Japan is threatening a huge dollar sell off if the US doesn’t do something about domestic interest rates. Japan lets its currency float against the dollar, which is nasty, because the Chinese renminbi doesn’t float – it’s pegged to the US dollar. So every time the yen strengthens the Japanese have less wiggle room in their two primary markets. The Japanese are also making it clear that they are talking to the Europeans about a coordinated approach to the dollar sell off. This means that not only does the Emperor not have any clothes, everybody knows he’s broke, too, but if everybody rushes in to try to grab 10 cents on the dollar everybody will end up with nothing. Obviously the Americans know this, which is why they are still smiling. However…. The Arab world has been throwing US dollars over the side since 9/11 but apparently it’s been even worse since November 2nd. I wish I could predict which dolt will start the run on the dollar.
Some think tank in California – the only one that predicted the 2001 recession – says that the housing bubble is about to collapse. Building industry spokesmen say, “Can’t collapse – don’t have oversupply”. I laugh in their faces. Once you have higher interest rates, there will be LOTS of oversupply, and that will happen the second the US has to prop up the dollar when the real rush begins. If I wasn’t going to be living on corn meal mush for the rest of my life, I might be entertained by the prospect.
Hear Rumsfeld got roasted by the troops yesterday or the day before. I don’t imagine it helps. After all, he was there shaking hands with Saddam Hussein in the 80’s; nothing abashes that guy.
The former lead guitarist of Pantera was shot dead last night. Heavy metal will kill you, don’t know the precise muzzle velocity.