Reply #14: Jim Willie: Deadly Dollar Confluence

[DemReadingDU]

11/8/07 Deadly Dollar Confluence by Jim Willie CB


The public and investment community continues to be bombarded with denials as to the importance of the seemingly endless slide in the USDollar, along with curiously shallow commentary that the US$ slide seems overdone. The US$ exchange rates could justify a 50% decline from here, out of sheer principle, not based upon the relative price of milk cartons or taxi rides. The comprehension of the gold breakout signal seems equally misunderstood and minimized. To be clear, the people have begun to sense with alarm the nature of the energy cost problem, but do not detect its weak currency roots. The USEconomy is soon to receive a series of cost shocks, starting with another 50 cents higher in gasoline per gallon. The US$ woes are hedged by crude oil positions, resulting in crude oil leading the USDollar declines. The financial sector has a painfully clear vested interest to minimize the US$ threat, pointing out the small positive on export business growth. Wall Street needs a favorable light on the currency behind all of its financial asset investments, naturally. We are fast approaching, if not already smack dab in the middle, of a confluence of powerful negative factors exerting downward relentless pressure on the US$ exchange rates.

A powerful bearish momentum is driven by three extremely important factors: fundamentals, technicals, and psychology. The US$ fundamentals are miserable, resembling a Third World nation, marred by gigantic deficits and emphasis on war. The US$ technicals are miserable, whose DX index chart reveals a massive generational breakdown below critical support. The US$ psychology is miserable, accompanied by broad international revolt, defection, and diversification away from its corrosive losses. Just today, French President Sarkozy beat some war drums over the crippled, subprime currency called the USDollar. He stated a warning that the Untied States has engaged in an economic war to devalue the USDollar in order to deal with its severe problems. The implication is that the USGovt and financial sector is attempting to renege on loans (due to devaluation), to export its monetary policy (freezing other central banks), to render cheaper its exports (while foreigners have their exports rendered most expensive), and to do so with its usual fare of fraudulent toxins scattered to foreign lands. Just yesterday, the Chinese unofficially announced a strategy to avoid weak currencies and embrace strong currencies. To me this is a bold slam against the USGovt and ugly offshoot of the trade friction.

It seems almost every day we find a significant story to paint yet another ugly face on the USDollar ultra-slow motion collapse. It is gaining downward momentum. No bounce off 78, none off 77, none off 76. We are witnessing the middle stage shock waves, which in my view will result in the death of the USDollar. These are strong words. So are those coming from Asia out of anger. So are those coming from the Persian Gulf out of a sense of betrayal. So are those coming from Russia out of outright hostility. The Untied States has taken foreign credit supply for granted, then engaged in fraud on a grander scale than ever has been witnessed in all of modern history. The backlash is reaching a critical stage nowadays, with some expected and some unexpected reactions. Look for a global boycott of some sort. The main engine upholding the USDollar is the US$ printing press used by the USGovt henchmen.

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http://www.financialsense.com/fsu/editorials/willie/2007/1108.html