The dollar is well on its way to a successful spring. Observe the heavy volume and that the price
springed up from its spring position. The Euro had a successful upthrust. I have placed this in a separate space because it is potentially so important. The Fed since the beginning of March has been permanently buying bonds, bills etc; from its primary dealers. This addition of reserves enables loans of 10x the amount purchased. This then can be leveraged in markets 10-50:1. In so far as much of ,this money went into the carry trade and into overseas markets, it involved shorting the dollar to buy foreign currencies and assets. Hence a massive short position has been built up. A short covering rally will cause the sale of those assets and declining prices. This is of course the same mechanism which caused all the bubbles which so recently burst. Isn't there something about madness is doing the same thing and expecting a different result.
The dollar is well on its way to a successful spring. Observe the heavy volume and that the price springed up from its spring position. The Euro had a successful upthrust. I have placed this in a separate space because it is potentially so important. The Fed since the beginning of March has been permanently buying bonds, bills etc; from its primary dealers. This addition of reserves enables loans of 10x the amount purchased. This then can be leveraged in markets 10-50:1. In so far as much of ,this money went into the carry trade and into overseas markets, it involved shorting the dollar to buy foreign currencies and assets. Hence a massive short position has been built up. A short covering rally will cause the sale of those assets and declining prices. This is of course the same mechanism which caused all the bubbles which so recently burst. Isn't there something about madness is doing the same thing and expecting a different result.
