This is the truth, nothing but the truth, and the whole truth, with a waterboard as my witness!

Sunday, June 1, 2008

Dollars and US policy

I have heard allot lately on the dollar, cause and effect, prognostications and such: The best explanation I heard was from Grorge Soros speaking to the Trilateral Commission, where he expressed the reasoning why the currency of reserve would remain the US dollar in May of 2008.

Paulson and Bernanke along with quick legislation on a couple of fronts; student loan legislation, preventing systemic default at a central point (Bear Sterns) and the stimulus package acted quickly (which was not done in the case of BOJ) and to a smaller correlation in the 30's to prevent deflationary circumstances criplling and disrupting an enconomy.

I heard yesterday some economist harping on C-span (sat 5/31) about a return to the gold standard, where the predicated assumption would be that we would cripple lending and opportunity until such time that someone extracted more metal from the ground in absence of any real production or economic eficiencies.

What has happened is that the market is adjusting in the US, driving is down, small cars are selling, Hummers are not chic, and the sale of Burpee seeds has doubled over last calendar year. To sum things up?

Almost evrything that this current administration has touched has turned to shit, an almosty midas in reverse effect, with the exception of dealing with this crisis. Putting aside the policies that allowed the crisis to formulate, the response was effective and led to the following circumstances:

Exported US goods will be more competitive.
US consumers evaluated their consumption and as an aggregate have made behavior changes that make the US on aggregate more competitive.

I see a bubble in the oil market, metals, and commodities (and yes I'm bucking the notion of food as well) asserting that speculation will be checked as consumers purchase more heathier foods grown closer to the consumer, and that this will reverse agricluture growth job decline in the US as well.

All in all, the quick action and high oil prices while a bitter medicine, and an unpopular sentiment, were what the US economy needed as a platform for continued growth.

And if you think the circumstances of an overall economy look bad in the US, well look globally, and if you shorted the dollar a bit to far, drank the Koolaid if you will, or believe that metal can buy a chicken if the owner doesn't want to sell, well you made a foolish bet.

Truth is not always what the MSM presents.

I see some covered positions coming in the afore mention commodities and growth in locally healthier foods and greater overall US efficiency.

The dollar looks strong

Anybody shorting past 2009 will take a horrific haircut.

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