Oh my!
From Brain Surgeon Roubini:
Does the U.S. dollar’s December slide mean the USD has passed its peak? Most likely not. The turn-of-the-year profit-taking on long USD positions creates a near-term blip in the dollar's uptrend...
It was
profit taking that caused the "blip"? Really? Or maybe it has something to with the Fed saying it would rain money from heaven until Wall Street (and Main Street) looked like a ticker tape parade? He continues:
More aggressive policy response in the U.S. compared to Europe, could bring the U.S. out of a recession faster than the Eurozone (though growth will most likely remain subdued for some years to come), supporting the dollar against the euro. In the longer term, however, once risk appetite revives, the greenback might lose its defenses in wake of worries surrounding U.S. public debt expansion and the potential inflationary effect of quantitative easing. [Emph added.]
Well, at least, in the emphasized passage, he acknowledges the existence of history, even as he doubts its veracity. "Potentially inflationary effect"?
This is what he said in the FT some two weeks ago:
But with governments and central banks bringing private sector losses on to their balance sheets, fiscal deficits will top $1,000bn for the US in the next two years. The Fed and the Treasury are taking a massive amount of credit risk, endangering the long-term solvency of the US government.
So sure, go buy the dollar!! I mean, if the issuer goes bankrupt, we'll let you know ahead of time. We'll send you the word. Wink, wink, touch nose. In the meantime, we see nothing wrong with driving on the wrong side on the highway. Less traffic there, see?
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