What I love about economists

Emailed 15th August 2015

What I love about economists – They only look at the domestic situation – they are that blind they cannot see that this time it is different. So people who have been buying USD they have been requested to sell…..because near term chart says so. (Bloomberg article below)

The Bloomberg Chart is reproduced at the bottom of this post – yes on average you lose 9.3 percent – the domestic situation is totally different from the global arena. This large playing field is experiencing currency wars to counter the USD strength.

Then when one looks at the Bloomberg chart two things come to mind – Asian Financial Crisis – Russia.

So we notice a flight to quality – first through Russia and thereafter the collapse of south East Asian economies and the rise in the USD.

Now look around globally – we have China, America’s, South Africa, Russia, South East Asia – Pacific rim, Europe – did I miss a region?


Over 22 trillion USD has been borrowed by the global community – at such low interest rates and current value of the USD – any interest rate increase will double that expense – then try paying back that debt in USD….. good luck.

But that doesn’t matter does it?

Here is a chart that I prefer – on the USD value against a basket of currencies – longest chart I can get my hands on – now looking at this chart we have volcanic Volkers contribution to increasing interest rates to ‘depreciate the USD’ in 1980’s – which resulted in higher interest rates and yields globally and that resulted in a stock market crash in 1987.

Then you can see ‘noise’ – a lot of noise – these seismic grey lines are none other than capital flows in and out of the U.S. – commencing with the Asian Financial Crisis – Russian default – Then the Financial collapse of 2008.


So all things being equal that seismic noise from individual events – 2008 was large – hence the increased seismic activity – but – yes but – this time around the debt load of all nations has increased dramatically from 2008.

You see the problem?

There is a huge frenetic increase in capital movements in the last couple of years – this means a major seismic shock coming – ain’t going to be pretty.

So 2008 will be minor compared to the 2015 – 2017 sovereign debt collapse – we ain’t talking about emerging economies this time around.

Here is part of the article – link to Bloomberg at the bottom.

“History Shows Time to Sell Dollar Is Now With Fed Near Liftoff

Anyone looking for the dollar to surge after the Federal Reserve lifts interest rates has a short memory.
The U.S. currency strengthened an average of almost 9 percent during the six to nine months prior to the past three rate-rise cycles. After that, it’s been a downhill ride, with the six-month drop averaging about 6 percent.
“The assumption that the dollar has to go up as the Fed tightens is not borne out by history,” David Kelly, chief global strategist at JPMorgan Chase & Co.’s JPMorgan Funds unit, said in a phone interview. “It does tend to go up in advance of an actual rate hike, but it’s one of those cases where people buy the rumor and sell the fact.”



Off Topic:-

Oh – yes now have a baby female kitten to keep Lucy (our female monkey) in order – called her ‘Snippa’ … AND YES means —> pussy ….. You heard that her first…


Yes I know – I am a silly …………..(insert your own description here)

And if we get a male cat – it will be called Willy….

Sent from my iPad


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