Dollar vs Dow
Posted on 11/11/2009 2:57:39 AM PST by TigerLikesRooster
The U.S. Lunatic Asylum (i.e., Economy) Is Facing Approximately $15 Trillion In Roll Risk By 2012
Submitted by Tyler Durden on 11/10/2009 15:06 -0500
Zero Hedge recently highlighted the developing risk in the government's outstanding Treasury portfolio, where nearly 40% of all issues mature within the year. As such the roll risk for the US government is massive, and even the smallest unexpected macro blip would make the rolling/refinancing of roughly $5 trillion in debt very problematic. Yet the US government is not alone in this quandary of how to keep T-Bill interest rates at record lows: an earlier report by Moody's demonstrates that the banking system is in far, far worse shape: "we note that average maturities of new debt issuances rated by Moody’s – which we use as an indicator of general trends -- fell from 7.2 years to 4.7 years globally over the last five years. This is the shortest average maturity for new debt at any given point during the 30 years of bank funding history covered by our analysis. As a related matter, we estimate that banks that we rate will face maturing debt of about $10 trillion between now and the end of 2015, $7 trillion of which will occur by the end of 2012."
Let's do the math: the US Gov't needs to roll about $6 trillion (and increasing) every year, Commercial Real Estate has a $3 trillion refi cliff around 2014 and the banking system has a $7 trillion roll maturity by 2012.
(Excerpt) Read more at zerohedge.com ...
Ping!
Gold’s hitting a new record high this day in London.
Against the dollar... The Euro is now worth $1.50, and the CAD is $0.96; JPY is at 89.8.
Thanx.
So when are our retail prices going to start following the same path as the Dow?
I’m studying for my Series 7 exam. It’s fun to read articles like this and understand what they are talking about. Knowledge is a good thing.
No problem... Love the graph a few posts up; the DJIA is actually flat this entire year, if you value it in EUR or GBP! It’s just that the dollar is so much weaker, it takes more of them to buy the slice of those multi-national companies...
I think my guess was accurate; Obama came to Beijing to discuss the coupling of the RMB to the USD; not to ask the Chinese to break it, but to KEEP it. The RMB is getting valued higher and higher, and that's helping to keep the USD up (via the peg).
When the Chinese unpeg the RMB from the USD (even for a 10% correction), the RMB will gain against other currencies, and the USD will plunge even further against those same other currencies. Right now, the peg is one of the solid things keeping the USD from plunging like a rock in deep water...
It’s interesting how the discussion involves a weakening dollar and then goes on to state obligations in nominal values. A weaker dollar may just be the only way out this huge debt hole.
” A weaker dollar may just be the only way out this huge debt hole. “
Did I misread the article??
What I understood was that as US debt comes due, we don’t have the cash to retire it, so we must ‘roll’ (re-borrow) it at a higher interest rate - which negates any perceived ‘advantage’ from the weaker dollar....
What am I missing??
The society of ownership.
If you take the US GDP and measure it in Euros it is down 25% since 2000
http://www.kitco.com/kitco-gold-index.html#RT
VERY interesting! Looking at the 1 year graph, and we see over the last 7 months a big divergence in the price of gold in USD and the price of gold in a basket of non-USD currencies... Most of the change in gold in the last 7 months (since the passage of the “stimulus” bill) appears to be from a declining USD, not an inherent gain in gold!
Most of the change in gold in the last 7 months (since the passage of the “stimulus” bill) appears to be from a declining USD, not an inherent gain in gold!........
Yeah and don’t fall into the trap of always attributing golds rise or fall to the USD activity
Kitco front page gives a a daily breakdown on gold telling you what part of that day’s gold rise/fall is attributable to the USD and what part is just plain old gold buying or selling
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