Instead of opening the 100th "The dollar is collapsing haha I told you so get out now" topic I thought I'd start a platform where people can explain their reasoning behind contrerian bet number one of 2009 that is going long on the USD. Good luck. Plenty of people who subscribed to Irving Fisher's theory: "Each dollar of debt still unpaid becomes a bigger dollar...if the liquidation of debts cannot keep up with the fall of asset prices which it causes; in that case the very effort of individuals to lessen their burden of debt increases it because the mass stampede to liquidate in swelling each dollar owed." And went long on the $ have gotten their head handed to them on a stick. Has the vicious drop as of late changed your bullish view on the USD in any way? Cheers.
New war, beat the shit out of any 3rd world countries who would not take dollar as payment for debts, increasing the protection charge for world trade, didn't you see the new figure shows arm sells broke last year record despite world wide recession?
I'm a dollar bear, but the one argument I can bring up against that cause is that time and time again, people had thought it was the end of the dollar. Yet as the trade got extremely crowded, everyone was stomped on as the dollar reversed. It feels VERY much like that right now. All we need is a supermodel to come out and say she won't accept payment in dollars any more OR an Economist cover with "The End of the Dollar" on it.
If equities fall globally on fears and economic pessimism the USD will rise, its just that simple. Call it safe haven, risk aversion or whatever but thats the bull case Furthermore its hardly contrarian to be an USD bull, so anyone who is short better not expect to get rich with the trade because chances are, you wont
The USD has been the weakest of all major currencies for a decade now. People do not 'expect' to get rich betting against the USD, people have been getting rich(er) betting against the USD. I do agree a return of risk aversion would be supportive to the USD but would it bring the $index back to it's post Lehman highs? That would require another "end of the world" scenario taking place undoubtably.
Are they getting richer when sentiment is getting extreme?I bet they arent. As the shorts from 2008 found out, reversals are massive, vicious and relentless. It was just a few months ago that the dollar was flying on bank nationalization concerns, how come the shorts weren't here on ET bragging about how easy is to make money shorting dollars?