[mattduke]

<deleted>

[mattduke]

$this->bbcode_second_pass_quote('DantesPeak', 'W')ell I agree they're going to go. It's just a matter of time. Who wants to be the last person on board the Titanic, but sinking USS Dollar when it goes down?

[mattduke]

$this->bbcode_second_pass_quote('', 'A')BU DHABI (Reuters) - Treasury Secretary Henry Paulson said on Sunday leaders of Gulf oil producing states had told him that abandoning their currency pegs to the dollar will not solve their inflation problems.

[3aidlillahi]

Here's a good question. Let's say that they drop the dollar pegs. And in order to appeal to the masses, they adopt the Islamic custom (near requirement) of demanding currency be made out of silver and gold. Hundreds of billions of dollars a year would flow into gold and silver then. What would that do to the US dollar and the prices of gold and silver?*

*In this situation, you would want to hold as much silver as possible, while picking up gold if you can find it at good prices. The reasons are that 1 dinar = 4.25 grams of 22k gold. 1 dirham = 3.0 grams of "pure" silver. 7 dirham = 1 dinar which would mean roughly a 10:1 ratio of gold to silver as opposed to the "market" value of ≈50:1.

It's a gold-holder's dream. It's a silver-holder's paradise. It's a dollar-holder's Hell.

$this->bbcode_second_pass_quote('', 'Q')uote:
ABU DHABI (Reuters) - Treasury Secretary Henry Paulson said on Sunday leaders of Gulf oil producing states had told him that abandoning their currency pegs to the dollar will not solve their inflation problems.

Lie.

[Micki]

3aidlillahi, that is a distinct possibility.
There has been a lot of talk about the "gold dinar" over the years.
Similarly some central/south american countries have talked about silver backed currencies.
For those who are not familiar with the gold dinar, I add this link as a starting point;
The Seriousness of the Gold Dinar - by Dr. Mahathir

[mattduke]

$this->bbcode_second_pass_quote('3aidlillahi', 'B')ut what if they just went back to a paper currency? They could/would likely still have inflation problems. Probably not as bad as now but they'd exist. (I consider 0.1% inflation a problem.)

[DantesPeak]

Most likely, they will go to some unannounced basket of currencies first anyway.

In the mean time, they'll just accumulate the gold in their soverign wealth funds. Then they may announce - or not - shifting some of the basket into gold. Alternatively they could start adding gold to their foreign exchange reserves.

I don't see anything stopping this. So one country at a time will drop out of fixing solely vs. the dollar - until they all are. Then they could reunite under a semi-gold backed currency, since they will still want to inflate some. Semi-gold backed because the IMF does not allow currencies to have a specific gold value.

[HEADER_RACK]

Bloomberg

$this->bbcode_second_pass_quote('', 'W')e need to create a resolution process that ensures the financial system can withstand the failure of a large complex financial firm,'' Paulson said in the speech excerpts distributed by the Treasury to reporters traveling with him in London.

[Cynus]

Whatever fancy name Paulson ends up with, I'll still call it by its true name: a taxpayer bailout.

[Eli]

Cynus is exactly right.

He is talking about setting up a Gov. Trust to take all the bad debt and let the big boys walk away. Just like the Resolution Trust Corp. did back in the saving and loan crisis.

[HEADER_RACK]

I agree. I don't believe in a taxpayer bailout either.They are pushing hard for one because they know we are on borrowed time.
Fortis is probably right and we are only days to weeks away from a meltdown. They are clawing and scratching as fast as they can to try and avert it. I say they got themselves into this. let the chips fall where they may.

[DantesPeak]

$this->bbcode_second_pass_quote('Eli', 'C')ynus is exactly right.

He is talking about setting up a Gov. Trust to take all the bad debt and let the big boys walk away. Just like the Resolution Trust Corp. did back in the saving and loan crisis.

[roccman]

$this->bbcode_second_pass_quote('DantesPeak', '')$this->bbcode_second_pass_quote('Eli', 'C')ynus is exactly right.

He is talking about setting up a Gov. Trust to take all the bad debt and let the big boys walk away. Just like the Resolution Trust Corp. did back in the saving and loan crisis.

[Kingcoal]

$this->bbcode_second_pass_quote('', 'I')n a speech in London today, Paulson identified a legal gap that leaves unspecified how to deal with failures of companies that don't take deposits, such as investment banks.

[NoWorries]

http://www.breitbart.com/article.php?id ... _article=1

I find this fascinating (and incredible) since it is so far at odds with what other analysts are saying.

Just thought I'd add this as a counterweight to the discussion.

[biofuel13]

Whatever Paulson is on, I want some!!

[SoylentGreen]

Did they find 50 Billion barrels up Paulsons A**?

[Denny]

I think the political leadership has to constantly espouse optimism, even whebn they have none in their psyche.

If Paulson were the treasurer of an auto parts company right now, he'd likewise have to say they see bright times ahead. If he were to publicly admit that they don't have a clue how to meet loan repayments and payroll commitments staring them on the horizon, that would put the company into Chapter 11 right then and there.

[mmasters]

They will lower the price of oil in a few months before the elections. The market will rally. Things will look good again for a short while.

[SoylentGreen]

the only thing thats gonna rally is OIL. Isreal F-16's are going bust some caps in Iran.Then the US Navy will have to bust a bunch more caps clearing , securing and neutralizing the threat on the Straight of Hormuz.