Sunday, May 14, 2006
Something big is coming this week. Maybe a whole bunch of big things: Rove indicted, dollar plummets, gold, silver, gold and silver, Iran, full NSA Echelon exposed, Bush's head explodes, who knows. But I feel it in my bones. Be alert - the world needs more lerts.
By way of GATA:
We are in meltdown mode,' said David Brown, chief European economist at Bear Stearns. 'It's all being whipped up into a bit of a selling frenzy. The dollar has a massive portfolio of negatives against it: it's the long-term problems of the trade deficit, and the government's budget deficit.'
Bloom warned that 'phase two' of a sell-off would cause turmoil in the equity markets, as on Friday, when both the Dow Jones and FTSE saw sharp losses. 'I'm expecting an increase in volatility and uncertainty across the board,' he said.
Brown added that the dollar's woes were likely to be exacerbated by central banks shifting their reserves towards other currencies, including the euro. 'Asian central banks have been buying fistfuls of dollars as the flipside of their massive current account surpluses. They're long dollars.'
He added that with the US current account deficit with the rest of the world worth 7 per cent (ed. note: 5% in any other country would be melting point) of its GDP in 2005, the White House and the Federal Reserve would probably be happy to watch the dollar decline. 'I don't think Washington's going to be concerned,' he said.