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| Topic: Front Page of Today's Financial Times. | |
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It looks to me that America is headed for another bubble. This time, it's going to be commodities .I'll explain:
Quantitative easing has the effect of lowering the price of a dollar relative to other world currencies. One of the main purposes is to make American exports cheaper for the rest of the world to buy. America doesn't make much of anything any more that the rest of the world wants to buy, so now we are down to selling our natural resources directly with little, if any value added. This is something like resource-rich, third world countries in Africa that have no manufacturing base. They sell their diamonds or gold on the world markets and the dictator keeps the money and spends it in Italy for his sports cars, Switzerland for his vacation chalet, Greece for his yachts and either Europe or Seattle for his personal jet liners. This is why commodities will be the next bubble, in my opinion.The bubble, of course, will take place in the financial sector, where, thanks to the anti-regulation crowd, there is no meaningful regulation to dampen rampant speculation. I suspect that this will bring on the second dip of this double-dip depression. |
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It looks to me that America is headed for another bubble. This time, it's going to be commodities .I'll explain: Quantitative easing has the effect of lowering the price of a dollar relative to other world currencies. One of the main purposes is to make American exports cheaper for the rest of the world to buy. America doesn't make much of anything any more that the rest of the world wants to buy, so now we are down to selling our natural resources directly with little, if any value added. This is something like resource-rich, third world countries in Africa that have no manufacturing base. They sell their diamonds or gold on the world markets and the dictator keeps the money and spends it in Italy for his sports cars, Switzerland for his vacation chalet, Greece for his yachts and either Europe or Seattle for his personal jet liners. This is why commodities will be the next bubble, in my opinion.The bubble, of course, will take place in the financial sector, where, thanks to the anti-regulation crowd, there is no meaningful regulation to dampen rampant speculation. I suspect that this will bring on the second dip of this double-dip depression. the Feds QE policy is driving investors into the commodities markets. the dollar is worthless and zero percent interest rates aren't really much of an incentive for people to loan money. the reality is that inflation is rising and with that comes higher prices for ...well... commodities. so don't you think that a smart investor who realizes the reckless monetary policy of the Fed... driving inflation.. leading to higher prices... might find commodities to be a rather good investment in the short term? or if I were a believer in government is the cure to all that ails the world then I would be inclined to post.. the rising prices are purely related to speculation and lax regulation.. the Feds QE policy is just so we can sell our products and be competitive in global markets. |
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so don't you think that a smart investor who realizes the reckless monetary policy of the Fed... driving inflation.. leading to higher prices... might find commodities to be a rather good investment in the short term? How short term? Goldman Sachs is already taking a wait-and-see attitude. My personal intuition is that the bubble will continue, perhaps till just before the 2012 election.
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I am thinking the dollar is being devalued so we can pay down the debt with worthless paper.
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Edited by
artlo
on
Mon 02/07/11 01:36 PM
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Here's where the dollar has been in the last year.Well, I guess you have to plug in the ticker yourself. Use DXY:IND
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I am thinking the dollar is being devalued so we can pay down the debt with worthless paper. I am thinking that the dollar was devalued so the Chinese yuan devaluation would not place China on the financial high ground... Why else would they be so upset that we did it? |
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Edited by
Fanta46
on
Mon 02/07/11 09:57 PM
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Looks stronger to me than in recent years.
American Dollar click on values to see graphs 1 USD in USD Argentine Peso 4.11574 0.24297 Australian Dollar 0.98643 1.01376 Botswana Pula 6.81663 0.1467 Brazilian Real 1.67844 0.595791 British Pound 0.620746 1.61096 Canadian Dollar 0.9886 1.01153 Chilean Peso 479.205 0.00208679 Chinese Yuan 6.56441 0.152337 Colombian Peso 1872.35 0.000534088 Croatian Kuna 5.46792 0.182885 Danish Krone 5.49833 0.181873 Euro 0.737706 1.35555 Hong Kong Dollar 7.78462 0.128458 Hungarian Forint 198.116 0.00504755 Iceland Krona 116.429 0.00858893 Indian Rupee 45.3694 0.0220413 Iranian Rial 10335 9.67586e-05 Israeli New Shekel 3.68468 0.271394 Japanese Yen 82.3833 0.0121384 Kazakhstani Tenge 146.83 0.0068106 Kuwaiti Dinar 0.2789 3.58551 Libyan Dinar 1.9324 0.517491 Malaysian Ringgit 3.03717 0.329254 Mexican Peso 11.9714 0.0835324 Nepalese Rupee 72.95 0.013708 New Zealand Dollar 1.29772 0.770582 Norwegian Kroner 5.78806 0.172769 Omani Rial 0.3845 2.60078 Pakistan Rupee 85.519 0.0116933 Qatari Rial 3.64 0.274725 Romanian Leu 3.14041 0.31843 Russian Ruble 29.3092 0.034119 Saudi Riyal 3.75 0.266667 Singapore Dollar 1.27463 0.784541 South African Rand 7.25312 0.137872 South Korean Won 1103.35 0.000906331 Sri Lanka Rupee 110.755 0.00902894 Swedish Krona 6.47837 0.15436 Swiss Franc 0.957111 1.04481 Taiwan Dollar 29.0338 0.0344426 Thai Baht 30.7209 0.0325511 Trinidad/Tobago Dollar 6.37806 0.156787 Venezuelan Bolivar 4.29453 0.232854 |
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so don't you think that a smart investor who realizes the reckless monetary policy of the Fed... driving inflation.. leading to higher prices... might find commodities to be a rather good investment in the short term? How short term? Goldman Sachs is already taking a wait-and-see attitude. My personal intuition is that the bubble will continue, perhaps till just before the 2012 election. The short term was while the emerging markets were buying commodities with reckless abandon. After the dollar peaked in June the next few months it declined against all currencies and especially versus emerging market currency like the Indian Rupee. The dollar is gaining some value versus emerging market currency because the emerging markets are staring at a fairly large market correction. Once that occurs the tight supply will diminish and the markets will come back down. I just don't see the kind of leverage in this market to justify calling it a bubble or expecting it to be some sort of catastrophic collapse. The majority of the buying was done to fill the void in countries strategic reserves, not for daily consumption. If China spends $10 billion on reserve oil and in 2 years its selling for half that it doesn't mean that the oil is worthless. I am far more concerned with food prices rising and its effect on the poor countries of the world. Countries that have little in the way of growth potential can't cope with record highs for corn and soy beans. That is a direct result of producers raising prices to combat some of the other market influences that cannot be controlled. |
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Looks stronger to me than in recent years. American Dollar click on values to see graphs 1 USD in USD Argentine Peso 4.11574 0.24297 Australian Dollar 0.98643 1.01376 Botswana Pula 6.81663 0.1467 Brazilian Real 1.67844 0.595791 British Pound 0.620746 1.61096 Canadian Dollar 0.9886 1.01153 Chilean Peso 479.205 0.00208679 Chinese Yuan 6.56441 0.152337 Colombian Peso 1872.35 0.000534088 Croatian Kuna 5.46792 0.182885 Danish Krone 5.49833 0.181873 Euro 0.737706 1.35555 Hong Kong Dollar 7.78462 0.128458 Hungarian Forint 198.116 0.00504755 Iceland Krona 116.429 0.00858893 Indian Rupee 45.3694 0.0220413 Iranian Rial 10335 9.67586e-05 Israeli New Shekel 3.68468 0.271394 Japanese Yen 82.3833 0.0121384 Kazakhstani Tenge 146.83 0.0068106 Kuwaiti Dinar 0.2789 3.58551 Libyan Dinar 1.9324 0.517491 Malaysian Ringgit 3.03717 0.329254 Mexican Peso 11.9714 0.0835324 Nepalese Rupee 72.95 0.013708 New Zealand Dollar 1.29772 0.770582 Norwegian Kroner 5.78806 0.172769 Omani Rial 0.3845 2.60078 Pakistan Rupee 85.519 0.0116933 Qatari Rial 3.64 0.274725 Romanian Leu 3.14041 0.31843 Russian Ruble 29.3092 0.034119 Saudi Riyal 3.75 0.266667 Singapore Dollar 1.27463 0.784541 South African Rand 7.25312 0.137872 South Korean Won 1103.35 0.000906331 Sri Lanka Rupee 110.755 0.00902894 Swedish Krona 6.47837 0.15436 Swiss Franc 0.957111 1.04481 Taiwan Dollar 29.0338 0.0344426 Thai Baht 30.7209 0.0325511 Trinidad/Tobago Dollar 6.37806 0.156787 Venezuelan Bolivar 4.29453 0.232854 The June 2010 monthly average of the dollar versus the Euro was $1.20/ 1 Euro. As of 2 minutes ago its $1.36/ 1 Euro.. We have a long way to go.. |
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Edited by
artlo
on
Tue 02/08/11 06:07 AM
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Invictus, You are way ahead of me on this stuff. I'll defer to your wisdom. the only place I take issue with you is that you are not taking into account the impact of market manipulation.
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