Buddy, could you spare some Cash?

What is Peter Goodman trying to tell Us? I cannot really tell, except that the Dollar may be acting irrationally in economic terms. There is a buoyancy to the Dollar for which no fundamentals can be found. Many claim it is the huge Holdings of Dollars held by central banks and sovereign Funds, which are adverse to selling Dollars normally due to the fall in Dollar value for themselves if the Dollar slides. My own Take on the Dollar states that the American Consumer has become the Consumer of Last Resort. No one is willing to call the U.S. on its bad I.O.U.s because there does not exist sustainable alternate Consumer Demand to maintain 40% of the World’s production of Consumer Goods–the high-Tech and high-Volume set of Goods in specific fact. An actual American Cut of 20% of its draft on Oil would generate about a 9% overcapitalization of Oil Recovery and Refinery capacity. A balanced American Trade (Imports and Exports equal in value) would close half the factories of the World, if a financed alternate Consumption could not be found. The alternate Consumption platform is not existent, and cannot be financed within the immediate economic context. The residual effect would be a massive slide in Value for the other major Currencies, under a massive slide of the Dollar.

Here is a Piece which may help explain the difficulty in establishing an alternate Consumption platform to replace the American Consumer. Citigroup plans to sell or downsize its Japanese Consumer Finance company. The financial group is in trouble, planning to sell $400 billion in assets to cover expected Mortgage and Credit losses in the United States. Their Option is to make it harder for the Consumer, while increasing their holdings in the more profitable brokerage business; abandoning Banking for the service of richer Investors. It is not remarkable, except for the fact such reduction is being conducted throughout the World by almost all financial groups. Consumer markets will not be created without Consumer Credit, and the Banking industry is leaving the markets unfilled or overpriced. We Americans are still the only People who can finance a bad-Risk Mortgage, even in the midst of a financial crisis.

I might as well include this Piece from Dean Baker, as this Post has turned into a description of why the Dollar holds Power. Dean believes that Fund managers lack fear of Losses if dealing in major Currencies, but know they face unemployment if said Losses occur in unconventional Currencies. I cannot say that I disagree with him to a great degree, but it should also be understood that Fund managers can understand the volatile elements which affect the major Currencies, but know little about the transitional effects which might threaten the value of other Currencies. I don’t know a damned thing about Money either, and therefore, I risk my Dollars on what I know what I know about. lgl