Dr. Kurt Richebächer: "Der freie Fall des Dollar ist unausweichlich!" - 500 Beiträge pro Seite

[golden-bear]

Bevor mich jetzt wieder Anfeindungen ereilen: Richebächer war früher Generalbevollmächtigter der Dresdner Bank.
Sein Artikel von Oktober 1999 "Die USA stecken in der unmäßigsten Kreditinflation aller Zeiten" wurde von der Bundesbank nachgedruckt. Er ist also sicher kein Schwachkopf oder Blödschwätzer.


WEEKLY COMMENTARY
August 21, 2001

ARMAGEDDON?
By James R. Cook

About the only thing Wall Street hasn`t been able to put a positive spin on these days is falling corporate profits. Sooner or later some analyst will try to make this into something good. The latest positive twist, however, concerns the falling dollar. Supposedly that will be a big plus for multinationals. This optimistic outlook ignores the far more serious implications of a dollar decline, which is, after all, a devaluation of the currency. For one thing, more expensive imports cause inflation. (It used to be that 30% of what we consumed came from overseas. It`s probably higher now.) Rising prices for imports would also give domestic industries more flexibility in raising their prices.

Since foreigners own a lot of American securities, a falling dollar and falling markets would hit them with a double whammy. They would be sellers. This would drive down the stock market and in the bond market would push up interest rates. What would higher rates do to a moribund economy?

The best analysis of the situation comes from the superb economist, Kurt Richebacher. Here`s the last page of his August letter:

"EURO AND DOLLAR
"The central focus of our attention in the global financial markets is not the Dow or the Nasdaq. It is the euro-dollar exchange rate. It is by far the single most important price in the global financial universe involving many trillions of dollars. Consider that foreign gross holdings of dollars amount to almost $10 trillion, as against American holdings of foreign assets amounting to approximately $8 trillion. The United States is a net debtor by about $2 trillion to the rest of the world, of which more than half has accrued during the last three years. For the first trillion, it took about 15 years.

Formerly, the movements of exchange rates were primarily influenced by changes in the trade balances. Weakness in the current account used to mean a weak currency. But in the 1980s, ballooning capital flows became the more powerful market force. Despite a rapidly rising trade deficit, in the first half of the decade the dollar was riding high on the back of soaring capital inflows. This was an utterly new experience for the currency markets.

The great surprise that shocked markets and policymakers occurred in late 1984 - early 1985 when the dollar inexplicably accelerated its surge against the backdrop of slowing economic growth and falling interest rates in the United States. In late January and early February 1985, the United States joined in concerted interventions against the dollar. Yet the market boosted it further from DM 3.17 to DM 3.47 in late February.

We have done this little excursion into history in order to show the present experience is by no means unique. Still, it`s most important to see, on the other hand, that some big differences exist between then and today.

It begins with the tremendous difference between the German Bundesbank and the European Central Bank. The Bundesbank never permitted the slightest doubt that it regarded the D-Marks` weakness as both undesirable and unjustified, and it had no qualms whatsoever to demonstrate its opinion with unilateral interventions. Nevertheless, its determination and credibility didn`t stop the superdollar. As to the European Central Bank and its president, Mr. Wim Duisenberg, we find it impossible to say one single positive word about them. Perhaps the dollar was unstoppable, but Mr. Duisenberg, in particular, has rightly earned the contempt of the markets with repeated careless remarks, among them his complete disinterest in the euro`s weakness. Quite fitting to this is his apparent inability to grasp the dangers in the world economic situation.

Having said this, we hasten to follow up with the question: What about Mr. Greenspan and Mr. Paul O`Neill, the U.S. treasury secretary. In contrast to Mr. Duisenberg, they exercise enormous influence in the market. But we regard this as evil and extremely negative. A mere comparison between Mr. Greenspan with former Fed Chairman Paul Volcker may elucidate what we mean by this remark. Mr. Volcker pursued his monetary policy with the focus on money and credit as the primary targets of his policies. Mr. Greenspan, on the other hand, has distinguished himself as the most prominent cheerleader of the American "new paradigm" economy, importantly contributing to the collective, manic euphoria that developed and grossly imbalanced the U.S. economy. Certainly, Mr. Greenspan is far more dangerous than Mr. Duisenberg.

We come to another difference between 1985 and 2001 that we regard as the most important one. It concerns the relative weight of manufacturing interests versus Wall Street interests in American policy decisions. In 1985, with Jim Baker at the helm of the U.S. Treasury, the Reagan government, worrying about the damage that the overvalued dollar was doing to the manufacturing sector, took the initiative for concerted G5 action against the strong dollar. The rest was the Plaza Agreement of Sept. 22, 1985. Its secret provisions featured up to six weeks of intervention to initially knock 10-12% off the dollar. In the event, the Plaza "announcement effect" was much more powerful than the G5 had expected. After barely a week with very small interventions, the dollar was down 12%, causing fears of an uncontrolled collapse.

There will be no Plaza Agreement this time. Wall Street interests have become absolutely predominant in Washington. In fact, both the U.S. economy and its financial markets have become so inordinately dependent on persistent, huge capital inflows that policymaking has no choice anymore. While a falling dollar would help the manufacturing sector, these beneficial effects would be vastly outweighted by the devastating effects that sharply slower capital inflows would do via a plunging currency to inflation, stock prices and long-term interest rates. Considering the potential sums involved, it could easily turn into Armageddon.

CONCLUSIONS:
Economic conditions around the world are worsening dramatically. In the past few years, large parts of the world economy became highly dependent on the bubble-related surge in U.S. import demand. The bursting of Japan`s bubble was a problem for Japan; the bursting of the U.S. bubble is a global problem.

There is a striking dichotomy in the U.S. economy and the markets between great optimism talked and pessimism practiced. It`s called confidence building. Mr. Greenspan, in particular, is engaged in the exercise to temper the slowdown by talking up the economy`s long-term prospects. But when consumers and businesses are overextended, no amount of talk will prevent a painful reckoning.

An endless stream of very bad news from corporations themselves leaves no doubt that economic conditions continue to deteriorate. But in the public discussion, head-in-the-sand optimism prevails.

The greatest secret worry of all is that bad news about the U.S. economy may set off a free fall of the dollar. All it may need for that to happen is doubt in the dollar`s stability inducing foreign holders of dollar assets to hedge the associated exchange risk. U.S. economic and financial prospects have effectively become hostage to the perception of an invulnerable dollar.

Considering the atrocious imbalances in the U.S. economy, the dollar`s free fall is unavoidable."

[JLL]

Dr. Kurt Richebächer ist mit Sicherheit kein Dummkopf. Habe ich auch nie behauptet.

Gruß

JLL

[Ken_meyer]

ich habe seinen Newsletter "zufällig" abonniert; dass der
Dollar absaufen wird, hat er schon 1999 behauptet...
Mittlerweile ist das wohl etwas akuter geworden und ich
bin deshalb in Dollars short.
Aber, das muss nicht zwangsläufig mit
einem Anstieg des Goldpreises einhergehen; das dürfte hauptsächlich dann passieren, wenn eine Panik ausbricht und
alle gleichzeitig zur Tür rauswollen.

[jeffery2]

Das es nicht gut für usa ist, wenn der Dollar in die Gruetze geht weiss auch AG. Wie geschrieben seit `99. Darum Kameraden wird er noch eine weile kämpfen, dass es nicht so kommt. Natürlich, die Wahrheit kommt schon an den Tag, aber wann----- J2

[Sep]

was soll schlecht daran sein, daß im Moment die Zinsen in den USA fallen, und als Folge davon Investoren die USA verlassen, UND der Dollar damit gegen EU sich abschwächt ?

Das ist doch gut für die US - Exportwirtschaft, und es hält die Importe aus EU etwas schwächer.

Gut für Boeing, schlecht für Airbus. Gut für Coca Cola und Gillette, Philip Morris etc. Das entlastet jene US- Firmen, die auf dem Weltmarkt tätig sind, und von denen wir in der Vergangenheit bei ihren Gewinnwarnungen immer den Hinweis hörten, dies sei verursacht durch den starken Dollar.

Europa geht schwereren Zeiten entgegen, das ist erst mal alles.

Gold sieht im Moment etwas stärker aus, Momentum, TBI, Bollingerbands etc. Aber warum es am 30.8. bei 300 sein soll, das seh ich nicht.

Immer schwer, gleichzeitig Kursziel plus Datum zu prognostizieren. Ich kenne keinen, der das kann.

SEP

[alterhaase]

schlecht für DAX
Automobile, Maschinenbau,

oder kaufen sich dann wieder die amis billig ein,
das spiel klappt immer wieder,
man muß nur eine schöne verpackung drum machen
(Glabalisierung der Märkte, int. Kapitalströme usw.)