Short The $$$ With Bush And Buddies

[petre]

the plan is to make USA a 3rd world debtor nation, with wage slaves to pay the credit card debt


DAVOS - Bill Gates, whose net worth of US$46.6 billion ($65 billion) makes him the world's richest person, is betting against the US dollar.

"I'm short the dollar," Gates, chairman of Microsoft said in an interview at the World Economic Forum in Davos, Switzerland. "The ol' dollar, it's gonna go down."

Gates' concern that widening US Budget and trade deficits are undermining the dollar was echoed in Davos by policymakers including European Central Bank president Jean-Claude Trichet and German Chancellor Gerhard Schroeder.

The dollar fell 21 per cent against a basket of six major currencies from the start of 2002 to the end of last year.

The trade deficit swelled to a record US$609.3 billion last year and total US Government debt rose 8.7 per cent to US$7.62 trillion in the past 12 months.

"It is a bit scary," Gates said. "We're in uncharted territory when the world's reserve currency has so much outstanding debt."

US President George W. Bush is pledging to clamp down on spending to halve the Budget deficit - US$427 billion in the 12 months to September 30 - during his second term.

The Administration releases its fiscal 2006 Budget on February 7.

Gates reflected the views of his friend Warren Buffett, the billionaire investor who has bet against the dollar since 2002.

Buffett said last week that the US trade gap will probably further weaken the currency.

"Unless we have a major change in trade policies, I don't see how the dollar avoids going down," he said.



Gates described China as a potential "change agent" for the next two decades. His foundation received approval in September from China's foreign-currency regulator to invest US$100 million in yuan shares and bonds.

- BLOOMBERG

 

[JudgeWapner]

Petre, is the euro a good buy at the moment?

 

[docmercer--banned]

``The U.S. dollar is no longer, in our opinion is no longer, (seen) as a stable currency and is devaluating all the time, and that's putting troubles all the time,'' Fan said, speaking in English, at the World Economic Forum in Davos, Switzerland. ``So the real issue is how to change the regime from a U.S. dollar pegging to a more manageable reference, say euros, yen, dollars -- those kind of more diversified systems.''

Paul Donovan, London-based senior global economist at UBS AG, seemed to speak for many traders and investors when he said: ``This in fact is a scenario we consider to be highly likely.'' Certainly more likely than, say, China letting the yuan trade freely.

Turning to the Euro

Again, Fan isn't a Chinese policy maker, and it's unclear how close he is to the economic decision-making process. Still, his views have a certain logic to them. Irony, too. The U.S. has been using its might to bully China into revaluing the yuan. Yet it seems it is U.S. weakness -- a fragile dollar -- that may be the catalyst.

It means now is as good a time as any for this region to avoid losses ahead of any surge in U.S. debt yields. After all, in real estate, it is all about location, location, location. With markets, it's timing, timing, timing, and waiting means Asian central banks may lose even more.

Confidence in the dollar wasn't enhanced this week by President George W. Bush's record budget deficit forecast of $427 billion for this fiscal year. It belied assurances that the White House will bring one of the world's most worrisome economic imbalances under control.

All this has investors turning to the euro. Once Asian central banks do, the dollar's woes will worsen. By buying vast amounts of Treasuries, Asian central banks are delaying the rise in U.S. yields that would typically accompany a falling currency. If Asians pull the plug, U.S. rates could skyrocket.

Reckoning Approaching?

Central banks here don't buy U.S. debt out of altruism. Hoarding dollars is necessary to hold down currencies to boost Asian growth. Yet dumping dollars would result in stronger Asian currencies and, by extension, Asian gross domestic product.

Smaller economies like Indonesia, Malaysia or Thailand may be able to trim dollar holdings without undermining their own economies. The same can't be said of Japan and China; combined, they own $906 billion of the roughly $1.1 trillion of U.S. Treasuries held overseas.

Still, the day of financial reckoning that investors fear may be getting closer.

It has long been said that Japan's bond market is a bubble waiting to burst. Even with a national debt approaching 150 percent of GDP, 10-year Japanese debt yields just 1.32 percent. Asians have to wonder if U.S. rates are irrationally low, too. Do yields at 4.19 percent for U.S. 10-year debt really compensate investors for the risks they face?

The U.S. finds itself in a be-careful-what-you-wish-for situation here. If China tomorrow announced it was letting the yuan float, as the U.S. wants, its central bank wouldn't need anything near the $191 billion of U.S. debt it holds. Massive dollar selling could follow.

Asian central banks like China's have become America's bankers, financing its excesses through good times and bad. It's now up to Asia to decide whether to extend the U.S.'s line of credit. The U.S. should be warned that the odds are moving less and less in its favor.






To contact the writer of this column:William Pesek Jr. in Kuala Lumpur, or through the Tokyo newsroomat wpesek@bloomberg.net.To contact the editor responsible for this column:Bill Ahearn at bahearn@bloomberg.net.</PRE>Last Updated: January 27, 2005 16:17 EST

 

[TTinCO]

Petre, is the euro a good buy at the moment?

Judge\Lo.....Against the US dollar, you CAN"T LOSE buying the Euro right now.

The Euro will (continue) to rise moderately unless anything drastic happens (the asians start dumping the US dollar) and the the the Euro goes through THE ROOF.

The fall of the dollar is a LONG, LONG ways from being over.

(If you want details, I can get into them....actually have an MA in Econ)

BUSH KILLED THE DOLLAR----and NO ONE can deny it (or realize just exactly how bad it may really get)

 

[WHALE]

QUOTE:

BUSH KILLED THE DOLLAR----and NO ONE can deny it (or realize just exactly how bad it may really get).

It's true the George W. Bush administration is the worst thing that ever happened to this great nation.
:sad3:

 

[docmercer--banned]

The European Union is rising to the front of ALL world events and will soon be the dominant player ....

The USA is entering our final phases of being a dominant player in many aspects

 

[Jointpleasure]

Flights out of the US start at 99.00 US dollars to Mexico. It would be a good time for the libs to pack their bags and leave to where they can make a better life for themselves. LMFAO

Commies.

 

[eek.]

The European Union is rising to the front of ALL world events
and will soon be the dominant player ....

erm...I dunno about that...

The EU is ok at trade stuff, but it couldn't organise a pissup in a brewery if there's a crisis.

The breakdown in Yugoslavia (1992?) proved that the EU still has a loooong way to go......and is still inclined to sit on its hands when serious decisions are needed quickly.

Thousands were being butchered right on the EU's doorstep and all those girliemen did was call one social worker meeting after another while the bodies piled up a few miles away.