Wednesday, February 11, 2009

Is there money in banks (2)

Today the bank stocks tumbled in view of the mixed message sent by US Treasury. Will there be a bad bank or unlimited support for bad banks?? There seems to be no clear answer from the authorities. And if earlier the American public was reckless with spending, the government is even more profligate.

The banks may still bounce back when the current shudders have passed, but the US Dollar has only one way to go. Down. With so much spending and printing of currency expect the Dollar to weaken sharply in next 1-3 months to levels not seen before.

Earlier the stocks and bonds market had a inverse relationship making the dollar stronger everytime the stocks sank. Yesterday both sank. Is that the dawn of realisation that Dollars are no more a safe haven?

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