Asian/ME dollar selling VERY unusual and portends immediate abandonment of

[junker]

I have provided the link to the complete article as well as several of the pertinent paragraphs. Authors ok with posting.

Here is the distilled-so-even-repub could understand it abstract.....

new patterns have emerged in global dollar selling that is rapidly overwhelming the ability of the Bank of Japan, and the Fed Reserve Bank to prop up the bucko...the dollar is basically bankrupt and now asian and central asian peoples and their gov'ts are selling off bucks. Only 3 agencies/govts supporting the dollar and they are running out of fuel to fight the conflagration...

so in spite of being told to basically go piss up a rope by some here who wish to live in denial about the tidal wave engulfing us all economically, I will continue to present these heads-up articles which go to the point of the emerging patterns of unfolding economic chaos.....

Why you ask? Well, being old and stupid/stubborn bald guy is not the answer, though it does contribute, but rather cause a couple of the demo'candidates have read my stuff (or their aides did) and have contacted me with the intent of pursuing their own education into the patterns discovered to be unfolding. This will make for some better informed humans who may NOT fluck it up when it comes their turn to have a go at fixing the economic mess wrapping the planet.

What the populace don't see coming is the financial system train-wreck. And while I believe that Bushbutts' owners DO see it coming, and that it contributed greatly to the Bush Clan rabid fierce desire to sieze power at this particular time in history, I am of the opinion that their (BushCo) self-delusional approach to self-preservation will back-fire on them during the rest of the crash.

The real problem, for me emotionally, is that it is the middle class and lower class that takes it in the shorts during these periods. Being fortunate to have NOT been born to upper class or wealth, I worry about my clueless compatriots. I know, typical tree-hugging, community promoting liberal leakyheart attitude. But what can a guy do? I am too damn old to start changing now....



Link: http://www.jsmineset.com/

Monday, January 12, 2004, 1:03:00 PM EST

Noland Bulletin Paints Bleak Picture

Author: Jim Sinclair/Doug Noland




Reference by Doug Noland’s Credit Bubble Bulletin (see below) to the unprecedented, huge but market-sterile intervention by the BOJ (Bank of Japan) is to me the most terrifying of facts.


It begs the question: Why are the Middle East & Asia, who are more in the know about today’s political problems than we are in the US, such unrelenting sellers of dollars even at the .8500 horizontal support? It is this unrelenting selling of the dollar that portends the bankruptcy of USA Inc.
Never forget the activity in the listed Put options and bear spreads on the airlines just three trading days (for no apparent technical or fundamental reason) before those airline companies had their planes hijacked and destroyed on 9/11. What is it that the Middle Eastern and Asian dollar sellers really know? Are we oblivious of the real facts?

You only need the trained eye and objective ear to see and hear what the market is telling you. Eyes in space are blind compared to a trained observer in world markets. Something is terribly wrong here and now. This Middle East/Asian dollar selling is way out of character even for a grinding bear dollar market at this point of that bear market experience.
A Few Chilling comments from Noland's Credit Bubble Bulletin:
"Fed Custody holdings of Treasury and Agency debt (for foreign central banks) increased $5.9 billion to $1.073 Trillion. Custody holdings have jumped almost $100 billion in just 14 weeks.

Yesterday the Bank of Japan reported that Official Foreign Reserves increased $29.1 billion during December to $652.8 billion. These largely dollar reserves were up an astonishing $201.3 billion, or 45%, for the year. There is market speculation that the Bank of Japan expended as much as $30 billion this week supporting the dollar. The size of these unrelenting interventions/liquidity injections is simply incredible, especially in the face of today’s wildly overheated global financial system. That unprecedented interventions are barely stabilizing the dollar is indicative of an unfolding crisis."

As one of our readers noted: "Unprecedented monetization of US debt is consuming the value of the dollar and the wealth of the middle class. Ironically, this economic stimulation is causing only unproductive consumption and fruitless speculation. The addiction of hot money to high beta rather than productive savings and investment is the Achilles' heel of Greenspan's experiment, and the remaining value of the dollar and the naivete of the American people is its limit. The acquiescence of the knowing in this squandering of our inheritance is creating a legacy of diminishment and dishonor for the next generation."
More

[ret5hd]

1. question: (maybe there isn't an answer)...

i have long thought the present situation is not sustainable. because of the situation described in the orig posting, i have recently moved all of my (meager) 4501k holdings to the money market acct...essentially a
savings acct that pays just a very small amount of interest.

I did this because i feel the stock market is going to crash again. but what is the difference between watching what little i have be pissed away in the stock market and watching what little i have be pissed away by a massive devaluation of the dollar?

where can you put 401k money that is apt to at least retain its value?

[junker]

3. there is no difference, and the only solution is to take

your wealth (however megar like mine) and put it into some 'thing' that is not denominated in ANY body's currency. True, at the moment, other currencies like EU and Pound and Suisse Franc are holding or gaining against dollar, but when the USofA is brought down by the collapse of the Fed Bank and their product the dollar, then all currencies, at least for a while, will be too unstable for investing. So find some thing (gold/silver, other precious metal, land, food, tools) to put your money into as nothing made of paper will survive the Fed engineered hyperinflationary spiral. And we are now seriously into it beyond the point of return.

[KoKo]

9. Land, food tools?? Land values and Housing are in a Bubble, so I'm not

sure about land holding up with this high consumer debt and so much taken out of their equity in their houses to pay for purchases, and more recently to keep themselves afloat if they've lost their jobs and healthcare.

I'm unsure about what you mean by taking your "dollars" and putting them in food and tools. That would be interesting.

[ret5hd]

10. i read a book once...

that suggested that the best things to buy prior to a crash are:
1)quality liquor
2)22 cal. ammo
3)canned goods

you would be able to trade these for anything else you needed.

[papau]

24. old and stupid/stubborn bald guy - I can relate!

But as long as the other countries are willing to take the hit from our pouring dollars overseas - namely inflation -

why is there going to be a melt down beyond loss of jobs in the US as the rest of the world GDP grows?

Granted the central banks could go into sell mode - and we have a crash - but I do not see that that is forced.

[Petrodollar Warfare]

2. A couple of questions

<<<Only 3 agencies/govts supporting the dollar and they are running out of fuel to fight the conflagration...>>>

We seem to have Japan (BOJ) and China in a serious "holding action" to buy US debt and keep the dollar's devaluation from becoming a run on the $. 1) Is their a third foreign gov't that you are referring to that is propping up the dollar?
(It seems most of the European and Middle Eastern gov'ts gave up on the dollar a long time ago.)

2) Any opinion regarding the upcoming meeting of finance ministers with respect to the dollar and euro?(Feb 04?)

Third question: Why does the euro seem to track so close to the price of gold? I read that in 1999 at the euro's release the ECB wanted to hold 15% of the euro money supply with gold. The euro is still considered a "fiat" currency but I have not been able to determine if this informal policy re gold is still in effect. Do you know if the ECB has increased it's gold holdings to parallel the euro's appreciation? (or anything else explaining what seems to be somewhat or a correlation) Thanks.

[junker]

4. Actually China is NOT propping up buck. The

chinese govt is using up the bucks they have by buying things like gas and oil and food, or they are giving the bucks to their banks to use to bailout bad debts and get solvent while they still can (by buying gold with their dollar gifts).

The Infamous 3 are BOJ, FED, and ESF (which is the Presidential Working Group on Markets and also called the PPT, they use your gold from Ft Knox and Anapolis to prop up the buck without your consent or even knowledge). Used to be that the Bank of England (which is owned by same people as own the Fed Reserve Bank- i.e. Queen of England and her boy, chucky) helped but they are so close to broke with their own problems that they are only minor players now...

2) up coming meeting of finance ministers is a doctors gather round terminal patient and try and come up with ideas sort of thing. Too late for anything to come out of here which will/would even delay or slow the progress to dollar death.

3) EU tracks the gold rise because so far the gold rise is really only reflecting dollar death so of course ALL other currencies including gold go up against the dollar as it is dying....eh? Makes sense? So having observed this bit of indicator, you will also know when TSHTF and the fan is turned on high as that will be the day when gold starts rising against the euro and suisse franc. At that point the whole thing starts escalating seriously to the point where everyone's lives will be affected/impacted.

So watch the price of gold in euro/rand/suisse franc. When it starts accelerating up in those currencies more than the daily downswing of the dollar, then TSHTF is close on its heels.

[cprise]

8. Why would the Euro necessarily become unattractive?

I hope this isn't a stupid question. I am a novice here.

But shouldn't the Euro weather better than the other currencies if the EU's fundamentals are generally better: For starters, it could nearly corner the world market in renewable energy technology in the event of an energy crisis. It has well-maintained infrustructure and institutions at home (even while owning privatized infrastructure abroad). People are well-educated, and many still have personal experience being under siege in their homes. High productivity per unit of energy used. Etc, etc.

The "sclerotic" EU (as the Wall St. propaganda goes) and the Euro are in an excellent position right now and could be the big winner coming out of a global financial crisis. The value of a fiat currency is a measure of resources and confidence, no?

[SlavesandBulldozers]

5. "Are we oblivious of the real facts? "

care to speculate? are you talking about an event in the world? Is this anticipation of the plummeting of the dollar a harbinger for another terrorist attack that we don't know about (like the 9/11 put trades), or is it that the devaluation is caused by horrific fiscal policy by Bush? I'm sorry I'm not very well-tuned with market terminology.

[CaptainClark23]

6. Not to answer for Junker...

But should the fiscal collapse occur in the manner that Junker and others indicate it will (and I've found the arguments compelling); terrorist attacks would be the least of our worries.

Chronic fiscal mismanagement on a Federal and Global level have put us in more danger than any terrorist attack could. Even that most fearsome threat of a dirty bomb would only affect a limited portion of the population and infrastructure.

USD collapses and we're all fecked, taking a goodly portion of the world with us. No one on the planet would be immune from the fallout of this bomb. Duck and cover never seemed such sage advice til now.

[Art_from_Ark]

7. Annapolis?

I was not aware there was a bullion depository in Annapolis. There is one at West Point, which is now also a Mint.

(On edit: Meant as a reponse to #4)

[Infinite Velocity]

11. OPEC mulls move to euro for pricing crude oil

By PATRICK BRETHOUR
Globe and Mail Update

Calgary — OPEC is considering a move away from using the U.S. dollar — and to the euro — to set its price targets for crude oil, the highest-profile manifestation of the debilitating effect of depreciation on the greenback's standing as the currency of international commerce.

Several members of the Organization of Petroleum Exporting Countries are seeking formal talks on using the euro, as well as the U.S. dollar, when determining price targets for crude, a senior oil minister within the cartel said Monday. “There are countries that are proposing this,” Venezuela's Oil Minister Rafael Ramirez said in Caracas. “It's out there, under discussion.”

Mr. Ramirez did not specify which OPEC members are pushing the proposal, but much of the impetus is believed to come from Persian Gulf producers.

They have seen their purchasing power in Europe pinched as the U.S. dollar loses ground against the euro — including touching a record low Monday.

Any move to water down the use of the U.S. dollar as the currency would have enormous symbolic impact, said one prominent Canadian energy analyst.

“On a symbolic level, I think it's huge, not only for what it says about the U.S. dollar, but also the implied change to the nature of energy trading worldwide in the future,” said Wilf Gobert, vice-chairman of Peters & Co. Ltd.

Beyond the blow to the greenback's prestige, a move by OPEC to even partly price in euros would ensure that any further depreciation in the U.S. dollar boosts oil prices, Mr. Gobert said. And any country — not just the United States — using the U.S. dollar for pricing would see the cost of the commodity rise as that currency fell.

Indeed, while OPEC has yet to make any formal break with the U.S. dollar, its refusal to boost output has already offloaded much of the cost of the dollar's depreciation on to the American economy. Mr. Gobert said oil prices at the end of last month, about $32 (U.S.) a barrel, would have been much lower if not for the decline in the value of the U.S. dollar over the past 24 months. Using the exchange rates of the dollar versus the euro two years ago, crude would be selling for $22 a barrel instead, he said.

All of the oil prices used in OPEC's benchmark index, or basket, are currently denominated in U.S. dollars.

The cartel uses that index as the basis of its price-band policy, whose stated intent is to adjust output so the basket hovers within a $22-to-$28 range.

Oil prices have lingered well above that maximum for 26 consecutive trading sessions, which in theory means that OPEC should have increased its output by 500,000 barrels a day to lower prices. But the cartel has ruled out doing so before its regularly scheduled meeting on Feb. 10, arguing that it is the depreciation of the U.S. currency — not a lack of supply — that is fuelling the rally in crude prices. Monday, crude for February delivery rose 41 cents to $34.72 a barrel on the New York Mercantile Exchange, a 10-month high.

Mr. Gobert said he believes it is unlikely that OPEC will opt for a formal split with the dollar, although the cartel may very well accomplish the same effect by raising its price band, he added.

But he said that OPEC's musings about adopting the euro are part of the increased chatter about the rising value — and influence — of the five-year-old currency among commodity traders and analysts

http://www.globeandmail.com/servlet/story/RTGAM.20040112.wopec0112/BNStory/Business/

[aneerkoinos]

12. "talking openly"!!!

In other words, it's getting highly likely that at meeting of February 10 OPEC announces that it moves to a currency basket, consisting of perhaps 1/3 dollar, 1/3 euro and 1/3 other currencies.

http://story.news.yahoo.com/news?tmpl=story&u=/afp/20040113/bs_afp/qatar_oil_dollar_attiyah_040113163858

"Oil producers concerned by weak dollar: Qatar

DOHA (AFP) - Oil producers are worried about the fall in the value of the dollar, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said, suggesting it was inflating oil prices as there are no market shortages.

"Producers are concerned about the weakness in the price of the dollar and the current price of oil is not due to a shortage in supply," the minister told a Middle East investment conference Tuesday.

Attiyah spoke of the unease certain oil states, including some in the OEPC cartel, at the historic weakness of the dollar against the euro.

"Changing from one currency to another is a difficult decision to take within OPEC (news - web sites)," said the minister, without stating any position."

[Petrodollar Warfare]

13. Thoughts on OPEC and basket of commodities

It appears the Feb 10, 2004 meeting with OPEC could have important implications. Meanwhile, teh Chinese are going to revalue their currency. I think we are seeing teh beginning of a real monetary shift - a new paradigm of sorts.

Gold Bugs/Libertarians say "Gold is the currency of currencies."
Joseph Stalin once said "Wheat is the currency of currencies."
I say in the industrialized world "Oil is the currency of currencies."

Comments?

***********

"L. Ron Hubbard says that governments and people in general do not look for a simple solution (Gold or Silver) but love to implement the more complex challenge (Basket of currencies). So for honest money (benevolent) to compete with the fiat (malevolent) we should also have the option of the more complex basket of asset backed currencies such as Gold, Silver, and Platinum as well as other options using consumable commodities (Oil, Coal, Natural Gas) (Wheat, Corn, Soybeans) (Beef, Pork, Chicken).

The same computer algorithm they discuss here can be used to value the honest baskets as well. This keeps the conversation on the principle that one is asset backed (real) and distributed. The other is not asset backed (fiat) and less distributed. Distribution obviously indicates how easy it is to abuse or manipulate via a few select organizations.


Notice the key statement for the basket of fiat currencies is:

“It is a flexible standard that can manage subsequent adjustments in the relative strength of different economies, including a long term relative decline of the US economy despite the present attempts to heat it up. It can adjust to the global effects of massive Keynesian policies like the current flood of dollars throughout the world.�

Surely the above Metal, Energy, Crop and Meat benevolent currencies, or a basket of all of the baskets, directly adjust according to the actual strength of different economies and eliminates the effect of Keynesian (malevolent) policies.


The question: Is the solution stated here by the Chinese an attempt to stop the looting or is it an attempt to gain more of the loot? Isn't it about time that the producers control the money and not the looters? (Ok when I come out today I will finally take your copy of Atlas Shrugged and start reading it).

I have to admit that even myself when I read the article below, thought "wonder how that would be implemented" being distracted from the principles behind it. So the theory is to give the same challenge to people to solve a problem in a benevolent vs malevolent manner.

-Steve

***comments from London on RMB revaluation***


Even if this is only informed speculation, and I note that Henry Liu has seen fit to forward it, it is potentially enormously important.

Obviously very many wonder how far the global balance of payments disparities can go, but this possible/probable answer is very informative.

It marks a relative demotion of the dollar as world money, not just in quantitative terms but in qualitative terms.

The procedures prior to the advent of the euro shows that humankind has the computerised technology smoothly to manage a basket of currencies. If China switches from a dollar peg to a basket of currencies implicitly it is saying that this is its standard for world money.

It is a flexible standard that can manage subsequent adjustments in the relative strength of different economies, including a long term relative decline of the US economy despite the present attempts to heat it up. It can adjust to the global effects of massive Keynesian policies like the current flood of dollars throughout the world.

It sets a standard for other countries to switch to as a bench mark of world money, in particular the increasing number of countries for whom trade with China is most important.

All without an overt fight about whether the dollar is replaced by the renminbi.

It is not socialism, but it is about a somewhat more socially rational, sensible management of world money.

And the computerised basket of currencies will reflect the relative strength of different economies in the world in a less mystical way than gold or silver represented world money.

Clever Chinese.

Chris
London


----- Original Message -----

From: "Henry C.K. Liu"

Subject: RMB Revaluation - Goldman Sachs


> BEIJING, Jan. 13, (Xinhuanet) -- China will make a one-off revaluationof the yuan within the first quarter of the year and move to a trade-weighted basket of currencies to set its exchange rate by the second half, investment house Goldman Sachs said.

The measures will lead to a five percent cumulative appreciation over the next 12 months, it said.

With low interest rate expectations and yawning current account and budget deficits, the US dollar has been hitting fresh lows against the euro and other major currencies on an almost daily basis.

This is pressuring China to address its exchange rate policy, the investment bank said in a client note.

Although a 10 percent revaluation would be needed to bring the currency to fair value, it expects China to revalue the yuan by 2.5 percent against the US dollar in a "prudent first move" towards a more flexible exchange rate regime.

Goldman Sachs said that China is then likely to move from a direct US dollar peg to a crawling basket of trade-weighted currencies.

It cited a recent mainland media report which said that the government was considering linking the yuan to a basket of 11 trade-weighted currencies.

It noted, however, that because many of these were either managed against or pegged to the dollar, its composition would be 63 percent in dollars and the remainder split between the euro and yen.

Goldman Sachs said that the move to a managed basket of currencies would lead to a one percent appreciation against the basket in six months and 1.5 percent in 12 months, totaling a five percent rise in value overall.

It said that this implies an exchange rate of 8.07, 7.68 and 7.54 yuan to the dollar in three, six and 12 months respectively. The yuan will be valued at 13.00, 12.38 and 12.60 yen over these periods, it said.

End item

> (China Daily/Agencies)

[aneerkoinos]

15. More blather

"Minister Ramirez Discusses the Euro, Iraq, OPEC, and PetroSur

Dollar and Euro
Walter Martinez: Àt this moment we have the satisfaction of having the Minister of Energy and Mines with us so that he may clarify for us, why he is just returning from Vienna. Minister, what is the situation there? We have even received information that says that OPEC would be disposed to consider the use of the Euro, which seems an absolutely interesting and newsworthy item.

Rafael Ramirez: Yes, there is a discussion which is not new within OPEC, which has to do with the use of which reference currency for OPEC’s own commercial transactions and consequently of the speculative market derivatives, which are greater even than the volumes that OPEC handles. Also, there is a discussion, at the moment, that is on the table due to the strong devaluation the dollar has had with regard to the Euro. So there is a discussion, but it is a discussion that we are looking at with care due to its implications. For example, this gives us an adjustment of the price band , in proportion to the devaluation that the dollar has undergone. We would thus have a price band that would oscillate between $29 and $38 dollars per barrel, which would also mean an impact on the economy – something that would not agree with us. It is necessary to maintain a balance that allows the defense of our price, but which also allows that economic growth takes place which increases demand. Then there is an aspect that we are discussing, a proposal: probably the most balanced option would be to have a basket in order to maintain a balance between the dollar and the euro for the commercialization of oil. But this is a discussion that is in the midst of development, as you usually say, and there is no firm position of the ministers about it.

Walter Martinez: So there would be the possibility of studying a basket of hard currencies that then allows for the devaluation of the dollar, which some sources considered to reach 35%.

Rafael Ramirez: Yes, 34 to 35%, and that comes to be more of an aspect of the speculative markets, that is to say, there are exogenous elements to the oil market, that introduce variations. Oil countries effectively have a loss of real income. Although, in the case of Venezuela this is compensated for because all of our purchases of services are also expressed in dollars, which makes this a more or less complex equation that must be carefully evaluated."


more...

http://www.venezuelanalysis.com/articles.php?artno=1087

[JCMach1]

14. The GCC (Gulf States) have talked about developing their own

single currency as well. I am not an extraordinarily happy camper about the exchange rate at the moment. The UAE Dirham (AED) is pegged to the U.S. Dollar at 3.67. If the Dirham could float, it would be at 4-5 right now. Instead, I get the same devaluation as everyone in the states...

YUCK!!!

[KoKo]

16. Not to sound like a smart ass, but all of this "currency rearranging"

sounds like the Nations of the World are all in this together and that we will all fall together because if propping each other up with more crutches doesn't work with intervention by the IMF and Fed and whatever else is furiously working to prop up the world economies and paper over the huge US Debt we could be in for a devastating decline.

We won't see the full effects for awhile and they will be only slightly noticeable as layoffs and lowered wages seep throughout the world and the US Stock and Bond Market becomes a "playground" for the International day traders and other big players who can come in an out at a second's notice and rearrange their cash and profits and losses, but at some point the decline in all our standards of living will take hold and it will be too late to do anything about it.

On the other hand if this "propping and rearranging" can hold off the US collapse until we get an administration who can get a grip on all of this then we might avert this diasaster down the road. I imagine that's the hope.

So much hinges on the 2004 Election. The fate of the world, perhaps.

Just my take on it, not having a background in economics but watching the reality around me and trying to read as much as I can about world financial markets and economies.

[cryofan]

17. let me guess....

....these guys are in the business of selling gold....

[rapier]

18. notes

I'm sympathetic junker, I really am. Again however, you've been dead wrong on this timing thing. Tomorrw you may be right but the chances are tiny.

EVERYTHING continues to go in favor of the asset inflationists. Now the dollar is having a respite. Long term rates are falling and could have a melt down. Gold and most commodites, particularly engergy are being slammed.

While I am sympathetic to all your posted alt.economic articles and views they mean nothing in terms of identifing when the markets may become unhinged. 3 months, 9 months 2 years or 8, who is to say?

Take the dollar. The dollar falling was bullish. Now a dollar rise will be seen as bullish. When it falls again guess what the touts will say. The mania for stocks and financial assets could well be about to launch into something bigger than 99. All the ingredients are there except perhaps the liquidity but trying to understand that is beyond all analysis.


I mean really, there is no logical fundamental arguement which will make the markets flinch. That's because they are not logical. As Keynes said, "markets can stay irrational longer than you can remain solvent"

Not that what we have anymore can be called markets.

[KoKo]

19. rapier, what an excellent post. Both to the Heart and Hype of the Matter!

Nicely put. Up is Down, Down is Up, Deficits are Up, Markets are Up, Debt is Up, Treasuries and Dollar are Down, Consumer Confidence is Up, Holiday Sales are Mixed, Euro is Up, Gold is Up, Gold is Down, Commodities are Up, Commodities are Down........and on, and on, and on, and on, and on.........

:shrug:

[papau]

25. true - and learning that can cost! :-(

:-)

[54anickel]

20. Junker, I'm surprised you missed this one......

http://edition.cnn.com/2004/WORLD/asiapcf/01/18/saudi.mahathir.reut/

Sell oil for gold, Mahathir says

JEDDAH, Saudi Arabia (Reuters) -- Former Malaysian Prime Minister Mahathir Mohamad has told Saudi Arabians they should sell oil for gold, not U.S. dollars, to avoid being "short-changed" by a decline in the U.S. currency.

"The price of oil is $33, but the U.S. dollar has declined by 40 percent against the euro so you're effectively getting $20," Mahathir told an economic conference in Saudi Arabia's Red Sea city of Jeddah on Sunday. "So you're being short-changed."

Saudi Arabia, the world's biggest oil exporter, has justified higher world oil prices by saying they are necessary to compensate for the slide in the U.S. currency.

Mahathir, who retired last October, spent much of his time in office upsetting Western governments and defying their economic orthodoxies. But he became a respected spokesman in Islamic and developing states and received an ovation in Jeddah.

He suggested countries tally their total annual imports and exports and settle the difference at the end of the year in "gold dinars".


more.....

Someone started a thread in LBN
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=321463

[Petrodollar Warfare]

21. Will OPEC make a policy change on Feb 10, 2004?

This seems to be the question of the month. I have read an unprecedented amount of news articles (not the US media of course) that deal with OPEC/dollar/euro/gold issues. I have studied these issues for about 15 months, and I have never seen as many articles on these subjects within the last 10 days or so. Thus, I wonder if the OPEC meeting on Feb 10, 2004 will result in a major annoucement/policy change. Perhaps they will hint at a basket of currencies (dollar and euros and ?), perhaps even some oil pricing in gold? Not even the major US media could suppress such a news event.

Anyhow, I really don't know what if anything will result from that OPEC meeting, but the above scenario re OPEC is about the *only scenario* that I suspect could possibly create the fiscal crisis re the dollar that junker has predicted. (The Feb 5-6 meeting of the G-8 or G-7 re monetary issues will also be quite interesting, but I think OPEC is the one to watch more closely). Any thoughts?

[JCMach1]

22. There has been talk about going to a currency 'basket'

here in the GCC,,, I think it is much more likely OPEC will simply raise rates to keep pace with the dollars slide.

That has been the conventional wisdom here in the UAE.

[junker]

23. Trigger point for BOJ to abandon the buck support ?

clipped this from Jan 23 commentary at Midas. You can get a free 2 week trial and read the whole thing yourself if y've a mind to. This is merely illustrative.

I am also of the opinion that BOJ /derivative problems are at the <106 level.


Anyway.... note to mods no worries with (c) on this ....

www.lemetropolecafe.com

extracted paragraphs
*****************************

Here we go again. $/yen dips below the magic 106 and gold gets trashed from being up $1.70. The fury of these attacks and the notable illogical timing (that even leaves the market observers stumped) obviously signals some severe stress in the Cabal. The next few days could be the Waterloo of the Cartel.

Clearly someone knows that something serious happens below 106..does Japan stop supporting the dollar and starts liquidating dollar reserves? I think we shall soon find out and it obviously is gold friendly!


**********************************

[rapier]

26. notes

Any price target thought of as critical support has no meaning in this case. In general technical analysis in all its forms, particularly trend lines denoting support and resistance, measure the relative position of traders, meaning are they in a position of profit or loss. In real markets greed and fear rule. When it comes to fear, fear of loss, support lines tend to denote the price at which a significant portion of positions become losers and thus make the holders more likely to sell.

The BOJ evidently lost $78 BILLION last year on its dollar/T-bond position. Did that stop them from adding over $40 billion this month alone. NO!. They are not acting rationally so to ascribe some price at which they will slap their foreheads and say enough is enough is wrong.

This Japanese insanity is primarily political. It is divorced from ideas of profit or loss. It is divorced from free markets. Greenspan, the administration and the entire financial world love it. The Japanese are acting out of force, or necessity. Just as the Fed is by imposing ultra low interest rates. THey have no choice because the alternative is too terrible.

As long as there is the political will in Japan to keep up the game there is nothing to stop it. I suppose the 'markets' themselves could stop it but they don't have the will. It's a rigged game. All insist that the emperors clothes are beautiful. That is the reality beamed thru the media as well which is a crucial point.

Waxing philosophical as is my wont; in the end money and stores of value are simply a construct of the human mind. There is no absolute, as gold bugs would have it. Manipulated and managed markets are accepted and applauded as free markets now, and so it is. Therefore there is no market mechanism which will end the game. The game will end when consent for it from the bottom says enough is enough.

OK, probably. I accept a financial accedent based upon dynamics internal to the markets is possible. It would be wise however for Junker to accept the possibility that the new era has only just begun.

[54anickel]

27. There has been quite a bit of strange maneuvers in the trading pits

and by the Central Banks lately, especially this past week.

The Banks seem to be doing a bit of "toe in the water" testing to see how the markets might respond. It's almost like they are looking for alternatives to the standard monetary policy changes to effect the markets. Whether they are working together or independently is the question.

Perhaps they plan to attempt push the US into taking some action. I liken it to parents threating to cut off the trust fund of the rich frat kid until he begins to handle his finances like a responsible adult.

There was the ECB with conflicting rhetoric on rate changes and possible intervention. The Bundesbank mention it wanted the "option" to sell an additional 600 tonnes of gold from their reserves put into the renewed Washington Agreement, Japan's surprise announcement of loosing the monetary supply, the US Treasury market tanking and now considering offering TIPS, China who has been clear in the past that they are not ready to float their currency is suddenly talking about a basket of currencies, and on and on.

JMHO,
There's a lot of "news" and strange reactions to it in the currency trading pits. There's something in the air, sure the G7 meeting probably has a lot to do with it, it's just been quite different lately.

http://www.forbes.com/markets/currencies/newswire/2004/01/23/rtr1224988.html
US agencies sink with Treasuries on overseas worry

NEW YORK, Jan 23 (Reuters) - Sinking U.S. Treasuries prices
deflated the U.S. agency market's sails on Friday, with spreads
ending mixed after narrowing all week, as bid lists emerged and
nervousness flared about the extent of future foreign demand
for U.S. debt.

A catalyst for the downturn was a Reuters story quoting a
European diplomatic source saying euro zone ministers at
February's Group of Seven meeting will say that further euro
strength could spur a European Central bank interest rate cut.

A higher dollar means less intervention money from foreign
central banks with which to buy Treasuries and agencies, bond
strategists said.

more...

http://www.forbes.com/markets/newswire/2004/01/23/rtr1225028.html
US TREASURY OUTLOOK-New TIPS in the pipeline

NEW YORK, Jan 23 (Reuters) - The U.S. debt market may be about to see the launch of the longest-dated government bond in three years if the Treasury Department's proposal to launch 20-year inflation-linked paper comes to fruition.

The Treasury Department said on Friday it wanted feedback from major Treasury securities dealers on the idea of increasing inflation-indexed debt supply in place of conventional debt, but said it had not made any decision yet.

"Treasury's current nominal issuance, if continued, would ultimately skew our debt portfolio toward 5- and 10-year notes. How has the increased supply of 5-year and 10-year notes affected the primary and secondary markets? What would be the effect of substituting a 20-year TIPS for nominal issuance?" the Treasury asked in its quarterly agenda for meetings with primary dealers.

more...


http://www.busrep.co.za/index.php?fSectionId=565&fArticleId=330896
Bundesbank wants to join gold sellers

Frankfurt - Germany's Bundesbank confirmed yesterday that it had requested an option to sell 600 tons of gold by 2009 from its reserves under terms of any new global central bank agreement.

It was unclear in what form the option would be exercised.

In purely mathematical terms, the sale of 600 tons of gold would be worth $9 billion.

The German central bank made its intentions known during the negotiations to renew the Washington gold agreement of 1999, which limits the amount of gold sold by 15 European central banks to 400 tons a year, or 2 000 tons in all, until 2004.

[KoKo]

28. If this admins "success" in Iraq is any indication of their ability to do

anything without making a mess of it, maybe Junker's predictions have some validity in "impending doom."

How long can all this juggling go on? Just, as you say, rapier, there is no market mechanism to end the game unless there is a "financial accident" based on internal dynamics. (paraphrasing you)

And, it's not in the interest of the World Economy to have us implode, either. But, 54aNickle's links here, seem to suggest an "air of desperation." Something's afoot......

[junker]

31. I don't accept or reject. I use maths. The bottom has stopped paying.

The issue is less political will than capability of CB vs CB vs TheCommercialCollective and their ability to counter the forces/cycles/tendancies/whatever-you-call it.

We are in a Kondratief winter. It started recently. These are historically predicatble within the context of the current times manifestation of the common elements (i.e. Radio in 1929 = internet in 2000).

Within that context the path that BOJ is on has been repeatedly shown by history to fail. Further history has provided algorithms relative to polulation size/currency 'health' and local resource availability. Got it? This all has happened before and thanks to spreadsheets one can plot historical trend outlines against current emerging data to make predictions about strike/price points.

These points can be determined. It is precisely the bottom of the system, that is, the middle and working class peoples of the world whose actions in the aggregate are being trend lined. They have stopped paying for the sham.

The only things currently holding up the 'averages' such as the DOW/NASDAQ et al are the CB's and TPTB within their own manipulative structure. In other words they are playing with themselves.

So the numbers will not fall, but suddenly a visible schism will be able to be perceived (some can see it sooner than others) which will make watching the collapse that much more interesting as the exogenic (e.g. 'from outside the system') event of the implosion will be highly visible as the supposed rich meltdown. Of course, you realize that there really is no longer a middle class in the USofA and that we are all one paycheck away from homelessness (less than one hundredth of one percent of USofA citizens are financially secure).

And if anyone cares to note, the consumer basically stopped playing in December. Can't wait to hear how the Bushies will try to spin the new econ numbers next month....

[54anickel]

32. "Watching the collapse" - yes you can usually find hints of things to

come, even in the mainstream media. But much depends on individual interpretation - that's what makes sites such as DU so helpful. Ways to bounce interpretations around in attempts to get at the real news.


http://www2.dw-world.de/english/current_affairs/1.56183.1.html

BoJ and others are risking their own economic stability through constant intervention and they are reaching their limits. They are deciding where to draw the line.

ECB is paying a huge price, with thier recovery on the line as they bear the brunt of what is going on in the currency markets. They are basically saying interest rate changes is where they are drawning the line.

In this article is the first "hard evidence" of this admins desire to "starve the beast". Politically, they can now use the ECB pushing as the scapegoat for the "very, very though decisions on spending".

snip>
"If I am concerned about something it is that the euro alone has to bear the brunt of the fall of the dollar because many areas of the world are de facto linked to the dollar, be it through pegs or intervention," he said.

The ECB’s Trichet also expressed worry over a ballooning U.S. budget deficit, which if unchecked could become a source of international contention when it effects interest and exchange rates across the globe.

U.S. Commerce Secretary Donald Evans attempted to calm European fears by saying the situation was both "very manageable" and "affordable." He said the deficit would be brought down by some "very, very tough decisions on spending." Neither Cheney nor Evans seemed especially concerned about the weak dollar.

[aneerkoinos]

33. ECB

"ECB is paying a huge price, with thier recovery on the line as they bear the brunt of what is going on in the currency markets. They are basically saying interest rate changes is where they are drawning the line.

In this article is the first "hard evidence" of this admins desire to "starve the beast". Politically, they can now use the ECB pushing as the scapegoat for the "very, very though decisions on spending"."


Of cource ECB is not paying a huge price, on the contrary, their commodity, the euro, is gaining new markets and quickly becoming equal to dollar as world reserve currency and possibly very soon more important. Yes, some European business (mainly export) is suffering because of strong currency, other business (mainly home market) are benefitting. The ones that get hurt is allways the noisy crowd, and the ones doing OK keep silent.

I think it would be awful mistake if ECB joined the race to inflate currencies. They are quite right to speak about stability and unwanted volatility, and to demand US start acting responsible - raise interests and do something about debt. If ECB and BoJ join forces, they can force Fed to do what they want - hurt the US consumers very badly - which is unavoidable no matter what - now and not later, to make Bush hopefully unelectable and more importantly stop the disease spreading and save the world economic system, if possible. That's what I think ECB should do, but naturally I don't trust their wisdom.

One more note, the cultural difference of positive language of US and pessimistic language of Europe. This often distorts the US perception of what is really going on in Europe, Americans have used to the happy blather and don't understand European culture of constant self-critisism and the almost superstitious "humility" of not bragging in public about when things are OK. I think this pessimistic attitude of hiding good fortune is deeply rooted in the long and bloody European history - of which we are for some peculiar reason proud!?. It often seems to me that many Americans think that the way Europeans talk thing must be really shitty here, while in reality they are shitty just the usual way. For us Europeans it usually seems that the way Americans talk they are suffering from severe disconnect with reality.

[54anickel]

34. Americans "suffering from severe disconnect to reality".

Ya, probably true - we are so into the "me" thing, don't pay much attention to anything else going on in the world unless it hits our pocketbooks.

On the other hand, you make it sound like the Euro increasing so rapidly in value in the midst of a long recovery is no big deal and that Europeans don't seem to mind picking up the US tab for all the debt we've run up.

I tend to agree with the ECB that the rise in the Euro is damaging and I'm glad to see they have the foresight to attempt to slow the trend. Look at the price the US public is paying for all those years of an overvalued dollar. Of course, the policies of this current administration aren't helping much either.

[zedhead]

29. junker! thanks for your input

i have been lurking here for a while, just wanted say thanks 4 all the info and links, i am one who believes the crash is coming, i just dont know how soon. i think it is gonna be sooner than most think, it all depends on long the feds can keep this charade going! gonna be interesting!

[cosmicaug]

30. Impending doom.

zedhead wrote:

i have been lurking here for a while, just wanted say thanks 4 all the info and links, i am one who believes the crash is coming, i just dont know how soon.

Don't worry, neither does junker.

As for doom and gloom, I too have this feeling of impending doom.... In fact, I have had it all my life (which might, in and of itself, be a good reason to be skeptical). But anyway, the whole doom thing is not why I take junker with a grain of salt, it is because he makes what sometimes are very specific predictions which don't come true. As a matter of fact, in five days gold is supposed to hit $900/oz., according to junker.

By the way, does you keyboard have a <Shift> key? It's really neat, when you hold it down it makes BIG, FAT, CAPITAL LETTERS COME OUT. You should try it sometime. I think you might enjoy it.

[BeHereNow]

36. Shame on you Cosmicaug-

That was not a kind thing to say to a first time poster.
As a matter of fact, it was really condescending.
Who made you DU keyboard cop anyway?
I am going to start calling you "Causticaug"
as you seem to be unable to post without
insulting or putting others down.
What's that about anyway?
BHN

[BeHereNow]

35. Congratulations Zedhead!

On your first post! : )
Sorry to see that another DUer made fun of your typing
your first post out...
Pay no mind.
I look forward to your participation in DU
and you can use any keys you want
as far as I am concerned.
I prefer "no shift" to "full of ..."

BHN