"Leading Economist: Dollar Faces Outright Collapse; Financial experts issue dire warnings as Fed and Treasury continue to say they are "committed to a strong dollar" by Steve Watson Infowars.net Friday, March 14, 2008
Another prominent economist has warned that the bottom may soon drop out of the dollar completely as the currency hits fresh lows and continues to sink worldwide.
Peter Schiff, a dollar-bear at Security Pacific Capital, told the London Telegraph that the greenback faced the danger of outright collapse as countries in Asia and the Middle East mull plans to break their dollar pegs, which are fueling inflation across the region.
"The decline could accelerate rapidly. The world is still holding a lot of dollars it doesn't need," he said.
Schiff is well respected amongst the major financial publications, primarily due to the fact that over two years ago he accurately forecast that the U.S. housing market was a bubble that would soon come to bust, and also that the crisis would extend to the credit card lending industry.
Schiff is also the economic advisor for Ron Paul's Presidential campaign.
The greenback reached a record low of $1.5651 against the euro yesterday, meaning it has lost 15 percent against the euro since September alone. It also dipped below 100 yen, its lowest level in 12 years, and fell below parity with the Swiss franc for the first time in history today.
Other analysts share Schiff's fear of a total dollar collapse. Mitul Kotecha, head of currency strategy at Credit Agricole, said: "The real risk remains that we get a dollar rout. The news from from the US is consistently negative and investors are actually not overly long euros."
The Negative dollar sentiment is now becoming global, with nations who have traditionally accepted the dollar as equal to or better than local currency now rejecting it outright. Reports suggest that the once mighty dollar is no longer good enough even for Manhattan flea market traders:
In Manhattan's Bowery district, Billy LeRoy, the owner of Billy's Antiques & Props, prefers payment in euros so he can stockpile the currency for his annual antique buying trip to Paris.
"Whip out dollars at the French flea market now, and they'll shoo you away," he said at his store near apartment buildings where Europeans are snapping up units because they've become dirt cheap. "Before it was like the second coming of Christ, but now they don't want it or if they do take dollars, they're going to take their pound of flesh."
Other nations mulling a turn away from the dollar peg are likely to be influenced by the fact that the Chinese yuan has risen to the highest level since the end of its dollar link in 2005.
As the Financial Times reports, analysts are in no doubt that the weakness of the dollar is being caused by Fed rate cuts and injections of liquidity, which it says constitute efforts to steady markets.
Executives, investors and politicians say they're becoming increasingly worried. Dollars are ``printed on toilet paper,'' Marc Faber, managing director of Marc Faber Ltd., said in an interview with Bloomberg Television.
Yesterday U.S. Treasury Secretary Henry Paulson again repeated the now engrained mantra that he backs a "strong dollar'' and refused to elaborate when questioned at a press conference in Washington.
"The "strong dollar" message is so familiar, and is uttered with such unfailing regularity, that market observers often roll their eyes when they hear it, and short-term traders pay it little heed," reports Market Watch.
In the wake of the news that the G7 nations may intervene to shore up the dollar, analysts have stated that such action may now be futile considering that the Fed is seemingly unfazed by the currency's total degradation and has the ability to effectively "pull rank" over policy makers who may be genuinely worried about the decline.
Supporting the dollar may also prove futile, as its decline partly reflects the Fed's cuts and the ECB's decision not to follow, said Chris Turner at ING Financial Markets.
The Fed has cut its main rate by 2.25 percentage points since September to 3 percent, while the ECB's rate is still at a six-year high of 4 percent.
"Failed intervention is worse than no intervention,'' said Turner, ING's head of currency research in London. "Policy makers have their hands tied and will defer to the global priority of the Fed slashing interest rates.''
Meanwhile the corporate media in the US continues to echo the Bush administration's snowjob policy on the dollar crisis by ludicrously citing "experts" who claim that the unprecedented plunge of the greenback is "not necessarily a bad thing for the U.S. economy."
Printed from: http://www.infowars.net/articles/march2008/140308Economist.htm"
Yeah, I saw them saying that on t.v. and damn near puked!!!
"Watching the Dollar Die" by Paul Craig Roberts Prison Planet Friday, March 14, 2008
I’ve been watching the dollar die all my life. I sometimes think I will outlast it.
When I was a young man, gold was $35 an ounce. Today one ounce gold bullion coins, such as the Canadian Maple Leaf, cost more than $1,000.
Our coinage was silver. Our dimes, quarters, and half dollars had purchasing power. Even the nickel could purchase a candy bar, ice cream cone or soft drink, and a penny could purchase bubble gum or hard candy. If a kid could collect 5 discarded soft drink bottles from a construction site, the 2 cents deposit on the returnable bottles was enough for the Saturday afternoon movie. Gasoline was 32 cents a gallon. A dollar’s worth was enough for a Saturday night date.
Our silver coinage was 90 per cent silver. People sometimes melted coins in order to make silver spoons, known as coin silver, which can still be found in antique shops. Except for the reduced silver (40 per cent) Kennedy half dollar which continued until 1970, 1964 was the last year of America’s silver coinage. The copper penny departed in 1982. As Assistant Secretary of the Treasury, I opposed the demise of America’s last commodity money, but I couldn’t prevent the copper penny’s death.
During World War II (1941-1945), nickel was diverted from coinage to war, and the US mint issued a wartime silver (35 per cent) nickel.
It is not easy to find items to purchase with today’s US coins, but the silver coins of the same face value still have purchasing power. The 10 cent piece of my youth contains $1.42 worth of silver at today’s silver price. The quarter is worth $3.55, and the half dollar contains $7.10 of silver. The silver dollar is worth 15.2 times its face value. These are just the silver values of coins that might be worth far more depending on condition and rarity. The silver in the wartime nickel is worth $1.10, which is 22 times the coin’s face value. Even the copper penny is worth 2.5 cents.
When I was a young man enjoying travels in Europe, the German mark or Swiss franc traded four to one US dollar. The euro, which is today’s equivalent to the mark, costs $1.55.
People who haven’t accumulated much age have little idea of the corrosive power of “acceptable” inflation. Unlike gold and silver, fiat money has no intrinsic value. When money is created faster than goods and services it drives up prices, thus driving down the value of the money. If freely traded currencies are excessively printed or if inflation, budget deficits, and trade deficits drive currencies off their fixed exchange rates, prices of imports rise as the foreign exchange value of the currency falls.
Today the US, heavily dependent on imports, is subject to double-barrel inflation from both domestic money creation and decline in the dollar’s foreign exchange value.
The US inflation rate is about twice as high as the government’s inflation measures report. In order to hold down Social Security payments, the government changed the way it measures inflation. In the old measure, inflation measured the nominal cost of a defined standard of living. If the price of steak rose, up went the inflation rate. Today if the price of steak rises, the government assumes that people switch to hamburger. Inflation doesn’t go up. Instead, the standard of living it measures goes down.
This is just one of the many ways that the government pulls the wool over our eyes.
With the dollar value of the euro rising through the roof, today a vacation in Europe is far more costly than in the past. Thanks to China, so far Americans have been sheltered from the greatest effects of the dollar’s declining value. Our greatest trade deficit is with China. The prices of the goods from China have not risen, because China keeps its currency pegged to the dollar. As the dollar goes down, China’s currency goes with it, thus holding down price rises.
The resignation of Admiral William Fallon as US military commander in the Middle East probably signals a Bush Regime attack on Iran. Fallon said that there would be no US attack on Iran on his watch. As there was no reason for Fallon to resign, it is not farfetched to conclude that Bush has removed an obstacle to war with Iran.
The US is already over stretched both militarily and economically. An attack on Iran is likely to be the straw that breaks the camel’s back.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.The same paper that lied us into war in Iraq and is pushing the Iran propaganda doesn't seem to worried about the economy:
"Fed Acts on Wall St. Domino Theory"
"The Federal Reserve’s unusual decision to provide emergency assistance to Bear Sterns underscores a long-building concern that one failure could spread across the financial system.
Wall Street firms like Bear Stearns conduct business with many individuals, corporations, financial companies, pension funds and hedge funds. They also do billions of dollars of business with each other every day, borrowing and lending securities at a dizzying pace and fueling the wheels of capitalism.
The sudden collapse of a major player could not only shake client confidence in the entire system, but also make it difficult for sound institutions to conduct business as usual. Hedge funds that rely on Bear to finance their trading and hold their securities would be stranded; investors who wrote financial contracts with Bear would be at risk; markets that depended on Bear to buy and sell securities would screech to a halt, if they were not already halted....
Commercial banks, mutual fund companies and other big financial firms with deep pockets would presumably weather such turmoil.... The Fed’s action was intended simply to keep the financial markets functioning....
Regulators are facing an unprecedented and widespread deterioration in many markets. Last summer, the value of risky and exotic securities plummeted in value. Now, even top-rated securities once deemed as safe as Treasuries have hit the skids. Financial firms have written down more than $150 billion of their assets. Some analysts are predicting that losses in various credit markets will reach $600 billion....
Hedge funds rely on Wall Street for a range of services from the humdrum, like holding their securities, to the critical, like providing loans they use to increase their bets....
Nothing but a fucking casino down there, huh?
Place your bets, place your bets!
Investors are considering whether another firm might face financial problems. The price for insuring Lehman Brothers’ debt jumped to $478 per $10,000 in bonds on Friday afternoon, from $385 in the morning, according to Thomson Financial. The cost for Bear debt was up to $830, from $530."
Oh, so another big firm getting ready to shit the bed, 'eh?
And what a bunch of liars they are!
"Fed, rival keep Bear Stearns breathing""Bear Stearns Cos., teetering on the brink of collapse from a lack of cash, got emergency funding from the Federal Reserve and JPMorgan Chase & Co. in the largest government bailout of a US securities firm.
After denying earlier this week that access to capital was at risk, Bear Stearns chief executive Alan Schwartz said yesterday that the 85-year-old company's cash position had "significantly deteriorated" in the past 24 hours. The central bank agreed to provide financing through JPMorgan for up to 28 days, the bank said yesterday....
The Fed acted to prevent the failure of the second-biggest underwriter of US mortgage bonds and forestall a potential market panic as losses by banks and brokers reached $195 billion and stocks plunged for a third day this week....
Bear Stearns, founded in 1923, acted in response to "market rumors" of a liquidity crisis, Schwartz, 57, said in a separate statement. He said earlier this week that the company's "liquidity cushion" was sufficient to weather the credit-market contraction....
"We have tried to confront and dispel these rumors and parse fact from fiction," Schwartz said in the New York-based company's statement yesterday. "Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated."
The announcement caused financial shares to plunge, with Bear Stearns tumbling a record 47 percent to $30 in New York Stock Exchange composite trading. The stock has lost 66 percent of its value this year.
Lehman Brothers Holdings Inc., Citigroup Inc., and Bank of America Corp. also led declines as all 10 industry groups in the Standard & Poor's 500 Index fell...."
