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Tuesday, December 16, 2008

 

zirp


zero-interest-rate policy is here.

UPDATE: yves smith on consequences here and here.

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It's not looking good for the USD, eh?

 
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from perrone: on the ultimate danger to the USD (again), of course that's an animal that must be watched and managed. but is it a marauding beast or a dog, ready to be our best friend? the extremely prescient discussion of Keynes' insights this blog has promoted (great, great work GM) must lead us to believe the US is doing just what it ought to do, right? as the largest current account deficit country, it ought to see it's currency sink relative to those of the current account surplus countries and it's production (at the cost of its consumption) ramped up. zirp pushes you in that direction. the view that it's misguided domestic "stimulus" has it exactly backwards, it seems to me.

the question I tremble at is what happens to world trade if the US follows the plan but the surplus countries refuse to -- if they refuse to let their currencies get stronger and/or refuse to stimulate internal demand? a race to the bottom, I guess. but even then, the USD will be just as strong (weak) as any other fiat currency.

no?

 
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perrone, i think that has it exactly right -- beggar thy neighbor. given what is transpiring now in emerging markets, a ghastly race to the bottom looks like the order of the day.

mathew is right -- no good news for the buck here, at least relative to goods. but i think those looking for a currency crisis (including me) should look to GBP first; they are on a high wire relative to every other developed economy.

the dollar crosses with surplus nation currencies, however, i suspect will be stubborn. the dollar has sold off hard recently on quantitative easing, but others will quickly follow down to ZIRP and QE. and let us not forget that this is still a crisis of dollar-, CHF- and yen-based deleveraging -- a lot of dollars are being consumed as dollar debt is paid down. it's going to be easier in some respects for QE to get results in other economies.

 
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a good monitor of the renminbi-dollar cross is CNY -- no appreciable devaluation here yet in spite of the dollar crushing in december.

 
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i follow this blog even though I usually have no idea what you are talking about GM. It's either been luck or fortune but so far I haven't seen any kind of slow down in my industry (wind energy). I figured that people would put buying a turbine on the back burner as soon as the credit market dried up.

 
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there's a lot of speculation, dj, that your field will be one of the beneficiaries of fiscal stimulus in the form of government infrastructure spending, which is set to gear up as a sort of new-new-deal. with energy demand falling off a cliff, i'd be interested to see how capex reductions affect your line of work in between now and any eventual government outlays. please keep me up to speed -- and good luck! looks like a good place to ride this out.

 
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Basically what I did was shift our market from companies looking to offset energy costs at their plants to buyers with a steady source of federal money. We inked a deal with a Native American tribe, a community college and a High School within the last 2 months. The school market is going to get tougher because almost all states are bringing fresh budget cuts. But I agree that wind is a hot topic right now and with a little more federal incentives it could really grow fast.

 
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Bank of America and Mr. Higgins missing $millions, It can happen to you, my fellow Americans


More info: http://www.maxhiggins.com/blog

 
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