21 January 2009

Last chance to get out of US dollar ~ Jim Willie

The quintessential event is a high probable 20% to 30% overnight USDollar devaluation, enough to cause massive financial shockwaves, like broken financial firms, bankrupted banks, badly disrupted commodity exchanges, badly disrupted stock exchanges, and much more. This might be a planned event. The global power centers might have worked a compromise to attempt to produce some instant stability. They will not achieve any stability at all, but rather a chain reaction of dislocations. My guess is that it has been forced down the USGovt’s throat, in the aftermath of the largest fraud episode in human history, against a backdrop of the largest rescue bailout nationalization stimulus stream in history. To date, it totals over $9 trillion.


The USDollar has been lifted by queer forces in the last few months. Redemptions of Credit Default Swaps are paid out in US$ terms, as large corporations fail and their asset backed bonds default. CDSwaps are insurance policy contracts. Also, the sale of speculative fund positions often results in debt liquidation, and repayment of heavy credit extended in US$ terms. Another force has been revealed. In the 4Q2008, fully $150 billion in foreign subsidiary assets, funds, and profits were brought home by US corporations, in order to repair the balance sheets and stem disaster. This has garnered little or no publicity. The repatriation flow is not to be expected to repeat each quarter, and is largely completed. The Powerz prefer to formulate false stories about Flight to Dollar Quality, or the US financial sector being the first to emerge from the credit crisis, or foreign financial structures being worse off than the US, or some total nonsense.

The USDollar DX index has more thoroughly filled the gap from 82.5 to 83.5 described in the last article. Watch the stochastix crossover signal, which might be a thinly disguised rebound near its end. The USDollar is a tired soldier here. Almost always a retest of the previous established high occurs, like the 88 registered in November. That is in progress, and probably has run its course. Little talk has come to how US firms have been harmed by rising export prices charged to foreign customers. That is a US$ negative factor. The fast deterioration of the USEconomy is an extremely negative US$ factor. Lastly, as cited over two years ago, the USEconomic trade deficit finally has come down, but mainly due to economic slowdown called recession, finally recognized. My description is of disintegration, since credit devices have been destroyed, borrowers have been rendered insolvent, banks are mostly insolvent, supply chains are locked down, and transportation systems are left idle. Most claims of imminent revival are utterly laughable.

The USTreasury Bond is offering extremely low yields to investors. The short-term Bills are offering near 0% yields in a travesty on wheels. With the US$ elevated from its Death Dance, lifted by powerful prevalent destruction, and the USTBond principal elevated from risk aversion and central bank consolidation into the valueless monolith of worthless debt eventually to suffer default, SOMETHING MUST GIVE FROM POWERFUL FORCES.


Most US-based banks are insolvent. The largest banks have been kept afloat in the last decade by the perverse trade in credit derivatives. Rather than melt down the garbage silos called banks, and liquidating their assets, they are kept in a state of moribund animation in order to attract public funds. Such easy pickings from the USCongress, who have no idea what is going on, or else receive bribes. See the vast contributions from Fannie Mae over the years to key players today. The corruption and fraud has never in the history of the nation been easier, largely due to protection and collusion by the regulators themselves, but more importantly, due to the JPMorgan & Goldman Sachs key henchmen operating the Dept of Treasury & USFed. These are the Inside Guys. This is Counterfeit Capitalism, enough to make Jefferson or Keynes shudder. The TARP funds are a great example, gigantic intravenous injections to cadavers. They were not administered by the Paulson syndicate bosses because they knew full well that the banks were dead. So they stole the funds, a practice they have ample experience with from their mortgage fraud enterprise. The TARP is but a climax. Declaration of death would eliminate the opportunity for more rescue funds, relief efforts, and confiscation. With the insolvency, lack of adequate liquidity, the general decrepit state has led to an unsustainable situation. SOMETHING MUST GIVE FROM POWERFUL FORCES.

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