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Monday 30 November 2009
Analysts who forecast crisis warn of US meltdown in 2012
A US dollar plunge could ravage the United States economy as soon as 2012, when foreign investors are likely to exit en masse from US assets, according to a new book by two analysts who forecast the recent credit crisis.
Analysts who forecast crisis warn of US meltdown in 2012
Reuters 26 November 2009
NEW YORK: A US dollar plunge could ravage the United States economy as soon as 2012, when foreign investors are likely to exit en masse from US assets, according to a new book by two analysts who forecast the recent credit crisis.
Even after credit, stock and housing bubbles popped in the past two years, US dollar-denominated assets are still overvalued, and a bigger crisis is yet to come, says the book, Aftershock: Protect Yourself And Profit In The Next Global Financial Meltdown.
Huge US government debt issuance will drag the dollar into a much deeper dive, say analysts David Wiedemer and Robert Wiedemer and writer Cindy Spitzer.
In the short term, China and other foreign investors will keep buying Treasuries to curb their currencies’ appreciation against the dollar. Over the long run, investors will slash purchases as bond prices drop, say the analysts, who forecast the financial crisis in the 2006 book, America’s Bubble Economy.
Though most of the pressure on the dollar will come from the Chinese yuan and other resurgent Asian currencies, the euro will eventually punish the debt-burdened dollar, said Mr. Wiedemer in a telephone interview with Reuters this week.
The euro will rise to about US$2 over the next two to three years, before surging rapidly above US$3, forecast Mr. Wiedemer, whose risk assessment firm advises hedge funds and businesses.
At first, Treasuries will keep their safe-haven status. A year or two of double-digit inflation and interest rates will then trigger a sell-off in US government bonds and batter stocks, says the book which was published this month.
This view is extreme even among those economists who expect the dollar to decline in the coming years. Yesterday, the euro traded at US$1.4983, at 15-month highs but below its record high above US$1.60 hit in July last year.
For Mr. Wiedemer, the biggest myth about the US dollar is that foreign investors have nowhere else to go. The book says many central banks and governments have already started shifting part of their US- dollar foreign exchange reserves into other currencies, gold or commodities.
US government debt is expected to exceed US$11 trillion (S$15 trillion) by the end of this year and the government will ultimately exceed its credit limit when investors come to view Treasuries as toxic assets, the authors expect.
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Analysts who forecast crisis warn of US meltdown in 2012
Reuters
26 November 2009
NEW YORK: A US dollar plunge could ravage the United States economy as soon as 2012, when foreign investors are likely to exit en masse from US assets, according to a new book by two analysts who forecast the recent credit crisis.
Even after credit, stock and housing bubbles popped in the past two years, US dollar-denominated assets are still overvalued, and a bigger crisis is yet to come, says the book, Aftershock: Protect Yourself And Profit In The Next Global Financial Meltdown.
Huge US government debt issuance will drag the dollar into a much deeper dive, say analysts David Wiedemer and Robert Wiedemer and writer Cindy Spitzer.
In the short term, China and other foreign investors will keep buying Treasuries to curb their currencies’ appreciation against the dollar. Over the long run, investors will slash purchases as bond prices drop, say the analysts, who forecast the financial crisis in the 2006 book, America’s Bubble Economy.
Though most of the pressure on the dollar will come from the Chinese yuan and other resurgent Asian currencies, the euro will eventually punish the debt-burdened dollar, said Mr. Wiedemer in a telephone interview with Reuters this week.
The euro will rise to about US$2 over the next two to three years, before surging rapidly above US$3, forecast Mr. Wiedemer, whose risk assessment firm advises hedge funds and businesses.
At first, Treasuries will keep their safe-haven status. A year or two of double-digit inflation and interest rates will then trigger a sell-off in US government bonds and batter stocks, says the book which was published this month.
This view is extreme even among those economists who expect the dollar to decline in the coming years. Yesterday, the euro traded at US$1.4983, at 15-month highs but below its record high above US$1.60 hit in July last year.
For Mr. Wiedemer, the biggest myth about the US dollar is that foreign investors have nowhere else to go. The book says many central banks and governments have already started shifting part of their US- dollar foreign exchange reserves into other currencies, gold or commodities.
US government debt is expected to exceed US$11 trillion (S$15 trillion) by the end of this year and the government will ultimately exceed its credit limit when investors come to view Treasuries as toxic assets, the authors expect.
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