Thursday, July 12, 2007

If everything is so good, why is the dollar dropping?

There is a lot going on today. I’m seeing some rosy news about the U.S. economy, and the stock market is on a tear, retail sales figures (if you can believe the headlines) are better than projected, mortgage applications are up in spite of rising interest rates, foreclosures are down and a couple of CNNMoney headlines read; The greatest economic boom ever and Bulls stage record Wall Street rally.

What can I say?
Oh, I know! The dollar is dropping like a rock tossed from a plane at 30,000 feet. Against the Norwegian Kroner it was trading last week at around NOK 6.19 to $1. U.S. dollar. Today 7/12/07 at 7:12 pm Oslo time it is trading at NOK 5.73 to the $ dollar and dropping fast. The dollar is currently trading at 72 cents to the Euro and freefalling.

What does this tell us? I don’t know, but I will venture a guess: Central bankers are dumping the dollar. Gold is up as expected, as a seasonal bounce is due about now, but coincidently, at the same time as the dollar is dropping. It could signal a vote of no confidence in major currencies and a flight into gold, it damn sure looks like a vote of no confidence in the U.S. economy and the dollar no matter what the play is.

One only has to look at the financial news to see a slew of hedge funds shutting down on shaky CDOs and sub-prime mortgage news to guess where this is all going.
See: Gates of Hell

My guess is the shit is about to hit the fan and we all better learn how to duck as July is sure to bring us even more bad economic news.


Anonymous Louisville Real Estate said...

I think you hit it right on the head vern. This could all be a precursor to a tough few months to say the least.

Friday, July 13, 2007  

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