Well this occurred to me also. But I'm betting that the amount of U.S. currency in circulation would make it impossible for someone like Soros to push the market this hard.
If there is a Freeper-Economist-Wiz lurking out there it would be nice to hear some authoritative discussion on the possibility. Soros has done this in the past with British Pound I think so it is not that much of a reach to suspect his presence here. Presumably he would be driving the dollar value down hard by selling dollars and then cashing out and buying the dollars back at the bottom of the market.
Is that how it works?
You have got to get past this silly idea that Soros can,in real terms, effect the cumulative debt instruments of the U.S.Government which in the aggregate exceeds 35 trillion dollars. Even Bill Gatess worth in excess of 100 billion does not and could not in real terms effect the crescendo of effects this country and the world are about to experience. Remember we borrow 2.6 billion dollars per day. Therefore in about 45 days the 100 billion has bought you 45 days of interest. The vast wealth of this country is held by the middle class and therefore that is who is taxed. The federal government has prespent 35-40 trillion of the middle classes money, and now, understanding that we cannot pay the debt, the loaners are no longer loaning money to the debtor nation. Wake up and see what has happened. You and I cannot change it. The best we can do is protect ourselves from it and if you are astute profit from it. Few will do this because we are paralysed by our incredulity that it can happen in America. Well it is not a matter that it might happen. It is happening, now. Its is like a person who has colon cancer. At first the polyp is small and does not cause any pressure or obstructive signs. Then the polyp causesd dysplasia then anaplasia and therefore cancer, but it is small and there are no outward signs. But the paitient does have cancer. It grows and begins the process of showing a few signs,..a little blood in the stool, a little constipation. The patient still gets up and goes to work and feels relatively well,... but he has cancer. Then after 24-36 months there is a sharp cramping and bloating of the abdomen. X=rays show an obstrutive bowel. CT scan is done and there is metastasis to the regional lymph nodes or it may only show a mass effect in the colon. Now we have the diagnosis which has been present for 2 or 3 years... It has been getting worse when we did not realize it. It was getting worse when the signs of bloody stool and perhaps a few mild cramps occurred but we went on our way. And today we know we have what we have had for years. Now we have to act or all is lost on this earthly plain. Our economy has a very large problem and the medicine men have packed up their wagons and are moving on. The price will be paid in diluted dollars and unimaginable mysery of millions who will loose in real terms their ability to pay the rent,pay the note on the house, pay the note on the car. This is the prodigal son in the hog pen. Remember this.. ALL DEBTS ARE PAID. Not most, but all. Some in money, some in loss, some in devaluation, much in heartache,mysery, and grief.
Disclaimer: I am no authority, and I am no wizard economist. But as a freeper in good standing, I will happily hold forth on the subject.
I think it is moving out of the economists' area for now and into the traders'. It might be best to listen to -- and watch -- them at least for a while.
You probably won't hear a lot from the best ones, but watching the market should tell the story best.
First, the dollar could easily snap back and destroy the most aggressive speculators.
If any of you were in the Asian currencies back in the late 90s, think about some of those swing days. Heavy leverage could blow you out of the water just as well it could make you wealthy. Julian Robertson was one of those who lost his shirt in games a lot smaller than this one; when the yen snapped back, billions of dollars disappeared from Mr. Robertson's hedge funds:
But the reporting on Tiger's demise was surprisingly sympathetic. Some of the stories seemed to cast Mr. Robertson as a victim, the defender of genuine economic values against irrational hype. And that is apparently how he sees himself: he was withdrawing, he said, "from an irrational market, where earnings and price considerations take a backseat to mouse clicks and momentum." |
These waters can run deep, mighty deep. The Bank of Japan has the financial resources and the financial authority to act, if they decide to: " The Bank of Japan will conduct money market operations, aiming at the outstanding balance of current accounts held at the Bank at around 30 to 35 trillion yen. Should there be a risk of financial market instability, such as a surge in liquidity demand, the Bank will provide more liquidity irrespective of the above target." (35 trillion yen is $340 billion equivalent cash at 102.6) In my estimation, just the Chinese and the Russians alone cannot put enough dollar debt out that the Japanese cannot purchase it. The speculators' pockets don't appear to be nearly deep enough even with leverage -- and that leverage is a two-edged sword.
The Japanese show a large trade deficit themselves with China for the first six months of 2004. Weakening the yen in the face of a trade deficit isn't a good idea, and I would be surprised if they allowed the yen to weaken much against the yuan.
These are deep waters -- and interesting times.