Certainly that could be the case. But I don't believe Banana Ben will raise rates until the dollar is done collapsing. He wants that greenback dead. No question. So I think it'll be another card. Raising rates is certainly what would let the air out, but the Fed knows this. I have a feeling the card that falls first is going to be one they don't want or expect to.
LOL! Further illustrating my point, the announcement by the NY Fed to start testing these reverse repos had the market drop on open - worried that the Fed would start to pull back the crack it needs to keep going. But the NY Fed came out and said "Don't worry, this has no monetary policy implications". Don't worry, we'll still give you the heroin you need. The market loved it and rocketed up, selling the dollar against anything and everything.
I think it can if it's left alone to do as it should. But the Fed isn't letting the market do what it should, as it strides into the market to push rates lower.
lots of bark but no bite, firms like insurance and retail banks have no biz conducting proprietary trading in the first place bc they are taking on risks beyond the customers appetite and certainly without the customers' explicit authority, all this regulatory & central banks are too mired in PHD/ economic jazz. for eg, years ago, i happen to look at the balance sheets of one of the major insurance co. and all they have in their books are only treasuries which sh be the case
Yeah, good luck getting that to happen. With no regulation (or poor regulation) and free money to be made by buying anything but the USD, why would they NOT play the roulette wheel?
http://theroxylandr.wordpress.com/2007/02/23/human-readable-explanation-of-abxhe-indexes/ Look at this chart. After this no one wants to pay for insurance(credit default swaps), that cost more than the asset (asset back securities) it insures for.