Tuesday, March 24, 2009

US Dollar Collapse, Inflation monitor, Casino is Broken. DXY, HUI, XAU, TNR.v, ASM.v, RMK.v, SBB.v, OK.v, BTT.v, GBN.v, KTN.v, FVI.v, CGH.to, SAX.to,

Wall Street has happen to be run even worse then Casino, it has not only bankrupted its customers addicted to easy money, but it has bankrupted the House. This is Long Term Monthly chart of US Dollar to put recent Rally into perspective: it is a Bear market sharp counter trend correction with Lower High formed now.
This is a Double Top Bearish Reversal on US Dollar weekly chart.

Our recent Crash Alert is signaling the tectonic shift in intrinsic value of US Dollar. More and more voices are rising about New Reserve Currency as the main agenda of coming G20 meeting in London. First in Davos Putin openly spoke about it, everybody pretends not listening. Then Chinese Premier talked about it privately in Europe on Tour.

Now we have a few developments and world better listen, this Open Letter Europe 2020 is published today in FT as advertisement:

London G20 Summit: Last chance before global geopolitical dislocation Open letter to the G20 leaders

"...1. The key to solving the crisis lies in creating a new international reserve currency!
The first recommendation is a very simple idea: reform the international monetary system inherited post-WWII and create a new international reserve currency.The US Dollar and economy are no longer capable of supporting the current global economic, financial and monetary order. As long as this strategic problem is not directly addressed and solved, the crisis will grow. Indeed it is at the heart of the crises of derivative financial products, banks, energy prices ... and of their consequences in terms of mass unemployment and collapsing living standards. It is therefore of vital importance that this issue should be the main subject of London's G20 summit, and that the first steps towards a solution are initiated..."

At G20, Kremlin to Pitch New Currency

"The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system..."

Nobody cares? Wait a moment one...very important voice:

"China calls for the creation of a new currency to eventually replace the dollar as the world's standard, reflecting a growing unhappiness with the U.S. role in the world economy.
The Wall Street Journal.
With recent announcement of 1 Trillion for Credit Recovery of Assets with Problems (you can make the abbreviation by yourself) from the insolvent financial system USA officially became the largest unregulated Hedge Fund and everybody else seems to be fed up by now.
Idea is to move the reserve currency from US Corp Hedge Fund management under International System and base it on a basket of currencies including Euro, Yen, Pound and Yuan among other ideas.
What does it mean to US Dollar: charts are telling you about the picture better the thousand words as usual, just a few comments:
Another very important fact is that US Dollar dominates the world trade: Oil priced in dollars, commodities are priced in dollars and goods from China are priced in dollars due to US Corp being largest economy in the world and driven, before this recession, by two thirds by consumers.
If New Global Currency to be introduced and US Dollar share in the basket will be just 30%, Green Fellow overnight will lose its Imperial clothes and will have to stand for itself: for means of preserving wealth and for medium of trade. How it will succeed with Deficit of projected 9.3 Trillion over the coming 10 years, we are not sure.

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