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Reuters: Dollar slides As Relief At Debt Deal Fades

From an unfazed Reuters:

Dollar slides as relief at U.S. debt deal fades

By Richard Hubbard | October 17, 2013

LONDON (Reuters) – The dollar fell and Wall Street was expected to weaken on Thursday as relief over a U.S. budget deal gave way to worries over the effects of the 16-day government shutdown and prospects of a re-run early next year…

That was quick. The supposedly tremendous world-wide relief we have been promised for weeks didn’t even last six hours. In fact, it never even happened.

Equity markets in the U.S. and Asia initially welcomed the last-minute deal which pulled the world’s biggest economy back from the brink of a historic default, but the rally ran out of steam as the longer-term implications sank in.

Oh, our sides.

MSCI world equity index, tracking shares in 45 countries, was up 0.3 percent and close to a five-year high while Europe’s broad FTSE Eurofirst 300 index had shed 0.15 percent by mid-morning.

So this tremendous worldwide relief drove the world equity shares up a whopping 0.3%. But then those gigantic gains were cut in half six hours later.

U.S. stock index futures also pointed to losses when trading opens.

In other words, our news media guardians have been lying to us for the last few weeks? What a shock.

"Markets had expected the can to be kicked down the road, and the can’s been kicked down the road a little bit. We’re not really waking up in a radically new world," [said Luke Bartholomew, investment analyst at Aberdeen Asset Management.]

"Had it all gone wrong, then the market reaction would have been very different." …

BS. Why anyone would ever believe a Reuters selected economist is beyond our comprehension. They are never right. Yet they always manage to say exactly what Obama wants said.

The temporary nature of the agreement and longer-term worries that the debt ceiling risks would become a structural drag on the economy also weighed on debt markets.

How can borrowing another trillion dollars to pay the interest on the trillions you have already borrowed be bad for the economy?

That view was shared by Chinese credit agency Dagong, which downgraded the U.S. sovereign rating to A- from A with a negative outlook, driving further dollar losses.

Notice how Reuters buried this little tidbit of news in the 11th paragraph of their article. And mind you, this is after the US ‘avoided default.’

The 10-year benchmark Treasury note yield slipped to 2.65 percent from around 2.68 percent late in New York. While U.S. Treasury bill futures had gained 0.1 percent…

Yep, just like we were told, the financial markets are skyrocketing!

Against a basket of currencies, the greenback had slipped 0.7 percent to 79.9… The dollar’s broad losses saw the euro rise 0.6 percent to $1.35570…

The weaker dollar and the likelihood of Fed holding back on reducing its monetary stimulus also gave gold a big lift.

The spot gold price surged to a one-week high just shy of $1,320 per ounce, up more than 2.5 percent on the day. While the December COMEX gold futures contract touched a high of $1,320.50.

Of course, the US borrowing another trillion will just make the dollar that much more worthless. But who cares about that? Unless you have some savings in the bank.

This article was posted by Steve on Thursday, October 17th, 2013. Comments are currently closed.

2 Responses to “Reuters: Dollar slides As Relief At Debt Deal Fades”

  1. Petronius says:

    The failure of our rulers to address the Federal government’s long term solvency problem is having immediate consequences.

    Downgrade of US debt is only a baby step on the road to the coming Dark Age.

    A much bigger and more important step is the decline of the US dollar. We should begin to see significant decline immediately in the weeks and months ahead.

    In fact, the decline has already started. The dollar index has been turning bearish for the last few months. It has fallen below its 75-day moving average. All of the major currencies have been rising against the US dollar––not just the euro, but also the Swiss franc, Australian dollar, Canadian dollar, the yen, the British pound, even the peso.

    All are rising against the US dollar and will continue to rise in the years ahead.

    Gold is up $35 dollars this morning, or 2.7%. Silver is up. Yet they are cheap compared to where they will be in a few more years.

    The dollar may stage a temporary rally, but the secular trend is now firmly set on a downward course.

    The decline of the US dollar will be followed at some point by replacement of the dollar as the global reserve currency. It’ll happen––sooner or later, makes no difference. The timing is unimportant.

    But before that happens there will be a run-up to hyperinflation. The run-up will start with an accelerated upturn in consumer prices. According to John Williams (Shadow Government Statistics), we will see the early stages of hyperinflation starting in 2014.

    Other things may also happen: failures of electronic credit systems; disruptions in the food distribution chain; gas lines; cash restrictions imposed by banks; government interventions in the economy such as wage and price controls, restrictions on sending money abroad, etc.

    None of these intervention tactics will work.

    Hyperinflation is the end game. This will include dollar dumping and dumping of dollar-denominated paper assets.

    Tighten your seat belts. We’re in for a wild ride.

  2. GetBackJack says:

    Chase Manhattan Bank.

    “Not your money. Can’t have. Go away.” Oct. 16, 2013

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