. March 28, 2008 SouthAmerica: Reply to Davidlynch2000 Welcome back. You said: âYou were absolutely correct about the dollar, albeit 4+ years after you made the initially made the prediction.â Basically I made my prediction about the US dollar decline in 2001 when I wrote a letter to the president of the European Central Bank and in that letter I gave the reasons of why the US dollar was going to decline versus the euro and the price of gold. You can read a copy of that letter at: Central Banks and the US Dollar. http://www.elitetrader.com/vb/showthread.php?s=&threadid=81958 I have been giving all the reasons for the US dollar decline, but it seems to me that you need some kind of mathematical equation for you to understand why this is happening. By the way, the US dollar has not declined earlier and further because of the massive amount of US dollars that has been transferred from the United States to the oil producing countries, and with the price of oil going through the roof these countries have been swamped with confetti. And they have been using the confetti to buy US dollar assets. Please donât give me a hard time because my prediction about the stock market did not come through. My prediction about a stock market decline between 25 to 40 percent has not come to past because of massive US government intervention on the financial markets. Basically the Federal Reserve has put a floor on the stock market to keep it from going down â it is an artificial measure and nothing to do with the way a free market is supposed to work. The US stock market it has become even more inefficient than before since US government intervention is going to distort the reality even further. If you are investing good money on this market you are a real fool. Today the US stock market is a minefield and I canât even imagine all the surprises that are in store and it will explode in the next 2 years. .
. December 17, 2008 SouthAmerica: The âMoney Changersâ will find a way to squeeze the last drop of any profit out of the latest Federal Reserve desperate action against a collapsing US economic system in a frustrating effort to try to avoid a new Great Depression â Fed cuts key interest rate to near zero. It is obvious to anyone with a brain that the Fed latest move taken yesterday just reflect that the âPANICâ must be total at the Fed at this point; because they canât stop the collapsing US economy downward spiral to avoid a new Great Depression. The downward spiral of the US economy is picking up speed and is descending into a more realistic level. There is one meltdown that still is on the pipeline, it is on its way, and it will materialize in the future â the âMeltdown of the US dollar.â One last thought: Yesterdayâs stock market rally just shows that the old mindset has not changed in Wall Street â These guys have not grasped as yet that the old economic system is gone by âSudden Deathâ. There is a new international financial ballgame going on and the rules of the game have changed in drastic ways â Eventually they start figuring that out even in La La Land. ***** The âMoney Changersâ: http://iamthewitness.com/DarylBradfordSmith_Bankers.htm ***** âFed cuts key interest rate to near zeroâ Associated Press - Wednesday December 17, 12:14 am ET Fed slashes target rate to record low and takes other unprecedented steps to battle recession WASHINGTON (AP) -- The Federal Reserve has slashed its target interest rate to nearly zero and is taking a number of other unprecedented moves in an effort to battle a severe financial crisis and worsening recession. Consumers trying to buy a house or finance a car loan could be the big winners, but analysts caution that any upturn in the economy is still months away. The Fed on Tuesday announced that it was reducing its target for the federal funds rate to between zero and 0.25 percent, down from 1 percent, a level that was already the lowest target rate in a half century. And the central bank pledged to use "all available tools" to fight the current downturn. It said it was likely that rates would be kept at "exceptionally low levels" for some time to come. "The Fed has taken some very historic steps and for the first time since this crisis began, they have gotten ahead of expectations instead of trailing behind them," said Mark Zandi, chief economist at Moody's Economy.com. The Fed's announcement sparked a big rally Tuesday on Wall Street, with the Dow Jones industrial average jumping 360 points, or 4 percent, as investors were pleasantly surprised by the Fed's resolve to aggressively attack the country's economic woes. The reaction in Asian markets was more subdued overnight. In Japan, the Nikkei 225 stock average was down 0.2 percent after initially rising 1.1 percent. Hong Kong's Hang Seng Index rose 0.7 percent to 15,235.57 while benchmarks in mainland China, Singapore, Thailand and Indonesia added about 1 percent or more. Economists cautioned that even with the Fed's bold moves it will take months for the economy to stabilize given that it is confronting the worst financial crisis since the Great Depression and a year-long recession that is already the longest in a quarter century. The news on the economy is expected to get worse before it gets better. Businesses, which have already cut nearly 2 million jobs since January, keep laying off workers in the face of slumping demand. The government reported Tuesday before the Fed rate announcement that home builders slashed production in November by 18.9 percent, the biggest drop in nearly a quarter century, pushing activity down to a record low annual rate of 625,000 units as the woes in housing, where the current economic troubles began, showed no signs of abating. More economic news was scheduled to be released Wednesday when the Commerce Department reports the current account trade deficit for the July-September quarter. In advance of the report, economists were looking for the deficit to narrow slightly to $178.8 billion, down from $183.1 billion in the second quarter. Economists were optimistic that the central bank's moves Tuesday to cut interest rates and pledge other efforts to unfreeze frozen credit markets will translate into significantly lower interest rates for consumers. Commercial banks responded immediately to the Fed announcement by cutting their prime lending rate, the benchmark rate for millions of consumer and business loans, by three-fourths of a percentage point to 3.25 percent, pushing it to the lowest point in more than a half century. Home mortgages, rates on consumer credit cards, auto loans and student loans were also expected to decline in the weeks ahead based on the Fed's commitment to use "all available tools" to make credit more available. The Fed in the weeks since the credit crisis struck with force in September has rolled out a number of new programs to greatly expand its own lending programs, promising to provide up to $600 billion to purchase debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage companies. The Fed has also pledged to lend up to $200 billion to support securities backed by credit card loans, car loans and student loans, all in an effort to get those markets functioning more normally. In its statement, the Fed pledged to keep working to get credit into the economy through these programs and additional programs if needed. It specifically mentioned the purchase of longer-term Treasury securities. The Fed's massive expansions of its loan programs have already pushed its balance sheet of loans from $900 billion in September to $2.2 trillion currently. The new pledges had an immediate impact on bond markets where the possibility of heavy purchases by the central bank sent yields on Treasury securities falling sharply. "The Fed has decided to flood the economy with money in the hopes that it will be lent and spent," said Sung Won Sohn, an economist at the Martin Smith School of Business at California State University, Channel Islands. Sohn predicted that 30-year mortgage rates, which have already fallen a full percentage point since late October to now stand at 5.47 percent, could drop by another percentage point in coming weeks to around 4.5 percent. He predicted that rates on auto loans and credit card debt would also come down. "The bottom line is that confidence has deteriorated to such an extent that the Fed is willing to take these extraordinary steps," Sohn said. But Sohn and other analysts still look for the recession to last until next summer. The overall economy as measured by the gross domestic product shrank at an annual rate of 0.5 percent in the third quarter and many analysts believe it will be a much more severe downturn of around 6 percent in the current quarter with continued GDP declines in the first and second quarters of next year. If the recession ends next June, as some economists are forecasting, it will have lasted 18 months, making it the longest downturn since the Great Depression. Businesses cut more than a half-million jobs in November alone, pushing the unemployment rate to a 15-year high of 6.7 percent. Many analysts believe that unemployment will surpass 8 percent by late next year before an economic recovery has picked up enough steam to stabilize employment. The weak economy is helping to keep a lid on prices. The government reported Tuesday that consumer prices fell by a record 1.7 percent in November as gasoline and other energy prices continued to plunge. The Fed noted that "inflation pressures have diminished appreciably," a development that gives the central bank maneuvering room to focus on boosting growth. Source: http://biz.yahoo.com/ap/081217/financial_meltdown.html .