wake_up
16th July 2007, 03:34
3 Dollar Collapse Scenarios
Chris Laird
Well with all the dialog now about the foreign holders of US Treasuries and their Catch-22 scenario of holding and recycling US dollars, I have come to a conclusion.
No major holder of US dollars will willingly send the dollar into dollar hell. Because if they do that they go too. Its that simple. They are damned if they do and damned if they don't. So we can dispense with the notion of 1. Japan dumping US dollars. 2. China dumping US dollars, 3. China depeging the Yuan (renminbi). The MIDDLE EAST just might pull the pin though...
Aside from the Middle East grenade pin, what will happen is this rather:
Scenario 1: some simple small thing will compound into a crisis. It may be this year, or next year or the year after.
No one will deliberately mess with this dollar time bomb as far as the Asians and western economies are concerned. Ok it will be something like this: some smaller entity will dump some dollars. And some unforeseen chain will occur that is not in the financial models, or will have some unforeseen amplification, just like in the Asian currency crisis which started small and grew and spread all over Asia till once again the FED got involved and stopped it. One of these days....we won't be able to stop this event, it will happen in some UNFORSEEN MANNER.
Scenario 2: US consumer collapse ( most likely scenario of the three here)
Another way it will happen is the US consumer will severely reduce spending, INVOLUTARILY. Again, the idea here is not intentionally, but rather involuntarily.
The ten year note rises one percent and ends the housing bubble, and the US consumer who is 70 percent of the US economy retracts spending drastically, sending the US and the trading partners into deflation. I think this will happen this year regardless. The ensuing economic strife will initialize over the following two years leaving the world into grinding deflation.
IE the end of our wild worldwide speculation and investment and manufacturing bubble party will end mathematically. But Asia will not decouple, Japan wont, China wont, etc, voluntarily. They will decouple when they are forced to.
The way they might decouple would be to have to save their own currencies amidst a blossoming US dollar crisis, to save their own skins, but not as a voluntarily initiated decoupling. It would be a "oh my god! Its all falling! we have to let it go or it will drag us into financial hell!" thing. IE a PANIC. I want to say again, it will end in a panic. Not some initially orderly drop, where people can think. There won't be thinking, THERE WONT BE TIME TO THINK. There will be uncoordinated decisions to GET OUT.
I mean come on, do you think that these foreign holders of the US dollar will willingly comply with the demise of the modern world economy to a state of collapse? They know how precarious this thing is. No, they will do everything to avoid any destabilizing movement of the US dollar. Have you all noticed, recently, that when the report came out this week about the mildly disappointing US employment numbers, that the dollar actually rallied shortly after? That is how fast these people are acting to stabilize the US dollar. Every time the US dollar gets near 81 they buy dollars. Simple.
So, we are in a present state of affairs where, the US dollar is being very closely watched and will be supported as vigorously as is necessary., by Japan first, Europe second (they are just itching to boost the US dollar), China third, and I also am thinking even the middle east too, for now.
Scenario 3: **** Middle East retaliation for US democracy policy
Now a comment on the Middle East and the US dollar: 1. Pres. Bush (whom I admire even with his faults) is trying to make the Middle East into a democracy. That battle is being fought in Iraq. The Iraq thing is not about just Iraq and foreign fighters trying to fight for Allah. That is the PUBLIC presentation. The real battle is over democracy in the Middle East. If Iraq is successful, then what, do the Saudis has to become democratic too then? and Syria? and so on? This is a big time historic shift to all these people there. Iraq is ALL ABOUT DEMOCRACY. Not oil, not Allah.
We deposed the minority rule of the Sunnis, who were on Saddam's side. They are 20 percent of Iraq. The Shiites are 60 percent.
Now the real problem is that the Arabs Powers That Be, all anti-democratic, in Saudi, Syria, Libya, they are not interested in Moslem democracy. And they are afraid of radical clericism. They are either looking at rule by some radical mullahs, or some democracy and mob rule essentially. They are really between the rock and the hard place...I think they my retaliate against the US dollar if we start a democracy thing in the Middle East. Heck it's working more or less in Afghanistan! Who would have thought that! Next, Iraq?????? THEY WILL NOT ALLOW THIS. I believe the only real weapon they can use is the vulnerability of the US dollar. Or a successful insurgency. If the insurgency fails to stop democracy there then the US dollar could be attacked. It depends on how desperate they are. BUT THEY ARE CAPABLE OF TANKING THE DOLLAR because it is vulnerable. I believe that by messing with the power structure of the Middle East we are messing with big medicine.
There was a story out recently about lots of drugs being found in Fallujah. ( that don't sound too Muslim to me, what, DRUGS in Moslems? they are the most teetotaler people on the planet!) No the drugs tells me they needed it to keep fighting the overwhelming US military, for strength and courage. Doesn't sound to me like thousands of suicide bombers waiting to go to Muslim heaven. No its the paid off foreign fighters and AGENTS of the Mid East non democratic kingdoms that are pepping those guys up with drugs and probably including a nicely purchased fatwa from some major Muslim cleric who says Allah don't care about drugs... or something, who knows, these poor Muslims are being USED.
So then back to the US dollar and the Middle East... well, they are playing along... for now. But wait till the democracy actually gets a foothold in Iraq. The kingdoms will panic then. It will mean the end of them and they darn well know it. Could it be that they will be the ones who realize IT'S EITEHR KILLING OFF THE US DOLLAR, or they are goners? If that is the equation, I think they will seriously consider dumping US dollars. But they don't want to, but will see it as a necessary thing to save their grip on their Muslim slaves. If Iraq democracy starts to succeed, then WATCH THE ARAB DOLLAR MOVEMENTS.
Frankly, I am not sure we should be doing this democracy thing there. We are risking the very status of the US dollar by doing the demo thing, because the kingdoms might just say: "the hell with the old order! Time for a change!, time to kill off the whole friggin world economy and the US dollar..... we ain't leaving!"
Look at it this way, you have super rich Arabs, thousands of them, who are going to willingly give up their palaces, and harems? Hail no!
Why do you think money is being funneled into al-Qaeda? Just a few Arab rich extremists eh? No ,its all been looked at years ago and its deliberate. They are trying to cover their tracks, the rich sheiks, but they are all in it together. We, the US, are interfering between them and their dissatisfied masses and trying to set up democracy?
But I can also say that they don't want to do that, ie tank the world economy. But if they have too.....
I would be looking right now for this: If democracy gets a root in Iraq, look out for the US dollar.... that is my view. Again, if democracy takes hold in Iraq, WATCH THE ARAB MONEY VISAVIS THE US DOLLAR. Now then Japan doesn't care about Arab democracy, China and most of Asia don't, except possibly the Muslim part, like Indonesia.
Now just like China, and Japan, the Muslim kingdoms are making plans to survive a post US dollar world with things like the gold dinar. But it appears the US is already on that, being the military behind the Qatar gold bank. So we are thinking ahead already....
But will it be enough though? Maybe not, but it is one move on the US dollar chess board.
So, the parties that have a big financial interest in the US dollar trade carousel won't voluntarily let it drop. But an unforeseen financial butterfly effect could. Or it might be the Arab kingdoms, which will fight for their survival, and dump dollar holdings, if democracy succeeds in Iraq. In all three of these cases the demise of the US dollar will not be initiated voluntarily, unless its the rich sheiks fighting for their very survival.
Newsletter update.... Friends I am sorry but, I have decided NOT to publish a periodic newsletter as of this time. The reason is, that if I get on a regular publishing schedule, my "genius' (smirk*) is attenuated. I'm serious though, the insights don't come together for me in this way. I read hundreds of articles and newsflashes, and then I get an inspiration, and then put that on paper. I had the site all built, a web master hired, and all. I canned the whole thing yesterday.
A regular publishing schedule will not work for me, my thinking cannot be confined by some deadline to publish every week... I have really struggled about this. I have a bunch of people who said they are interested, but friends, I can't solve this problem of meshing inspiration with some fixed deadline.... The golden goose is special and wont lay on demand... lol! ? If you have an idea how to solve that problem, I would be happy to hear your ideas? Maybe I'll work on a book...la la la the bird is free! The bird is free!
I will be sending an email to all of you who replied to me... But thank you very much for your interest and encouragement. : )
January 18, 2005
Chris Laird
[email protected]
Chris Laird
Well with all the dialog now about the foreign holders of US Treasuries and their Catch-22 scenario of holding and recycling US dollars, I have come to a conclusion.
No major holder of US dollars will willingly send the dollar into dollar hell. Because if they do that they go too. Its that simple. They are damned if they do and damned if they don't. So we can dispense with the notion of 1. Japan dumping US dollars. 2. China dumping US dollars, 3. China depeging the Yuan (renminbi). The MIDDLE EAST just might pull the pin though...
Aside from the Middle East grenade pin, what will happen is this rather:
Scenario 1: some simple small thing will compound into a crisis. It may be this year, or next year or the year after.
No one will deliberately mess with this dollar time bomb as far as the Asians and western economies are concerned. Ok it will be something like this: some smaller entity will dump some dollars. And some unforeseen chain will occur that is not in the financial models, or will have some unforeseen amplification, just like in the Asian currency crisis which started small and grew and spread all over Asia till once again the FED got involved and stopped it. One of these days....we won't be able to stop this event, it will happen in some UNFORSEEN MANNER.
Scenario 2: US consumer collapse ( most likely scenario of the three here)
Another way it will happen is the US consumer will severely reduce spending, INVOLUTARILY. Again, the idea here is not intentionally, but rather involuntarily.
The ten year note rises one percent and ends the housing bubble, and the US consumer who is 70 percent of the US economy retracts spending drastically, sending the US and the trading partners into deflation. I think this will happen this year regardless. The ensuing economic strife will initialize over the following two years leaving the world into grinding deflation.
IE the end of our wild worldwide speculation and investment and manufacturing bubble party will end mathematically. But Asia will not decouple, Japan wont, China wont, etc, voluntarily. They will decouple when they are forced to.
The way they might decouple would be to have to save their own currencies amidst a blossoming US dollar crisis, to save their own skins, but not as a voluntarily initiated decoupling. It would be a "oh my god! Its all falling! we have to let it go or it will drag us into financial hell!" thing. IE a PANIC. I want to say again, it will end in a panic. Not some initially orderly drop, where people can think. There won't be thinking, THERE WONT BE TIME TO THINK. There will be uncoordinated decisions to GET OUT.
I mean come on, do you think that these foreign holders of the US dollar will willingly comply with the demise of the modern world economy to a state of collapse? They know how precarious this thing is. No, they will do everything to avoid any destabilizing movement of the US dollar. Have you all noticed, recently, that when the report came out this week about the mildly disappointing US employment numbers, that the dollar actually rallied shortly after? That is how fast these people are acting to stabilize the US dollar. Every time the US dollar gets near 81 they buy dollars. Simple.
So, we are in a present state of affairs where, the US dollar is being very closely watched and will be supported as vigorously as is necessary., by Japan first, Europe second (they are just itching to boost the US dollar), China third, and I also am thinking even the middle east too, for now.
Scenario 3: **** Middle East retaliation for US democracy policy
Now a comment on the Middle East and the US dollar: 1. Pres. Bush (whom I admire even with his faults) is trying to make the Middle East into a democracy. That battle is being fought in Iraq. The Iraq thing is not about just Iraq and foreign fighters trying to fight for Allah. That is the PUBLIC presentation. The real battle is over democracy in the Middle East. If Iraq is successful, then what, do the Saudis has to become democratic too then? and Syria? and so on? This is a big time historic shift to all these people there. Iraq is ALL ABOUT DEMOCRACY. Not oil, not Allah.
We deposed the minority rule of the Sunnis, who were on Saddam's side. They are 20 percent of Iraq. The Shiites are 60 percent.
Now the real problem is that the Arabs Powers That Be, all anti-democratic, in Saudi, Syria, Libya, they are not interested in Moslem democracy. And they are afraid of radical clericism. They are either looking at rule by some radical mullahs, or some democracy and mob rule essentially. They are really between the rock and the hard place...I think they my retaliate against the US dollar if we start a democracy thing in the Middle East. Heck it's working more or less in Afghanistan! Who would have thought that! Next, Iraq?????? THEY WILL NOT ALLOW THIS. I believe the only real weapon they can use is the vulnerability of the US dollar. Or a successful insurgency. If the insurgency fails to stop democracy there then the US dollar could be attacked. It depends on how desperate they are. BUT THEY ARE CAPABLE OF TANKING THE DOLLAR because it is vulnerable. I believe that by messing with the power structure of the Middle East we are messing with big medicine.
There was a story out recently about lots of drugs being found in Fallujah. ( that don't sound too Muslim to me, what, DRUGS in Moslems? they are the most teetotaler people on the planet!) No the drugs tells me they needed it to keep fighting the overwhelming US military, for strength and courage. Doesn't sound to me like thousands of suicide bombers waiting to go to Muslim heaven. No its the paid off foreign fighters and AGENTS of the Mid East non democratic kingdoms that are pepping those guys up with drugs and probably including a nicely purchased fatwa from some major Muslim cleric who says Allah don't care about drugs... or something, who knows, these poor Muslims are being USED.
So then back to the US dollar and the Middle East... well, they are playing along... for now. But wait till the democracy actually gets a foothold in Iraq. The kingdoms will panic then. It will mean the end of them and they darn well know it. Could it be that they will be the ones who realize IT'S EITEHR KILLING OFF THE US DOLLAR, or they are goners? If that is the equation, I think they will seriously consider dumping US dollars. But they don't want to, but will see it as a necessary thing to save their grip on their Muslim slaves. If Iraq democracy starts to succeed, then WATCH THE ARAB DOLLAR MOVEMENTS.
Frankly, I am not sure we should be doing this democracy thing there. We are risking the very status of the US dollar by doing the demo thing, because the kingdoms might just say: "the hell with the old order! Time for a change!, time to kill off the whole friggin world economy and the US dollar..... we ain't leaving!"
Look at it this way, you have super rich Arabs, thousands of them, who are going to willingly give up their palaces, and harems? Hail no!
Why do you think money is being funneled into al-Qaeda? Just a few Arab rich extremists eh? No ,its all been looked at years ago and its deliberate. They are trying to cover their tracks, the rich sheiks, but they are all in it together. We, the US, are interfering between them and their dissatisfied masses and trying to set up democracy?
But I can also say that they don't want to do that, ie tank the world economy. But if they have too.....
I would be looking right now for this: If democracy gets a root in Iraq, look out for the US dollar.... that is my view. Again, if democracy takes hold in Iraq, WATCH THE ARAB MONEY VISAVIS THE US DOLLAR. Now then Japan doesn't care about Arab democracy, China and most of Asia don't, except possibly the Muslim part, like Indonesia.
Now just like China, and Japan, the Muslim kingdoms are making plans to survive a post US dollar world with things like the gold dinar. But it appears the US is already on that, being the military behind the Qatar gold bank. So we are thinking ahead already....
But will it be enough though? Maybe not, but it is one move on the US dollar chess board.
So, the parties that have a big financial interest in the US dollar trade carousel won't voluntarily let it drop. But an unforeseen financial butterfly effect could. Or it might be the Arab kingdoms, which will fight for their survival, and dump dollar holdings, if democracy succeeds in Iraq. In all three of these cases the demise of the US dollar will not be initiated voluntarily, unless its the rich sheiks fighting for their very survival.
Newsletter update.... Friends I am sorry but, I have decided NOT to publish a periodic newsletter as of this time. The reason is, that if I get on a regular publishing schedule, my "genius' (smirk*) is attenuated. I'm serious though, the insights don't come together for me in this way. I read hundreds of articles and newsflashes, and then I get an inspiration, and then put that on paper. I had the site all built, a web master hired, and all. I canned the whole thing yesterday.
A regular publishing schedule will not work for me, my thinking cannot be confined by some deadline to publish every week... I have really struggled about this. I have a bunch of people who said they are interested, but friends, I can't solve this problem of meshing inspiration with some fixed deadline.... The golden goose is special and wont lay on demand... lol! ? If you have an idea how to solve that problem, I would be happy to hear your ideas? Maybe I'll work on a book...la la la the bird is free! The bird is free!
I will be sending an email to all of you who replied to me... But thank you very much for your interest and encouragement. : )
January 18, 2005
Chris Laird
[email protected]