re: amory hill buys the dip ... amory
Hi Amory ... "I was among the first to point out that Uncle Sam has the whole thing under control" ... gulp !!!
With one eye on the olympics I shall dare to share what is rattling around in my head for what it is worth ...
IMHO ... Greenspan's response to the last US recession was to inflate causing the dot.com bubble then savagely hiking interest rates triggering the crash ... he has since continued inflating at parabolic levels causing the property bubble and now is set to hike rates again ... the financial world is justifiably terrified.
At least one analyst predicts Greenspan will need to continue inflating M3 by at least US$1trillion in 2005 to sustain the property bubble/deficits/dollar. Sooo ... so called economic stimulus must now continue (amounting to nearly 2% of US GDP growth in 2004) or risk another recession while simultaneously using interest rates to club emerging inflation which thus far has been contained by corporate cost cutting/asian imports/outsourcing ... hence the so-called jobless recovery.
I'm no economist but I do know that when you increase the supply of any good relative to demand (in this case the dollar) it's value will decrease. It now takes considerably more dollars to buy a house as more dollars (as debt ... ) compete in the market.
The US dollar index is off nearly 30% yet POG is manipulated deliberately low to head off any hint of a dollar cisis ... leaving Gold analysts confused and frustrated.
IMHO ... the reason OIL is headed for US$50/barrel is compensation for the decreasing value of the US dollar ... not Iraq/terrorism/Yukos etc ... it was either OPEC switching to Euro's or hiking the Oil price in US$ ... in my view, higher Oil prices are here to stay.
Many analysts also fear the US could head into recession again in 2005-6 as Greenspan's strategies fail triggering an inevitable debt crisis causing the world's central banks to dump the US dollar.
The prudent observer will want to view this lot from the sideline but other than CASH it will be hard to know where that will be ...
