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Showing posts from February, 2010

How to Profit From the Rising Dollar

CPA Chris Wachtel at Seeking Alpha provides a helpful catalogue of the combination of fears and hopes that are driving the dollar higher. Importantly, he notes, the dollar's strength results form its 'relative' stronger position among a host of weak currencies, including the dollar.

Wachtel is the chief analyst for AVAFX, a leading online trading site for global currency, commodity, and stock index trading, at http://www.avafx.com/

Here's a key quote from his Seeking Alpha post:

The ramifications are chilling. The default of any of the PIIGS could well send borrowing rates for the others beyond affordable rates, effectively setting off a wave of defaults. Remember that the collapse of Lehman Brothers bank alone was enough to crash credit and asset markets in the fall of 2008. Imagine the panic caused by the collapse of Southern Europe.

That alone is enough to explain US dollar strength.

Read more at this link:

http://seekingalpha.com/article/191052-how-to-profit-from-the-ris…

The Zombification of Fannie and Freddie

Peter J. Wallison of the American Enteprise Institute has outlined several alternative futures for Fannie Mae and Freddie Mac, from nationalization to privatization. Unfortunately, the most likely outcome is that they will return as Government-Sponsored Enteprises and sow the seeds for yet another bailout in the future. Only privatization can stop the dead GSEs from returning as zombies.

By Robert Stowe England
February 18, 2010

In the current issue of Financial Services Outlook, Peter J. Wallison of the American Enteprise Institute lays out alternative future scenarios for Fannie Mae and Freddie Mac, both of which are currently under the conservatorship of the federal government.

The January-February 2010 issue of Financial Services Outlook, devoted entirely to Wallison's article, can be found at this link: http://www.aei.org/docLib/01JanFSOg.pdf

Wallison assesses the probability of each scenario and the likely outcome if that scenario is realized.

Nationalization

The first scenario is …