what are new governors are trying to accomplish.

    I am surprised that this overall quite interesting website gives such prominent platform to charlatans like this character Black. Neither his background nor his track record gives any indications that what he is stating makes any sense.

Mon, 02/28/2011 - 16:47 | 1004835 ConfusedIdiot
ConfusedIdiot's picture

Thank you D. There are too many Simon sez on the ZH site already. Regards CI

Mon, 02/28/2011 - 21:47 | 1005667 Kayman
Kayman's picture

To D and CI

Hoping and Praying is  far from Thinking and Doing.

Every declining Empire saw its currency decline with it.

I can agree the time frame is yet to be determined, but with unstoppable deficits and infinite printing, the USD is only as solid as the country backing it (the world's largest Debtor Nation).

So if you 2 Newbies want to stay on ZH, then let's hear a little more from you 2 bright pennies, as to why the USD will retain reserve status.

Mon, 02/28/2011 - 22:33 | 1005757 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

I think they aren't even real people. Just feeble, artificially manufactured attempts to generate distraction and-or the appearance of dissent.

Especially D... I give that guy a Billy Madison Award.

edit: Lots of legitimate dissenters in this thread though. Just D is ridiculously stupid.

Mon, 02/28/2011 - 20:48 | 1005525 sellstop
sellstop's picture

True, the US $ could be strong if we RAISED taxes AND cut spending.

What do you suppose will happen in 2012?

Same as 1980 is my guess.

gh

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