ROCKY

Well, Helicopter Ben pulled a Rocky. No, he didn't beat the crap out of Apollo Creed (aka Chris "the Crook" Dodd). Rather, he followed Rocky's creed (wow, I like that!) of, "You do watcha gotta do." He bowed and scraped and pulled at if forelock...well, he couldn't do that but he wodda had he had one...and consequently it is a veritable lock that he will be re-confirmed. He even took the blame for the consumer mortgage debacle that anyone with a brain in his head would lay at the doorsteps of Dodd/Frank & Co. but no one seems to care. He never really got asked about the liquidity ocean his predecessor had created and which he continued so here I am with nothing to write about after leaving all of you on tender hooks yesterday. Bummer. So I called my really smart friend Larry to ask him about a few things that have been on my mind.

"Whatup with Gold?

"The dollar."

That simple?

"Yep."

"How long is this going to keep going on."

"Donnno. It's a Chinese thing."

"What?"

"They suckered us."

'I thought they were in a dollar trap?.

"Oh, they are, they just don't care."

"I don't get it."

"Neither does Obama and the jerks around him. Look, they had that stupid G-20 meeting and got bupkus from everybody. But the Chinese are really smart. What's the one thing the guy you call The Leader really cares about."

"Uh ho, I'm beginning to see. The environment..."

"Charlie, you are getting good at this. So the Chinese throw him a bone about CO2 and all they are THINKING about doing with their currency and everybody starts breathing heavy and forgets about the things they can REALLY do to deal with the Yuan." They have absolutely no intention of changing their domestic policies nor their trade policy, such as it is and are quite prepared to suffer whatever paper losses they may suffer in dollar terms to preserve the status quo which for them is create jobs through export industries and keep a lid on things. But they are prepared--I think--to accommodate us in other ways so we're REALLY happy. Of course the "other ways" are meaningless for all intents and purposes."

"...But inflation...?"

"You're thinking like a Guailo. Look, these guys can control the internals in ways we cannot conceive. They could care less about our economic models and are convinced that we're dumb enough to blindly convince ourselves that they are, at some time, going to play by OUR rules. Baloney. I read your stuff about Dubai and you're right, but do you know what you missed saying?"

"No, what."

'That everybody believed that #2 would bail out #1 because THAT'S WHAT WAS INTIMATED AND THAT'S WHAT WE WOULD DO BECAUSE IT MAKES SENSE. To us, maybe but not to them. Same thing in regard to China. Their pitch, their rules. So off we go to Copenhagen feeling so warm and happy, except that we heard what we wanted to hear and not what they have been saying. The big problem though is that other people, especially in Asia, understand the Chinese and understand what they were saying and are not in a dollar trap. The can dump the buck at the drop of a hat, and guess what, that's one of the reasons why gold is where it is."

"So this could really get bad."

"Oh yeah, Charlie, really bad. Like in a real run on the dollar." If or when, I don't know but as Damon Runyon used to say, "The race doesn't always go to the swift, nor the battle to the strong, but that's the way to bet." Especially when the other guy doesn't even know what game he's in." And trust me, these guys haven't a clue."

"Larry, it's always a joy."

"Isn't it though! God, I love it so!!!!"