A lot of what I've been reading here doesn't seem to make much sense,
at least to me.
The price of gold -- in any given currency -- is determined by the
marketplace. Nothing else.
The value of a currency -- relative to another currency -- is
determined by the marketplace. Nothing else.
A country can devalue its currency relative to the dollar in the hope
of improving its export trade.
There are reports of a "race to the bottom," as different countries
try to devalue their currency.
In the past week, we've seen devaluation stories for the won, yuan and
dong. (I really wanted to write that sentence. It refers to the
currencies of Vietnam, China, and S. Korea.)
The dollar cannot be devalued in any similar way, because it's the
world's reserve currency.
If the US tries to devalue the dollar by "printing money," then the
only reaction of other countries will be to further devalue the won,
yuan, dong and other currencies.
China and other countries have a vested interest in a strong dollar,
since it helps their export businesses.
Since the US cannot devalue the dollar, there's only one remaining
choice, in case of a chaotic situation where the government can't pay
bets: Default on bond payments.
Geez, of COURSE the government can default. The supposed ability to
print infinite amounts of money would be unacceptable to other
countries for reasons just given, and if it were tried, the
government would end up defaulting anyway.
Of COURSE the government can default on bond payments. In a chaotic
situation, it's the only choice.
> I should mention that this situation is vastly different from that
> in the 1930s where the Federal Reserve Notes were backed by gold
> and since it is impossible for gold to default, it was impossible
> for Federal Reserve Notes to lose value in the marketplace unless
> the government came in and devalued them as Roosevelt did. Today,
> since the Federal Reserve Notes are not backed by gold but are
> instead backed by debt securities that can be defaulted on they
> are only as safe as the underlying securities that give them
> value.
This is utter nonsense, and it answers itself. Being "backed by
gold" is meaningful only if it's convenient to do so. As soon as it
becomes inconvenient, the President or the Congress can "devalue" the
currency by changing the price of gold -- which worked in the 1930s
because it was illegal to own gold. "Backed by gold" is totally,
utterly meaningless.
> And why would you accuse Thomson/Reuters of fraud for reporting
> analyst estimates? They can report on anything they want, even
> indicators that are notoriously horrible at turning points in the
> economy (analysts as a group always remain wildly bullish long
> into downturns, well they are normally bullish at all times
> anyway).
Anyone who wants to begin to grasp the debauched generational values
that have created the current financial crisis, or would like to
understand how almost an entire generation can be totally lacking in
morals and ethics, need only read this paragraph.
Sure, why not? An investment bank can sell any worthless securities
it wants, and lie about it. Who cares, as long as the sales people
get their fat commissions. Who cares if millions of investors, old
people, and local communities are totally screwed? Let them do
anything they want.
Or who cares if they collude with Moody's and other ratings agencies?
They "can report anything they want," as long as they get their fat
fees and commissions by providing AAA ratings for worthless crap?
Who cares if widows and orphans have to starve? I mean, screw 'em.
Let Moody's do what they want.
Or who cares if people like Madoff screw all their friends and
relatives, leaving them to discover that their lifetime savings -- 60
years of working and saving -- have been wiped out? Fuck 'em. If
these investors are so utterly stupid that they can't spot a simple
Ponzi scheme using two sets of books, then they DESERVE to lose their
entire life savings. Madoff can do anything he wants. Why not?
Or who cares if politicians and regulators don't want to say anything
about Fannie and Freddie because they're making so much money for
themselves on the fraud? Why not? Who cares if millions of
homeowners get foreclosed and have to live under bridges, as long as
Barney Frank and Christopher Cox get what they want? Fuck everyone
else.
The answer to your question is this: The same earnings estimates have
turned out to be wrong for five quarters in a row. Thomson Reuters
would have to be total morons not to have noticed this. "Fool me
once, shame on you; fool me twice, shame on me!" Well, they were
"fooled" five times. If it turns out that they didn't do enough due
diligence -- or that they looked the other way -- because they didn't
want to lose their fat commission and fee checks from the companies
they were reporting on, then it's securities fraud, and they should go
to jail.
Sincerely,
John