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dollar on the tightrope
Oct. 14th, 2009 09:57 amGood morning. A very brief note this rainy Wednesday; I have things to do and don't want to get into the whole vacuuming-the-cat thing, so I'll cut to the chase:
Everyone is wondering whether the US dollar is reaching an inflection point down. It's been on Drudge, it's floating around right blogistan as a political noise, and so on. Here are the numbers.
The US dollar index (DIX) is not, I repeat not, in record low territory today, but it is floating around 75.6, the lowest number since the spiral down to 70 back in spring/summer 2008. And you're starting to see actual news like this, wherein it's pointed out that the US dollar share of new global currency reserve acquisition has fallen dramatically, with the rate of decline accelerating in the third quarter. Go read that article.
Predictably, oil, et al, are up, with oil just shy of $75/barrel in New York trading. Elliott Wave International is one of the few bulls - they think we're at or near the end of Wave 5 of 5 down and should look for a rally almost immediately. It's also not in the interest of anyone - much - to see the USD collapse. A controlled decline is in the interests of many; a spike down, not really much of anyone.
I don't know who is right. But if we spike down here, any floor is quite far off. The USD really is on a tightrope today.
Oh, and I need to point out this blog post by Karl Denninger pointing to this Bloomberg article on banks pushing the Obama administration to allow interest-only loan reconfigurations, and talking about how this has never ended anything bit disastrously. I've spent time talking about the non-intuitive nature of exponential functions in growth, particularly as regards to oil consumption; Karl gives this same problem his go here, regarding interest on debt. People really do need to understand this, and it's not intuitive because you don't have any evolutionary pressures pushing brain development to handle it, so people think things like "2% interest" and go "that's tiny and will remain so forever." It's not, and it won't.
Everyone is wondering whether the US dollar is reaching an inflection point down. It's been on Drudge, it's floating around right blogistan as a political noise, and so on. Here are the numbers.
The US dollar index (DIX) is not, I repeat not, in record low territory today, but it is floating around 75.6, the lowest number since the spiral down to 70 back in spring/summer 2008. And you're starting to see actual news like this, wherein it's pointed out that the US dollar share of new global currency reserve acquisition has fallen dramatically, with the rate of decline accelerating in the third quarter. Go read that article.
Predictably, oil, et al, are up, with oil just shy of $75/barrel in New York trading. Elliott Wave International is one of the few bulls - they think we're at or near the end of Wave 5 of 5 down and should look for a rally almost immediately. It's also not in the interest of anyone - much - to see the USD collapse. A controlled decline is in the interests of many; a spike down, not really much of anyone.
I don't know who is right. But if we spike down here, any floor is quite far off. The USD really is on a tightrope today.
Oh, and I need to point out this blog post by Karl Denninger pointing to this Bloomberg article on banks pushing the Obama administration to allow interest-only loan reconfigurations, and talking about how this has never ended anything bit disastrously. I've spent time talking about the non-intuitive nature of exponential functions in growth, particularly as regards to oil consumption; Karl gives this same problem his go here, regarding interest on debt. People really do need to understand this, and it's not intuitive because you don't have any evolutionary pressures pushing brain development to handle it, so people think things like "2% interest" and go "that's tiny and will remain so forever." It's not, and it won't.
