The chickens of too many rate cuts came home to roost as the dollar index fell to its lowest possible on news that China was going to diversify out of its dollar assets.

Gold shot even higher, nearing the $850 mark and 10% (in $ terms) off its all time high.
The euro is now seriously overbought, and will probably correct in 2008, but don’t look for anything like that any time soon.

Technically, too, the dollar looks ripe for a correction at this point, but technicals don’t always come into play when the market is simply panicking out of the buck, fearing ever more rate cuts from the moronic, thieving Fed.

When Jim Rogers advises moving out of all dollar denominated assets and even supermodels and actresses insist on getting paid in euros (or in Kruger rands), party time in the US for all you tax-and-kill enthusiasts is over. The bill is coming due now. Who’s going to pay? The creditors, of course!

Writes the Independent:

“The banks remain unwilling to lend to each other, preferring to rebuild their balance sheets and “hoard liquidity” to buttress themselves against any shocks from repatriating off-balance-sheet losses from their special investment vehicles (SIVs). However, this tightening up has led to a vicious circle. Making credit tougher has exacerbated the problems of struggling mortgage holders in America; default rates then rise and make the banks even more exposed to losses as credit agencies downgrade their assets. This seems to be what happened at Citigroup. The admission that it was unable to assure investors that a potential $11bn write-down for sub-prime mortgages would not grow has led to this fresh fit of extreme nervousness. Huge write-downs by Merrill Lynch ($7.9bn) and UBS ($3.4bn) have not helped.”
Let’s cheat them by turning the buck into a piece of trash…