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Thread: economic advice

  1. #1
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    economic advice

    Here is a freebie for you folks. I figured everybody on the planet knew this one, but just found out that is not the case.

    Be on the lookout for Euro bargains. The riots in paris have dropped the euro like a rock. eventually, people will settle down and see that theya re overreacting, and the Euro will start to climb. This is the US import season, adn the dollar will be dropping like a rock as 100 billion monthly trade deficits start hitting reports.

    I am NOT saying to run out and buy the Euro. In fact, I shorted it at 2019 and I am still sititng on it to see where it goes. I AM saying keep an eye on it and on the news out of europe. There is opportunity for significant profit there with very little risk or work.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

  2. #2
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    wasn't the euro dropping prior to the Paris situation?

    I think the Paris situation is just a reflection of the values in Europe...but thats a different board.

  3. #3
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    Quote Originally Posted by Steeeeve
    wasn't the euro dropping prior to the Paris situation?

    I think the Paris situation is just a reflection of the values in Europe...but thats a different board.
    The Euro fell during September, primarily as people waited to see what would happen following the failure of the EU constitution. Then it traded in a relatively narrow (100 pip) band until it fell off the planet with the riots in France. Currently it is around 1.1760, though there have been spikes above 1780.

    Personally, I reveresed my position at 1.1650, then again at 1.1750, and again at 1.1700. I am again going to sit on it and see what happens, though at this moment it seems to be fighting its way higher. I would look at 1.2100 as a reasonable exit point if you want to go long term. On the other hand, this is dollar dropping season, so maybe letting it ride would be a better idea. Then again, gamehuis has pointed out that there have been some absolutely bizarre orders coming out of certain untraceable banking canters, which to my mind strongly suggests currency manipulation, since I highly doubt that drug dealers and mafia figures who keep their money in the caymans are taking an interest in currency trading.

    I get a definite feeling watching the market that the rules are starting to change. I have always found that paying heed to such feelings pays off in the end, so I am setting my stops carefully and watching closely (in fact, for the first time ever I have alerts and streaming charts going to my PDA).
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

  4. #4
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    The current interest difference between the US an the EU is also responsible for the drop of the Euro. But the ECB is very hawkish about raising the rates next December, so that will certainly give the Euro a boost.
    Eh, what's this? A Republican from Texas that actually makes sense and can speak English?

    http://www.ronpaul2008.com/html/Issues_fx.html

  5. #5
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    Quote Originally Posted by gamehuis
    The current interest difference between the US an the EU is also responsible for the drop of the Euro. But the ECB is very hawkish about raising the rates next December, so that will certainly give the Euro a boost.
    True enough, though personally I think that taking increased interest rates in the US as a sign of economic strength is foolish at best. Our current inflationary problems are not the result of growth (not even close).

    Traditionally, interest rates have been used to cool the demand for expansion capital, essentially restriciting the money supply and slowing the economy. Demand for expansion capital has been flat in the US for a long time now. The primary goal of recent interest rate increases is to move our bonds, which we cannot seem to sell at current rates (we have not sold out a bond offering in a very long time, and the surplus has been bought up by our own government...cranking up the printing presses for all practical purposes).

    The chinese have publicly announced that they are unwilling to purchase any more bonds unless they see a full 2 point increase on return in order to make up for inflation and increased risk (sad since our bonds are already paying well over the canadian rate).

    We are essentially seeing the result of monetary inflation (what I generally refer to as treasury level inflation, though the term is not entirely accurate) and increased fuel costs finally starting to trickle down to the wholesale and consumer level. No amount of interest rate juggling on the planet is going to solve that problem.

    Frankly I think that announcements of increased rates by the fed send the exact opposite signal. Increased interest rates at this point spell the end of the housing bubble and the 5% of GDP that it represents (you can use any flow though multiplier above 2.5 that you are comfortable with on that). Rate increases equal a higher debt service cost on our bonds.

    Subtracting Iraq war costs from GDP and we are in a recession. Consider flow through multiplier on that and it is a fairly serious recession. I do not think that raising interest rates during a recession is necessarily sound monetery policy, especially when it is unlikely to solve our inflationary problems and is likely to drive us further into recession (or depression, depending ont he defintion of "depression" you prefer) by killing off housing.

    We could stop spending money like drunken sailors in a whore house and solve some of our problems, but that would mean no more vote buying, and our politicians would never go for it.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

  6. #6
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    We're seeing the results of 'running out of money' in current congressional budget battles. Current administration is unable to pay the bills with moderate Republicans understanding cutting of domestic social spending to finance Iraq, especially at the senior, largest voting block level, is going to come around and bite them at election time. Does anyone else see a similarity with USSR military spending and domestic cuts before they were cut off at the knees?

    As to energy costs, I just received a UPS notice of fuel surcharge increases on my personal account. Tack that onto everything any American buys and there's 3.5% inflation not included in public numbers. Add real inflation to the decision to no longer disclose M2, that it will take another two points of interest to sell bonds without purchasing them ourselves and the train with no brakes is gaining speed.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

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