Across the Curve

By DFTT on Jul 4, 2009 | Reply

It’ll be interesting to see whether or not those nations calling for change, rethink their positions if Europe’s economy requires the same bad medicine that is currently being dished out in the U.S.

Japan (http://www.reuters.com/article/newsOne/idUSTRE5621DR20090703) and the invisible hand seem to favor the greenback in times of crisis, http://stockcharts.com/scripts/php/candleglance.php?FXA,FXB,FXC,FXE,FXF,FXM,FXS,FXY,inr,XRU|C|C20

Happy 233rd birthday.

By Erich Riesenberg on Jul 4, 2009 | Reply

The FDIC could guarantee the US dollar… ?

By Sutton on Jul 5, 2009 | Reply

India is a cesspool with the most overated talent pool in the world. A handful out of a billion can do the job. Wow.

By Chicken on Jul 5, 2009 | Reply

Perhaps one day these countries will stop jawboning the dollar and get down to the business of flooding the globe with same (right after they’ve run out of printer’s ink).

By sbenard on Jul 5, 2009 | Reply

Over the past few months, all the BRIC nations have now called for relief from dependence on the Dollar. This strikes me as a potentially ominous sign. These countries are worried for good reasons. A word to the wise is sufficient!

Also, John, I was curious if you have any thoughts on this Bloomberg story tonight suggesting that a seasonal summer rally (I never had the slightest idea there was such a thing) in treasuries may fizzle due to the vast supply. So far, treasuries have been rallying since around 6/10 or so, but this article surprised me:

http://www.bloomberg.com/apps/news?pid=20601087&sid=asrfDT7ZC8eM

By Matthew Millar on Jul 5, 2009 | Reply

It is interesting that the Indian man suggested that dollar holders were facing a prisoner’s dilemma. Y’all probably already know this, but the equilibrium state of a prisoner’s dilemma is all players playing “cheat” which would correspond to divestment of dollars in this example. So I can’t really believe this is a prisoner’s dilemma. Still his point is well taken: if all the countries vulnerable to dollar ownership cooperate, they can lessen the total aggregate carnage.

I just felt it was worth pointing out that any one country could play “cheat” at any time, and save their own skins to the detriment of the other dollar holders.

By Dr.Dan on Jul 6, 2009 | Reply

India will be one of the first ones to start moving away from USD. Russia would soon follow

I am fairly convinced that China (and to some extend saudis) will be left stranded.

By BL on Jul 6, 2009 | Reply

If the dollar goes down, other currencies go up, and U.S. exports boom. We’d have to cut back on imported oil and make more stuff here in the U.S. Countries with mercantilist trade policies that accumulated dollars to detriment of the U.S. workers would get badly hurt.

What’s not to like?

BL

By joe on Jul 6, 2009 | Reply

the best strategy in prisoner’s dilemma is tit-for-tat. You only defect (cheat in your terms) if the other player does so in the prior round. There is no Nash Equilibrium to the game because the optimal strategy is for neither player to defect, but if one player guesses that the other player won’t defect, it is better for him to do so. That’s what leads tit for tat to be the best strategy, you only defect to punish the other player for defecting first.