where are the guys who were crowing about the dollar being down?

Well, that's US industry screwed. The Chinese will be well pleased.

"John Larkin" schreef in bericht news: snipped-for-privacy@4ax.com...

If you look at the article more carefully, you will realise that the dollar's recovery is entirely due to panic, just like it's recent fall - when foreigners realised how bad the U.S. sub-prime mortgage crisis was they sold U.S. dollars, not appreciating that the U.S. had managed to sell the worthless paper involved around the world.

Now that that fraud is driving banks to wall all around the world, the U.S. dollar looks relatively less repulsive.

That you are gloating over the current "recovery" of the U.S. dollar does suggest that you don't fully grasp the significance of the current crisis of confidence. "If you can keep your head while all around you are losing theirs ..." you probably don't know what is going on.

My Australian client, signed in June, is not a happy camper :-(

...Jim Thompson

-- | James E.Thompson, P.E. | mens | | Analog Innovations, Inc. | et | | Analog/Mixed-Signal ASIC's and Discrete Systems | manus | | Phoenix, Arizona 85048 Skype: Contacts Only | | | Voice:(480)460-2350 Fax: Available upon request | Brass Rat | | E-mail Icon at

America: Land of the Free, Because of the Brave

You quoted in US dollars, of course. The Australia number is amazing... 60% in 4 months!

My european and asian business was clearly up as the dollar went down, whereas my parts cost didn't change enough to notice, so a low dollar was good for us. It will be interesting to see if the trend changes.

John

I don't think so. The Euro is $1.27 today. The last time it was that low was long before any mortgage crises. The reason the Dollar is up is because the other currencies are worse off. Just look at Iceland.

Tam

lots of people with non-us cash getting dollars to buy all the stuff that is now "on sale" in the US?

-Lasse

:> "John Larkin" schreef in :> bericht news: snipped-for-privacy@4ax.com... :>>

:>>

:>>

:>> Jeez, look at the chart! :>

:> If you look at the article more carefully, you will realise that the :> dollar's recovery is entirely due to panic, just like it's recent fall - :> when foreigners realised how bad the U.S. sub-prime mortgage crisis was :> they sold U.S. dollars, not appreciating that the U.S. had managed to sell :> the worthless paper involved around the world. :>

: :I don't think so. The Euro is $1.27 today. The last time it was that low was :long before any mortgage crises. The reason the Dollar is up is because the :other currencies are worse off. Just look at Iceland. : :Tam :

Simply stating that the only reason the US$ is up is because the other currencies are worse off, doesn't explain the crucial "WHY?"

In Iceland's case we have a small country with a GDP of around 10B$ and it decided that banking was their niche market. It suddenly "grew" banks out of all proportion to their national reqiuirements and those banks ran up massive bad loans of around 100B$. That's why they are in such a bad position.

If you look at Australia for example, our $ has plummetted against the US$ yet our banking industry isn't in nearly the same situation as banks in the US or Europe. We have a solid minerals industry exporting to China, India and everywhere else which is lacking workers to meet the export demand and yet our $ is dropping rapidly against the US greenback. We are basically booming compared to all other nations yet our $ is being massacred. It should be the other way round to my thinking. Please explain?

One explanation I have heard is that when the whole world goes to pot, the US will be the last to go. Can't explain Australia, though. Unlike most EU countries, it has intrinsic value.

Tam

this made me smile

martin

...

That's the same thing given in the web page Larkin posted the link to.

I think it's crap.

One hypothesis that fits the situation is that some US investors are making a run on their mututal/hedge funds to convert them to cash. This makes the fund operators liquidate to get cash, and the local moneys from any overseas investments in the firesale have to be converted, which puts large upward pressure on the dollar. (In addition to trashing the other contries' stock markets).

Damn, I wish I had a spare couple of hundred grand to play with. Countries like Australia with a lot of US investment but relativly sound economies should be an interesting play in the currency markets for a while.

Mark Zenier snipped-for-privacy@eskimo.com Googleproofaddress(account:mzenier provider:eskimo domain:com)

"It meant that because Porsche had not declared the proportion of VW shares it controlled, traders may have been indirectly and inadvertently borrowing shares from Porsche, selling them to Porsche, buying them back from Porsche and then returning them to Porsche."

Cool.

John

...

I agree. Good on Porsche they profit on both sides of the equation and bankrupt some hedge funds. Win - win.

Short selling good businesses by hedge funds to drive the share price down should be made a criminal offence.

The sooner businesses start getting valued again for their intrinsic manufacturing value as opposed to their stock market gambling utility the better. I hope that Porsche manages to drive at some of these parasites to the wall. It is high time that the hedge fund bastards driving stocks down on sophisticated double or quits bets were crucified.

Unfortunately I expect it will turn out that it was mostly our private pension funds they were gambling with :(

Regards, Martin Brown

Adding delays in a feedback loop doesn't do any good, but fees on high-speed trading, getting progressively heavier as trading gets faster, should do the job. The parasites get punished, but long-term investment shouldn't be hurt.

I agree bankers and politicians should get some training in control theory!

Jeroen Belleman

It often makes things considerably worse.

Maybe. The housing market has massive fees compared to most financial instruments, but...

Governmnent doesn't have that many levers (inputs) to control things (a lot of state variables). The system may not be entirely observable, let alone controllable, so attempts to stabilize things may end up accentuating a limit cycle or something like that. Nobody's got a model that is remotely accurate. It's a bit silly to apply advanced math to a situation like that... it just adds some fancy terminology in there to justify the not-even-wrong hand-waving (as if they need any more of that).

Best regards, Spehro Pefhany

I didn't mean to imply that the stock market should be strictly controlled like you would an industrial process. The idea is merely to damp brutal changes and wild oscillations, such as we are seeing now. To a control engineer, it is obvious that to damp oscillations, you must extract energy from a system. To a banker, this may be far less evident. In fact, they seem to thrive on it. Well, some of them, anyway.

As for government having little influence: $7e11 has a lot of leverage. It's just that by applying it this way, it does nothing to actually damp the oscillations. Quite possibly the opposite, I believe.

As for the massive fees in the housing market: Those are charged to the buyer, who is not usually interested in cyclically selling and buying. There is no such brake on the financial circuits surrounding this market, which exposes it to instability, maybe more of a relaxation type. The internet, the wireless telecom business and the electronic component market seem to behave in much this way too.

Out on a limb, I would speculate that the huge amount of virtual money in the financial circuit has an effect similar to reactive impedance in an electrical circuit: It rings after being excited. The housing market provided the kick.

Anyway, that's my take on the matter. Clearly, it's very much coloured by my professional background.

Jeroen Belleman

Depends on the complexity of the system. We are dealing with TAUgreed and TAUfear as the main dynamics of short-term transients. Tg seems slower than Tf to me, which means people wait too long to get in on the up-slope, but panic and dump if they think things are going down. Both are positive feedbacks in this system, so we get classic neon-bulb relaxation oscillations. Speculators add a lot of gain. We could reduce both gains by taxing stocks held for a short time, and we should also find a way to damp the fear factor. This instability isn't healthy for the economy.

John

The giant tool that government has is taxation. It could be redirected towards stability.

John

Greenspan damped the fear for way too long. It's like forest fires, where preventing small ones leads to the accumulation of fuel, and so to catastrophic fires at infrequent intervals. The market value of housing grew so much faster than average incomes, for so long, that there's a huge overhang that has got to be corrected one way or another. That's going to result in a lot of pain, however it happens. Folks foolish enough to use their homes as piggy banks are going to get a haircut, that's just reality.

Cheers,

Phil Hobbs

Ironic that the most important dynamic loop is not even slightly understood. We should stop issuing PhDs in economics until this is fixed.

John

Yeah, they had such high fees that the fees became more profitable than the mortgages they were based on. That was one component of the problem, the real profit was in generating fees, not in servicing mortgages, so who cares if the mortgage is good or not...

Charlie