Thursday, August 14, 2008

Not a bailout, a buy out.

(Links fixed)

Is this Sovereign Wealth Fund(SWF) action?

Look at these two charts, side by side:(Cash commodities
traded in dollars)

Obviously massive shift from commodities to dollars.

The Results?

Where will these dollars go?

(I don't believe central banks have this much
clout nor can they get together to act in concert
to prop the dollar...why I think it's SWF action
primarily. If I'm right, that means a wooden
stake was just driven into the heart of central
banking. Is there a new vampire in town? Well, at
least he's market-driven, not offering 'frebbies'
like the Fed, to be paid for by the all-suffering

Which SWF? Why?

Isn't this action a giant prop to the US
Economy...dollar up, commodity prices down...probably
minimal recession instead of Great Depression
and foreigners happy getting more for the
dollars they hold? Where will these dollars go?
US banks.

To see if that be true, probably best to watch this:

Where else (for now) would this cash go?

Who would benefit primarily?

Interesting that this coincides with the Chinese
Olympics, isn't it.

What I'd do if I was a Chinese SWF (a wag):

I'd make calls to banks offering to buy their
foreclosed properties at 10-20¢ on the dollar with
my US Treasury holdings (I've got a ton of them,
losing about 40% with the fall of the dollar last
year)...with an option to buy them back later
after the currency has increased in value. Banks
will eat them up. (This is assuming the Fed has
run out of money to trade T-bills for worthless
mortgages. I think we can count on that.) some form.

I'd then refurbish these houses. Cost: 10-
20¢ more on the dollar, then sell them or
rent them for 50-60¢.

Good return on investment all around.

In the process the dollar probably gains at least
some of what I lost holding Treasuries.

Then I'd buy them back and dump them before they
go to junk.

Am I propping the currency so I can later sell those
tons of T-bills I have with aplomb, my ass intact
and keep my economy churning by pumping cash
into my best customers' pockets, the American

That's my plan. But talk is cheap.

Now listen to the howls about 'furreners' buying
up America.

Been going on since the first white man bought
Manhattan from the Indians for a few trinkets,
the currency of the realm then.

What's changed?

Your mileage may vary...

In any case, watch for the next market to