AMID THE HORRORS IN WORLD MARKETS ONE FACT SEEMS TO BE AVOIDED...
AMERICA IS BANKRUPT...
THE DOLLAR BUBBLE HAS ALLOWED THE US TO LIVE BEYOND IT'S MEANS FOR DECADES...AND NOW THE CHICKENS ARE COMING HOME TO ROOST...
MUCH TALK IS DONE ABOUT THE LIBOR...THE CREDIT MARKETS...THE DERIVATIVES ....AND SUB-PRIME HOUSING AND HOUSE PRICES...
BUT THE FACT THAT THE US HAS BEEN A HOLLOWED OUT ECONOMY FOR DECADES IS COMPLETELY IGNORED...
CLEARLY, WHAT IS HAPPENING IS A TECTONIC SHIFT TO A "NEW REALITY"...WHERE THOSE WHO HAVE CAPITAL...MAINLY THE ASIANS....HAVE TO BE ALLOWED TO TAKE THEIR PLACE IN THE SYSTEM...AND THE US HAS TO BE DOWNGRADED TO A ROLE BEFITTING A MASSIVE BANKRUPT DEBTOR NATION...
AS NOTED HERE...THE US IS REALLY ICELAND WRIT LARGE!!
SO WHAT WE ARE SEEING IS THE DEATH OF THE OLD SYSTEM...THE AMERICAN DOMINATED SYSTEM OF BRETTON WOODS...AND THE BIRTH OF A NEW SYSTEM THAT ALLOWS ECONOMIES LIKE CHINA TO ASSUME IT'S PLACE IN THE WORLD ECONOMY...
IN SHORT, THE FICTION OF AMERICAN EXCEPTIONALISM HAS ENDED...
WHAT IS BEING BORN IS NOT YET CLEAR...BUT WHAT IS DYING IS VERY CLEAR...
THE ECONOMIC PAX AMERICANA...HAS BECOME A POX AMERICANA ON THE WORLD ECONOMY...FOR TOO LONG!
THAT IS ENDING...
WHAT NEXT...?
WELL, I AM AMAZED THAT THE INFLATION AND HYPER-INFLATION SCENARIO HAS NOT BEEN DISCUSSED FOR THE US.... IT IS ONLY MENTIONED IN THE SIDEBAR COMMENTS... WHY ARE US BONDS "HOLDING UP"...WHY ARENT RATES RISING AS THEY SHOULD ... AND GOLD ONLY NOW STARTING TO PROVE THE PUDDING...
YET THE COMING HYPER-INFLATION AND THE COLLAPSE OF THE DOLLAR AS THE WORLD'S RESERVE CURRENCY IS REALLY THE WHOLE IDEA...
IT IS THE SINE QUO NON FOR MOVING ON TO THE NEXT LEVEL...
SO MY SENSE IS THAT WE ARE STILL HEAVILY INTO DENIAL HERE ABOUT THE TRUE STATE OF PLAY...
LOOK FOR AN GREAT EPIPHANIC MOMENT WHEN GOLD HITS $1000... IT'S COMING ON FAST!!
AT THAT POINT...THE DISCUSSION WILL HAVE TO BECOME MORE MACRO...AND MORE REALITY BASED...
THIS IS 1932 FOR THE DOLLAR... WITH 1932 BEING THE YEAR THE UK POUND COLLAPSED...CAUSING THE REAL "GREAT DEPRESSION."
SO THE FINE DETAILS LIKE LIBOR AND "RESTORING CREDIT" WILL HAVE TO BE SIDELINED AS THE WORLD DIGESTS THIS "NEW REALITY!"
CONCLUSION.... TRYING TO SOLVE THIS SITUATION "AS IF" THE DOLLAR WERE A NORMAL HEALTHY "REAL" CURRENCY IS AT THE HEART OF THE CURRENT CONFUSION...
THE DOLLAR IS A ZOMBIE....
THE AMERICAN ECONOMY IS LIKE NOSFURATU...THE GREAT UNDEAD LIVING AMONG US....!! A HOLLOWED OUT ECONOMIC CORPSE!!
ONCE THIS IS ACKNOWLEDGED...WE CAN MOVE ON TO A REAL SOLUTION...
UNTIL THEN... NOTHING.
