Where will it go next?

The end game of this credit bubble should be very predictable indeed...
The 'saviour' in Fed will come to the rescue in the eyes of most investors, actually the Fed is the source and instigator of such crisis...

First, it will lower the fed fund rate to zero or close to zero, hoping to pull down the long term rates...
if that doesnt happen, more drastic action will be taken... as most already know that the US as a nation is essentially bankrupted in most senses - nationally, economically, financially, infrastructurally, politically...
The foreign central bankers and investors worldwide have been financing the US consumers and its government for years, in exchange for a stash of paper promise in the form of USD or T-Bond... It is no exaggeration to say that US's only major export to the world is the (ever devaluing) USD ... obviously this is unsustainable as you dont expect it could keep getting free lunches without ever having to pay, this trend can be seen by the increasing disdain for the T-bonds by foreign central bankers... the US government could count themselves lucky if those nations dont become seller of the T-bonds, let alone buying... with nobody who is sane gonna buy this phony debts from the Treasury, so here comes the Fed... the sound of --whoosh whoosh whoosh-- the fleet of helicopters from Ben Bernake is cranking up the engines, the blades rotating in overdrive mode, ready to drop cheap money... The Fed will be the buyer of these T Bonds, hence creating nake new money out of thin air in an attempt to ward off depression... this is the kind of money creation in the style of Weimar Germany hyperinflation after WWI and the kind that we are now witnessing in Zimebawe where inflation is easily 10000% or more... This scenario might happen or this might not, as those foreign nations holding trillion of USD reserve might still have a sway in this, if they threaten to dump the USD... based on history, this is more likely to happen than not... this fiat currency system is the root cause of all this, to which the Fed is desperately trying to hold on, because they have monopoly of money creation under this system where they could benefit immensely even in times of hyperinflation... this fiat money system is not a new invention at all, it has already been experimented many times since ancient chinese civilisation, in all 100% historical cases, they all eventually *failed*, become worthless paper... for those who argue that this is 'modern' times, it wont happen like before, then you need to look no further than zimebawe for a live example...

If the Fed somewhat successfully reflate the bubble this time, it will sow the seed for the coming bigger crisis... and the immediate cost will be inflation at least one or two notch higher than before, and repeat infinitum... In short, this vicious cycle of monetary inflation must continue or the system will implode....

so we still have time to *observe and adjust*, and be prepared for what i believe to be an eventuality... accumulate (Physical) Gold, and Oil, and agricultural commodities especially *if* there is major correction, we are living in the final days of cheap resources and cheap commodities, so gold, platinum, silver is still very much bullish and alive in my view... Physical gold's demand will actually increase if this 'faith based' financial and monetary system is getting fragile and unstable. Gold is a universal currency itself, has no counterparty risk, will never become worthless, it doesnt depend on the responsible behaviour of human beings of currency-issuing central banks, gold is already the *fulfillment* of promise itself, in contrast, fiat money is a *promise* to pay or fulfil you something at best - an IOU, its value could change as easily and wildly as a few rate cuts, printing machine and national bankruptcy as well as the ever flimsy and intangible faith... and Peak Oil is coming near us, with most major oilfields' capacity peaked and production declining gradually, coupled with increasing oil consumption in oil-producing nations itself as well as china and india... and there are still likely to be structural inflation for food in the next 2 or 3 years... that said, thats a longer term trend, and i have no clue about how long or strong the depression will be, but stagflation or (hyper)inflation will likely to follow, these takes time for the effects to manifest itself, wont happen overnight though... in the short term, both gold and oil could experience bigger downside risk indeed... especially when you have a Fed whose *real* mandate is to keep gold and oil price low to get people hooked on fiat money, thats why they have over a trillion in gold and oil derivatives for price manipulation...

[ 本帖最後由 hardcat 於 2008-1-22 22:57 編輯 ]

btw, the US Fed is a privately owned company, not a US government organisation...  with shareholders from Goldman Sach, Rothschild Banks of London and Berlin, Morgan Stanley, Deusteche, Warburg Bank to name a few...  which in turn are owned by some obscenely rich elites... who have lots of other big business and corporations e.g. media, big pharm etc...  

thats the reason the Fed's policies are actually destroying the US and its USD - it is all done for their own interests...  and every bailout plan has always been for the multibillionaires and his cronies bankers who are in trouble....