Thursday, October 21, 2010

Too early to talk about the End-Game for this currency war...

But the middle game for most currency wars looks like world-wide depression. In the past, the end game has been world-wide war, e.g. WWI and WWII, let's hope it doesn't become that serious!

But sometimes protectionism does become serious, especially when you threaten to pay back the folks who lent you money with a fraction of what they lent you in the first place. Those folks tend to get a little P.O.'d when that happens...

Most reasonable policy would be to avoid those middle and end games.

Reasonable policy will most likely happen very soon, for example next week when no one on the planet is willing to lend the US Fed a single dollar without an exorbitant interest rate. Then, the US can face the consequences of huge national debt without relief.

Or - the following week, when there is no longer any motivation for anyone in the US to be concerned about midterm elections... because the elections will have concluded.

You have one-to-two weeks to sell. Try not to leave any $ on the table. :)

Your trade for Friday?

Could anything catastrophic happen with the dollar valuation over the weekend?

Yes it could so make sure you are hedged.