Dollar Decline Is A Slower Process than Soros and Esterhuizen Think Written By: David Neubert 2008-02-10 12:02:52 Eben Esterhuizen quotes George Soros saying that the current financial crisis is the culmination of a 60-year super boom of dollar credit expansion . The current financial crises based on over-leverage and excess government spending is part of the long term trend in the decline of the dollar that started in the 1970's. The Pound Sterling did not lose its status as the currency of international payments overnight; the process took nearly 80 years and ended last century. The US dollar is in a similar situation. If anything, the recent dollar drop and all the "sky is falling" pessimism is ahead of itself and the dollar actually has a greater chance of rallying from here against the Euro (1.47 USD/EURO).
I do agree with Mr. Soros that the U.S. will have to have higher interest rates at some point and that's why I'm currently short US long term treasuries.
Eben nicely outlines the risk reward of my higher interest rates bet; a bet that is currently causing me to cough up cash to meet margin calls on my treasury futures. But if I'm right, the reward is much larger than what I lose if I'm wrong.
Five Reasons to Save the Dollar Written By: Eben Esterhuizen 2008-03-03 00:38:12 Photo:VaguelyArtistic, Creative Commons, Flickr
Financial firms have so far announced losses totaling around $160 billion, and UBS feels there could be a total of $600 billion in losses triggered by the subprime collapse. There is more bad news to come and central bankers know it. If UBS is correct we've only seen the tip of the subprime iceberg, and central bankers will have to remain flexibile to effectively deal with upcoming challenges. I don't doubt that the dollar's long term trend is down, but coordinated intervention to give the U.S. dollar a short-term (2-5 years) lift may be an interesting idea for central banks to consider.
Freud, the Fed, and a Box of Chocolates Written By: Eben Esterhuizen 2007-12-15 07:36:32
"Children begin by loving their parents; after a time they judge them; rarely, if ever, do they forgive them" - Oscar Wilde
