tag:blogger.com,1999:blog-7982981413278241287.post5479040863400131430..comments2023-10-28T17:54:39.467-06:00Comments on The Golden Truth: More Analysis Showing That A Second, Bigger Credit Collapse is ComingDave in Denverhttp://www.blogger.com/profile/03016238915167131989noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-7982981413278241287.post-11400108313697073782009-08-11T16:06:08.502-06:002009-08-11T16:06:08.502-06:00I don't think the Fed has to do a lot more tha...I don't think the Fed has to do a lot more than what they are doing already to prop up real estate; right now they are 'paying' banks (interest on reserves) to keep bad loans/bad real estate off the street.<br /><br />The discount window is still open, the RE collateral is still considered 'AAA' by the Fed which still has an unlimited amount of cash to lend @ 0%. <br /><br />The FDIC is doing something similar, keeping bad banks afloat and writing threatening letters demanding more capital rather than folding them. <br /><br />You are right, inevitably, the bad RE will have to be exposed to the light of day, particularly as the banks aren't giving new, good loans on offset the bad. Banks will continue to fail and the rate of railure will increase. I suspect the government - and the markets - can tolerate a long, ramp up in commercial bank failures for a very long time.<br /><br />At that point, Congress will simply create a new stimulus or bailout which will result in a 'New FDIC' within which to dump all the zombies with the package sold to Citi or Morgan- Stanley (paid for by the taxpayers, of course). <br /><br />If there is going to be a break, I suspect it will be outside the Fed/Treasury ambit, perhaps foreign exchamge or energy prices.<br /><br />I think gold is in a good, longer term buying opportunity since both the Fed and most other central banks are selling it and keeping the price below $1000, trying to stabilize the trade currencies. <br /><br />If you buy it ... you may be hanging on to it for a long, long time ...Steve From Virginiahttps://www.blogger.com/profile/04002636865996847926noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-59533693909592216752009-08-11T09:44:11.311-06:002009-08-11T09:44:11.311-06:00P.S. I believe the correlation effect among the va...P.S. I believe the correlation effect among the various asset classes has a lot to do with the way the quantitative/black box hedge funds operate. This effect is magnified during low volumn periods like we've had this summer.<br /><br />There is also the manipulation factor with gold. At some point gold is going to break free from this correlation/manipulation and there will be a move higher in gold that will shock even the most ardent gold bugs.Dave in Denverhttps://www.blogger.com/profile/03016238915167131989noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-64656543145277222452009-08-11T09:41:19.964-06:002009-08-11T09:41:19.964-06:00Excellent question.
The USD is down roughly 33% f...Excellent question.<br /><br />The USD is down roughly 33% from its peak earlier this decade, and it's down 12% from its bear market rally peak earlier this year.<br /><br />The only way the Government can slow down the collapse of our system is to keep printing money, which silently devalues the USD.<br /><br />The "flight to safety" aspect of the USD is disappearing - I mean, the USD index traded up to the 120 area after the tech bubble collapsed -it could only muster a bear bounce up to 89 when we hit those decade lows in the Dow/SPX back in March.<br /><br />The problem is that even if the USD has the "veneer" of strength, the reality is that it is being devalued on a daily basis, and has been for a long time.<br /><br />When the real caca hits the fan, I believe there will be torrential rush out of all "assets" and into gold/silver and mining stocks. The behavior of gold/mining stocks after the 1929 collapse gives us a hint of what's to come.<br /><br />And here is a great illustration of the relative devaluation of the USD, as gold moves inversely to the dollar and look at what's happened to Dow/Gold:<br /><br />http://stockcharts.com/h-sc/ui?s=$indu:$GOLD&p=D&yr=3&mn=0&dy=0&id=p30739439981Dave in Denverhttps://www.blogger.com/profile/03016238915167131989noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-21196983081516511572009-08-11T08:23:48.889-06:002009-08-11T08:23:48.889-06:00Dave, the past months have evidenced a correlation...Dave, the past months have evidenced a correlation between many asset classes (including stocks, commodities, precious metals and foreign currencies) vs the USD. If your prediction of what's coming is correct, then why won't the USD (cash) be the place to be?Unknownhttps://www.blogger.com/profile/18370293794289310909noreply@blogger.com