The Dollar, The Holler and The Collar

The Dollar: From Money news (money news.newsmax.com) on 8/20/09 we see this post “Pimco: Dollar Will Lose reserve Status” by Julie Crawshaw. The article gives Pimco’s (“The worlds leader in bonds”) view of the dollar’s future. Here’s some of that view:

• “A new report from bond giant Pimco predicts the dollar’s days as the world’s reserve currency are numbered.”
• “‘We are clearly seeing a loss of status for the U.S. dollar as a store of value even in the absence of a single viable alternative,’ Pimco managing Director Curtis Mewbourne says in a report.”
• “In combination with other factors, that likely means a continuing devaluing of the U.S. dollar versus other currencies, especially the EM currencies.”
• “He (Director Mewbourne) points out that China already has currency swap arrangements with a number of countries so that trade financing can be negotiated in yuan instead of dollars, and several countries can now replace part of their foreign currency reserves with non-dollar-denominated bonds issued by the International Monetary Fund.”

The Holler: “Leroy’s; They’re Everywhere:” is the title of Mike Folkerth’s 8/19/09 post over at Mike Folkerth -King of Simple (mikefolkerth.com). As usual Mr. Folkerth goes right for the knees in his analysis of where we are and where we’re going. Here are some of his views;

• ” … people like Ben Bernanke, Alan Greenspan, George Bush, and we now add Barak Obama, who talk as they may, have little influence on the reality of our situation.”
• “I ran an article on this site some three times that is titled, “3^rd World Status; A pink Slip Away”. The jest of that article is; ALL THAT SEPARATES US FROM THE UNFORTUNATE STATUS OF SAY MEXICO; IS EMPLOYMENT.” (caps/PH)
• “However, to believe that our economy would return to past levels, we would have to believe that viable full employment as a percentage of the available growing manpower will return to past levels. We would then also have to believe that the resources are available to put all of those folks back to work; forever.”
• “The reason that investment ads contain the caveat, “past performance is no guarantee of future results,” is because the circumstances that surround the investment change! And the circumstances that surround viable employment also changed.”
• “As for instance of changing circumstances, as our fishing boat was sinking, my old childhood pal Leroy Finkenbinder once said, “This thing never sunk before. To which I added, “Well Leroy, you never hit the fishing pier at 15 knots before.”

The Collar: Lew Rockwell (lewrockwell.com) posted this excellent Bill Bonner piece yesterday, 8/20/09, entitled, “No Durable Recovery”. Mr. Bonner’s work includes not only his own superb analysis of why there won’t be a durable recovery but a Nouriel Roubini supporting opinion also. While we recommend that you read the entire article, this brief observation stood out to us:

• “The feds are running into a brick wall of the future. They’ve made promises – mainly to older voters – that now have to be fulfilled. And the number of older voters is increasing … as the Baby Boomer generation enters its retirement years. Social Security and health care promises alone will add trillions to federal deficits. By one estimate, US debt could rise to 300% of GDP by the middle of the century.”

PH Note: What we here at PrudentHome see coming for the US, in the short and long haul, is a reduction in permanent employment with a lower standard of living. This will be brought about by a weakened political will, a demographic shift in ages and population, and reduced national and international availability of natural resources: harder times appear to be ahead.

We suggest coping through greater self-reliance while, at the same time, placing your trust and effort in faith, family, friends and neighbors.

Until next time; keep your eyes on the horizon as the weathers changing fast.