Michael Perelman wrote:
>
> I was only responding to Rob, whom I [mistakenly?] thought was
> suggesting such a possibility -- not predicting anything.
Just quoting some thoughtful people's ideas and trying, in an admittedly
amateurish way, to tie them together into the narrative that most recommended
itself. I admit I've been manically bearish for about three years now (since
around the time US profitability stopped dead), and that this can get boring
(even if we then get a major tank in the NASDAQ, the S&P/Dow don't budge for
the whole period, Japan goes backwards atop trillions in pump-priming, and
relations between the US and the rest of the world plummet) but I'm sorta
hoping for some learned correction. As I keep asking, what is it that's gonna
happen that's gonna bring about this recovery (y'know the one; the one
scheduled for the quarter after the quarter after next)?
I could have quoted Goldman Sach's William Dudley, too, who said on Wednesday
that: "The longer policymakers persist in their efforts to influence the
exchange rate, the greater the danger of an unnecessarily sharp correction
becomes. If the dollar began to slide, the credibility of policymakers would
be called into question. This could lead to an even greater depreciation, as
foreign investors demanded a bigger risk premium on US financial assets."
Doug wrote:
> > Flee? Dumped? You could have a marginal movement out of dollar
> > assets
> > into euro assets without crashing asteroids and other apocalyptic
> > fireworks. Why is it so either/or - either rentiers are locked into
> > U.S. assets, or they'll jump all at once into EU assets?
> >
> > Doug
I'm asking about an either/or scenario because that's how I understand the
term 'instability'. A small move either way can lead to a wild lurch, and if
it does, there's nothing in place to retard the lurch until a lot of damage is
done. One out, all out. That's all.
And Michael wrote:
> > >Regarding Rob's musing about the dollar, Ellen's question was > > >where
>would people flee if they dumped the dollar?
Well, I think they'll go for what seems underpriced at the moment - that's
probably the Euro for now. But I'm not sure that a few bob on the oil barrel,
perhaps in combination with emptying inventories and the possible incapacity
of the greenback further to export its inflation tendencies, might not bring
gold back into fashion. I saw a T-Rex T-shirt yesterday, and all the young
dudettes are bedecked in flairs again - so why not a stagflation, replete with
desperate lurch for bullion to complete the picture?
I'm just asking, Doug ...
Cheers,
Rob.
