Friday, March 13, 2015


...which is what the former manager of Man United used to say when it was time to worry.  Well, when Little Paulie Krugman almost gets it right, by my reckoning it's squeaky bum spades.

Paulie just figured out that Mario's QE exercise for which he has been screaming for over a years is just about to turn the the U.S. Dollar into Le Currencie Horrible from the standpoint of doing any good for the U.S. economy and--though he will not admit it--not do a damn thing for economic conditions Over There.  He also was on the mission of an American QE Whatever once again but with hardly the fervor of past episodes of Paulie Plays John M.  If we are lucky, he might figure out that it's fine to be a Keynesian if you are as smart as John M. which Paulie is almost certainly not, but I fear that is a hope for a far distant future.  Anyway, this sort of revelation on the part of Paulie is cause for concern: if he can figure it out we should worry.

The Euro was slaughtered again today as was pretty much everything else that counts except the dollar.  If I were still trading (the world thanks God that I am not), I'd probably be positioned for the Euro to break the buck inside of two weeks.  This movement is something out of the Doomsday Book.  Following it right down into the toilet is oil which the smart guys say will be with a 30 handle by the end of the month.  With the supply figures out there they are probably right this time.

On top of all of this, comes now another concern which was there all along but somewhat ignored in all of the other melee:  dollar denominated debt.  Oh not your Greece and points east, but corporate dollar denominated debtors, especially in emerging markets.  In places like Brazil.  For companies like Petrobras which is mired in scandal and corruption, hampered (to say the least) by political motivated mis-management and in the wrong business at the wrong time with a balance sheet completely mis-matched in currencies.  Petrobras is not the only one.  The same scenario with a few variations on the theme is being played out around the globe.  The Dollar is the financing currency of choice.  When your liabilities are appreciating, and you cash and earning are depreciating...  We have seen this movie before and it has always been rated R if not X.  There are a lot of concerned people out there not named Fergie.  Count me among them.  Paulie, you should be as well.

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