The structural causes that led to the Global Financial Crisis of 2008 are identical to the structural causes that are leading us to another systemic financial crisis in 2011.
- You were told by Congress and the Fed that if the government didn't raise the debt ceiling, a disaster would ensue. Well, the debt ceiling was raised and the disaster continues. The situation now feels "out of control."
- The debt downgrade was the fundamental driver that pushed gold above the technical channel and onto what I've labeled the "super highway" price channel. The Fed seems to have pulled out all the stops, and still business is almost at a standstill. Something is very wrong.
- The economy is weakening, unemployment remains over 9%, and the stimulus that did not help before is called for again. The Fed can lower rates to boost bond prices, but not enough to help businesses.
- Ben Bernanke told Congress in July that the Fed would intervene to buy US Treasuries if the economy began to stall or if deflation re-emerged as a threat. The Sept-Nov USD $65.00 target for the dollar on the chart below feels solid. Longer term, the fundamentals indicate death or coma for the dollar.