[emersonbiggins]

$this->bbcode_second_pass_quote('FoxV', 'L')istened to the CEO of Hovanian this morning and he said that this will not do anything for housing.

[truecougarblue]

The majority of ARMs are tied to LIBOR, which is set by London banks. In case you haven't noticed, the Bank of England is defending the pound by raising rates. I think this is because the Brits have a much longer history of ignoring the plebes. Aristocracy has it's advantages.

The Fed rate cut will do less than nothing for overleveraged homedebtors. They're toast.

Got no debt?

[Heineken]

$this->bbcode_second_pass_quote('Byron100', 'H')eineken wrote:

$this->bbcode_second_pass_quote('', 'T')he Fed is not trying to prop up the stock market, it is trying to prop up housing. The stock market is a secondary concern.

The biggest single threat to TPTB in the US right now is falling housing prices, especially right before a presidential election. TPTB will do anything it can to stop that.

I agree that the Fed made the wrong move. The US needs to take its lumps. The longer it puts that off, the worse the final "settling up" will be.

[truecougarblue]

"The Fed will cut to zero if that's what it takes."

Japan did that in the 90s and it did nothing to halt a deflationary recession.

What people don't seem to grasp is that bad debt is bad debt. You can't get blood from a turnip. The percentage of homes that are upside down equity-wise is growing daily, and far too many of those homeowners have been living a lifestyle based on phantom equity gains of the last 5 years.

One of the first hard lessons I learned as an investor is that leverage is empowering on the upswing but is an 800lb gorilla on the downside. (no offence Aaron)

This housing downturn won't finish until the excess is wrung from the system and people can again buy homes at 3-4 times income as has been historically the case. If the median income in Rome, GA is 30K them the median home should sell for 90-120K. There is no way around that. The fed can try to inflate it's way out of that, but unless they get some wage inflation going, that's not going to happen.

[nth]

$this->bbcode_second_pass_quote('truecougarblue', '"')The Fed will cut to zero if that's what it takes."

Japan did that in the 90s and it did nothing to halt a deflationary recession.

[RdSnt]

So, the market froth is already evaporating. How much do you bet that sellers are the big boys taking their last chance to bail out.
I don't normally make predictions but I will say that I expect the US markets will go negative by Friday.

[Twilight]

I doubt the BoE will be raising rates any time soon. Not after the stuff that has been going on lately. People are already hinting in what they hope to be self-fulfilling fashion without any subtlety whatsoever that UK interests rates have peaked.

It is hard to escape the conclusion that the US dollar is being deliberately devalued. Ironically this will give PO some credence as the buying power of the US consumer on international energy markets will be dented disproportionally compared to other consumers such as the eurozone. Of course it is unlikely that the likes of CNN will make such an argument, they will just report one record oil price after another with little in the way of original commentary. It will be interesting to see what will happen next summer if US inventories approach MOL and the dollar has by then slid significantly compared to other currencies. What price will the US motorist be asked to pay at the pump? Assuming it is operational? There's one can of worms that just became more threatening!

I don't know about capital flight. But now is indeed a good time to take profits. We may see the Dow over 14,000 once more, but I doubt there is much point staying in if you are taking a hit from currency conversions. How long will you accept payment in dollars when your spending is in euros or yen? The Fed just told everyone how it thinks that will work for you.

[nth]

If USD continues to weaken, then I expect EU to intervene and buy USD.

It looks like EUR/USD is stuck around 1.39

[Twilight]

$this->bbcode_second_pass_quote('nth', 'I')f USD continues to weaken, then I expect EU to intervene and buy USD.

It looks like EUR/USD is stuck around 1.39

[FoxV]

$this->bbcode_second_pass_quote('RdSnt', 'S')o, the market froth is already evaporating. How much do you bet that sellers are the big boys taking their last chance to bail out.
I don't normally make predictions but I will say that I expect the US markets will go negative by Friday.

[nth]

$this->bbcode_second_pass_quote('Twilight', '
')How long could it support such a stance, if other major economies went the other way?

Also, what would it gain, apart from a steeper increase in imported energy costs?

[midnight-gamer]

I realize that putting my savings into gold or euros would have been a wise thing to have done several years ago. I had been putting it off until I saw something dramatic enough to prompt doing it. The problem I have had all along is that my wife is very reluctant to do anything with our savings in any way.
Also, this may seem like a simple thing, how do I hold my euros or what ever, once I change it? In the bank, buried in the lawn, ect.

[nth]

$this->bbcode_second_pass_quote('midnight-gamer', 'I') realize that putting my savings into gold or euros would have been a wise thing to have done several years ago. I had been putting it off until I saw something dramatic enough to prompt doing it. The problem I have had all along is that my wife is very reluctant to do anything with our savings in any way.
Also, this may seem like a simple thing, how do I hold my euros or what ever, once I change it? In the bank, buried in the lawn, ect.

[Tyler_JC]

$this->bbcode_second_pass_quote('midnight-gamer', 'I') realize that putting my savings into gold or euros would have been a wise thing to have done several years ago. I had been putting it off until I saw something dramatic enough to prompt doing it. The problem I have had all along is that my wife is very reluctant to do anything with our savings in any way.
Also, this may seem like a simple thing, how do I hold my euros or what ever, once I change it? In the bank, buried in the lawn, ect.

[truecougarblue]

Euro is pretty much toast too, they will be forced to follow BBs lead. Look to the Japanese for the conservative play.

[Twilight]

In tomorrow's newspapers...

$this->bbcode_second_pass_quote('Telegraph', '[')b]Fears of dollar collapse as Saudis take fright

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

As a close ally of the US, Riyadh has so far tried to stick to the peg, but the link is now destabilising its own economy.

For Saudi Arabia, the dollar peg has clearly become a liability. Inflation has risen to 4pc and the M3 broad money supply is surging at 22pc.

The pressures are even worse in other parts of the Gulf. The United Arab Emirates now faces inflation of 9.3pc, a 20-year high. In Qatar it has reached 13pc.

Kuwait became the first of the oil sheikhdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth.

[gnm]

Oh thats just peachy.... That ought to drive oil up nicely tomorrow also.

Buy your survival goodies now because everything is about to get a whole lot more expensive....

-G

[nth]

$this->bbcode_second_pass_quote('Tyler_JC', '
')
Would it be possible to purchase bonds denominated in Euros, perhaps bonds from the European Central Bank?

I believe the 5 year Euro-bond is paying around 4.5% right now, that's not too shabby.

[Tyler_JC]

$this->bbcode_second_pass_quote('nth', '')$this->bbcode_second_pass_quote('Tyler_JC', '
')
Would it be possible to purchase bonds denominated in Euros, perhaps bonds from the European Central Bank?

I believe the 5 year Euro-bond is paying around 4.5% right now, that's not too shabby.

[Doly]

$this->bbcode_second_pass_quote('Tyler_JC', '
')So in a rising inflation world, which central bank is going to keep its currency strong?