U.S. politicians from both sides of the aisle are lining up to support possible trade sanctions and tariffs on China. Apparently the enthralled ignorami we call our “representatives” are reacting to China’s currency manipulation (as if Tim G. & the gang are helpless bystanders in the global currency wars).
Rogers warns against such economic blunders, noting “We had a trade war in the 1930′s, it led to the Great Depression.”
Shortly after that bludgeoning remark, Rogers adds “We already have small signs of trade wars breaking out in Brazil, France, other places, now America. This could be very dangerous in the end.”
Use the search function (top-right) to find more Jim Rogers stuff. Lots of videos in the archive from this wise investor.
When nothing seems to help, I go and look at a stonecutter hammering away at his rock, perhaps a hundred times without as much as a crack showing in it. Yet at the hundred and first blow it will split in two, and I know it was not that blow that did it, but all that had gone before.
Jacob Riis
Gold had another up day with stocks, as it was ‘risk on’ with renewed hopes for fresh infusions of liquidity as we saw from the Bank of England.
I tended to view this action as more ‘technical’ than fundamental.
I don’t like the headline correlation between stocks and the metals like gold and silver which would normally function as a safe haven in a time of increased risk.
Notice the new lines of broad support and resistance levels on the gold chart. We have not yet broken to the upside, so caution is advised.
Guest post from Jesse’s Cafe, Oct 6 2011. Re-published with permission. Visit Jesse’s blog here.
In this interview via Reuters, Mr. Rogers talks about his desire to short treasuries (eventually), which he says will be “one of the great shorts of our time”. Also discusses why he’s currently long the dollar, and why the world needs a “controlled disaster” before something much more volatile inevitably occurs.
Please bear in mind that the DX dollar index will become increasingly irrelevant because of its outdated structure, heavily weighted to the euro yen and the pound, to the exclusion of the emerging currencies and the precious metals.
The shorter term chart has been rallying largely on euro weakness. We might see another eurodollar short squeeze if things continue to deteriorate in the European banking system.
A stronger dollar is something that the wealthy and the financial sector may enjoy, to the detriment of the rest of the country and any hopes of economic recovery. However the realities of things make a stronger dollar problematic.
So the next best thing is to slowly devalue the dollar by printing money and selectively distributing it, with tax benefits, to the most powerful and fortunate members of society.
In a ‘free market’ for currencies the dollar would have been much lower by now because of the persistent trade deficit, and the enormous dollar balances held by some of her trading partners.
The financial engineers favor a slow decline so as not to disclocate any of the major banking concerns. The currency discussions between China and the US are political theater for their respective peoples and the currency tourists, i.e. the small speculators who provide a snack for the wolves.
