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“Been in this game one-hundred years, but I see new ways to lose ’em I never knew existed before.”

                              Casey Stengel

FX Trading – G-20 bust in the making?
Does today’s price action foreshadow things to come after the G-20 meeting?  Or is it another chance to sell the dollar again at a higher price?

Right now, we are going with the former because we think the G-20 will be a total bust.  And given the penchant for all governments of late to crackdown on entrepreneurship and penalize the competent to carry the rest of the pack, anything that flows from the G-20 seems highly unlikely to get economies moving again. 

Our “esteemed” Treasury Secretary still seems to believe he can lead a horse to water and make him drink.  Pampered elites definitely see the world as they want it, and often confuse their wants with the way it really is.  Mr. Geithner thinks if everyone were to lend and borrow again that all will be good–global demand will be restored.  The loving symbiotic relationship between the US and China will be back on track–the one that has them sending us crates of stuff, and us sending them crates of dollars in the shipping containers otherwise empty on the way back to Asia. 

Was he not paying attention when Japan pushed rates to zero and stimulated out the yin-yang during its lost years?  Japanese consumers didn’t borrow and the banks didn’t lend much even with zero interest rates and infrastructure projects creating bridges to nowhere.  Japanese consumers and institutions were busy repairing their balance sheets; that was their priority.  It is no different now for US consumers after losing an estimated $12-$15 trillion in wealth over the past couple of years.

Knock-knock: is there a brain-cell home among the core of President Obama’s elite economic advisors?

We think G-20 is a bust.  And today’s price action a precursor of things to come as dollar perma bears realize that risk aversion may just last a lot longer than they think. 

Stay tuned.  A blast-off, one way or another, may be in the offing!