Observer: IMF acts to avoid markets meltdown ($ plunging)

The International Monetary Fund is in behind-the-scenes talks with the US, China and other major powers to arrange a series of top-level meetings about tackling imbalances in the global economy, as the dollar sell-off reverberates through financial markets.

Amid tumultuous trading, which sent the dollar to its lowest level in a year against the euro in late trading on Friday and gave the FTSE its worst day for three years, the IMF was working privately to exercise its new powers to bring decision-makers together.

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Analysts believe the weakening of the dollar is the beginning of a long-awaited readjustment in the global economy. After the Federal Reserve appeared to hint last week that it could pause in its series of interest rate rises, attention in the markets switched to the weaknesses of the US economy.

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'We are in meltdown mode,' said David Brown, chief European economist at Bear Stearns. 'It's all being whipped up into a bit of a selling frenzy. The dollar has a massive portfolio of negatives against it: it's the long-term problems of the trade deficit, and the government's budget deficit.'

http://observer.guardian.co.uk/business/story/0,,1774162,00.html

We will all start paying right away as the value of our savings vanishes.

The rich with brains (Soros, Buffett and a few others) realize their own wealth is down almost 50% on the slide of the dollar, alone, even though the dollar figure has remained steady or even increased. The fact is that we're all about 50% poorer than we were when the keptocracy stole the office 5 years ago. Whether or not we can survive another 3 years of their incredible bungling is debatable. My guess is that the IMF will intervene sooner rather than later. The world can't afford the loss of the US market, even though it's shrinking every day as people get closer to the edge of ruin.

The problem is a deep rooted one, a basic flaw in the philosophies of both parties, the fallacy of free trade. There is no such thing. They have fattened the rich and beggared the country to no avail. While the silly dogma of free trade reigns supreme, the idiocy will continue. The only difference between the two parties is the pace of our destruction: rapid under the GOP, slower under the Democrats.

Should the world unite under one currency, under fair labor practices and fair wages universally, then the dogma of free trade can make a comeback. Attempting free trade without these in place has been killing the US worker for over 40 years.

The bill's just coming due, folks.

"The only difference between the two parties is the pace of our destruction: rapid under the GOP, slower under the Democrats."

They're two heads of the same snake. The Democrats aren't quite as callous and uncaring at the Republicans.

We've been warned this would happen for years - maybe it is finally time to pay the piper.

position for the US of A to be IN.

First answer: Lots, but it can't be sold hurriedly.
Second: Not great.

...expect substantial increases in interest rates. Interest rate increases will break the stock market.

I suspect that mining and natural resource stocks were thrown out with everything else in order to disguise the dollar crisis. The stochastics and MACD were stuck to the ceiling anyway. When they come down, I'm going to buy some of my favorites for the next move upward.

Gold and platinum are rising so fast there was a story here in the UK that jewellers are having to reprice everything in stock almost daily - very Weimar Republic!

six times in the last two months.

Let's see if the cabal has enough werewithal to keep the markets propped until midterms.

I think a lot of foreigners are watching the relative values of their us investments plummet and will soon -
if they haven't yet started - dump en masse.

Got Silver?

the Congress, the tax-cuts, Greenspin, the forever war or this mal-admin...

U.S. dollar in danger of a 'Snow' job
http://www.arkansasnews.com/archive/2006/05/13/WesleyBrown/336068.html

Amazingly, an administration so hawkish about homeland security and a strong national defense does nothing to bolster the unstable U.S. dollar.

In the past week, Tony Snow, former Fox commentator turned White House press secretary, sent out an e-mail blast decrying the media's coverage of America's economic progress.

Yet, the Fox-Snow and the White House have been quiet about the other (U.S. Treasury Secretary John) Snow's job as guardian of the nation's symbol of economic strength and prosperity.

Once the preferred exchange of all global markets, American greenbacks are now even disdained by many U.S. investors and routinely manhandled by other currencies of the world.

more...

its been put off and bandaided for too long now.

This may be the big one come Monday.

i dump dollars as fast as i could. it`s going to make imports into this country a lot more expensive the wally-dollars are coming back to haunt the usa

http://www.tradearabia.com/tanews/newsdetails_snECO_article105043_cnt.html

The dollar's decline is creating inflationary pressure in the UAE, which has pegged its dirham to the US currency, an economy ministry official said on Sunday.

The US currency's slide against the euro was a key factor in Kuwait's decision to revalue its dollar-pegged dinar by 1 percent last week and markets have been speculating that other Gulf Arab central banks would soon follow suit.

Adulla bin Ahmed Al Saleh, an undersecretary at the economy ministry, told reporters inflation in the UAE could hit 6 per cent this year, unchanged from the ministry's figure for 2005, partly due to the rising cost of non-dollar imports.

snip>

The Saudi and Qatari central banks have sought to quash market speculation that they would follow Kuwait's move. The UAE central bank has declined comment, but most analysts think a dirham revaluation is unlikely in the short-term.

more...


Game of musical chairs may end badly
http://www.insidebayarea.com/business/ci_3822548

snip>

While events in Hyderabad unfolded, the U.S. Treasury Department was unhappy with efforts by Japanese officials to slow the yen's gains since a meeting of the Group of Seven last month. Japan was miffed the U.S. seems to be encouraging a weaker dollar and downplaying its record current-account and budget deficits. China also voiced concern about the depreciation of the U.S. dollar.

All this is code for "the world's economic imbalances aren't my fault, but yours." If events in Hyderabad crystallized anything, it's that the blame game that's become a common feature of the global economy is entering a new and more dangerous phase. What's even more worrisome is that there's no adult in the room in which this game is playing out.

The G-7 can't act as referee because its members are part of the problem. The International Monetary Fund is too busy trying to remain relevant in a world devoid of crises to offer much direction. Of course, if today's imbalances get out of hand, the IMF's bailout abilities won't be up to the challenge. The world economy isn't too big to fail, but too big to save.

Here's an update on the global blame game:

more...


Treasuries May Extend Decline as Dollar Saps Foreign Interest
http://www.bloomberg.com/apps/news?pid=10000103&sid=age4VYKDBOtg&refer=us

May 15 (Bloomberg) -- Treasuries may extend their biggest drop in a decade as international investors shun U.S. assets because of the dollar's decline.

Treasuries lost 2.04 percent this year, according to indexes prepared by Merrill Lynch & Co. The dollar's 9 percent decline against the euro and 6 percent drop versus the yen is making returns even worse for international investors, who own more than half the $4.2 trillion of U.S. government bills, notes and bonds.

``There's further for the dollar to drop and that might make people even less inclined to buy Treasuries,'' said Timo Schild, an investment strategist at Frankfurt-based Deka Investments GmBH, which oversees $55 billion.

The Treasury Department today may say international investors bought fewer U.S. assets in March than in February. Net purchases of stocks and bonds dropped to $79.7 billion from $86.9 billion in February, according to the median estimate in a Bloomberg survey of economists. International purchases of U.S. securities peaked at $106.4 billion in October.

snip>

Foreign investors bought an average $13.1 billion of Treasuries in January and February, compared with an average of $29.2 billion in 2005. The figures for March will be released at 9 a.m. in Washington.

more...

Monday morning could get interesting... :popcorn:

Some posted yesterday, referring to Elizabeth Edwards' site which catalogs absurd (funny yet sad) headlines that no one would have thought possible just a few years ago. Add this to the list: "IMF in emergency session to bail out the US Dollar."

The Iranian bourse is only one of 3 (or 5) oil bourses and it will take time for business to be directed their way -- the US still has a bunch of the oil rich nations by the 'short-hairs.'

Just my opinion...

And, in the meantime, I have been working to hedge my financial bets over the past few months (actually since the Presidential Election 2004 was stolen).

He added that with the US current account deficit with the rest of the world worth 7 per cent of its GDP in 2005, the White House and the Federal Reserve would probably be happy to watch the dollar decline. 'I don't think Washington's going to be concerned,' he said.

IMHO (I'm no economics guru).

The only collateral for those loans is the "full faith and credit of the U.S." -- WTF is that worth, these days?

The implications for the global economy are staggering. I don't plan to hoard gold, though; I'd rather have things that can be bartered.

to keep buying out our debt.

continue as the purchaser of last resort. An 'strong' dollar ? More like the most propped up currency, with sleights of hand everywhere in the background silently keeping it up.

I secretly wish the 'emperor has no clothes' realization settles in. Then globalization will end and jobs will return to the US and the vicious cycle can begin again.

The IMF prevented a meltdown of Asian currencies. I think the problem then was that the U.S. dollar was too strong, though - too many budget surpluses, I guess.

http://www.middleeastforex.com/index.php?section=215

Iran: Euro to replace dollar as oil currency

In July Iran will ditch the dollar in favour of the euro as the currency in which it will accept payments for its oil and natural gas exports, Iranian president Mahmoud Ahmadinejad announced Friday.

The switch, first mooted months ago, was expected but Ahmadinejad's decision comes just as Washington is stepping up pressure on other United Nations Security Council members to act against Tehran for flouting agreements taken with the UN's nuclear watchdog.

Ahmadinejad's announcement, made in Baku, Azerbaijan where the Iranian leader is attending a regional economics conference, appears aimed at weakening the United States' resolve to seek sanctions against Iran if it does not comply with the UN International Agency for Atomic Energy's demands.

Some observers beleive the Iranian move could deal a severe blow the the American currency as many central banks from oil importing nations could choose to stock up their currency reserves with euros rather than dollars- AKI.

Interest rates will have to rise no matter what bernanke thinks... as rates rise the deficit becomes unstoppable and unpayable... basicly the Republicans have bankrupted America

May that party receive the Justice it deserves...

About two or three months ago, John Williams had an article out called Shadowing Reality (You have to register now to read the article) which warned that once some of the smaller countries started dumping dollars that it would soon cause a domino affect and bring hyperinflation to the US. Sounds like this is starting.