US Dollar: Safe Haven?

Read this.

I laughed when I read this for three reasons:

1. Anyone who thinks the US dollar is actually a safe haven must have been asleep the last two years. I know, I know, conventional wisdom says otherwise, but my gut says conventional wisdom is more like conventional stupidity on this matter. Right now the US Wall Street droids are readying to fight any regulation that restricts their greed-based decisions, so they can do business as usual. And while I understand the idea that most investors think the US is too big to fail, it isn’t. Look at the historical nature of debt default, and now ask yourself if the same recklessness is widespread in the financial sector in the US after that last debacle, how does that make them safe? You have a government pouring money they don’t have into businesses that don’t care about stability beyond their own private interests. The US is not yet a stable investment, and anyone who thinks it is must be ignoring the basic risks that show in its debt to GDP ratio, its political stalls, and its continued reliance on credit and debt to finances national and international operations. If the US was a company, no way would anyone think it a safe investment right now – and the fact is that same measure needs to be applied. Mind you, I’m not saying the US is about to fail, I’m just saying calling them safe because Greece is in the can is foolishness. If you want safe when Greece tanks, look for whomever competes in the markets that they nationally compete in – that’s your safe bet.
2. This decline here (not just of Canada's buck, but all of the currencies affected) is exposing the fact that currency markets are both misinformed and based on a false base. The US largely started the financial sector crisis, and we continue to measure almost all currencies against this unstable one? That’s kind of similar to measuring my height while being tossed between two strongmen. And for those who think that’s a misplaced metaphor, that’s the point. My height is not relative to whether two strongmen can bounce me around, any more than some of the currency shift we’re seeing is relevant to Greece’s debacle, or the US greenback. This is one more sign the currency traders are ignorant profiteers.
3. The last laugh came when I mused on Greece being near default. This is not the first time it has happened. Throughout the 1930s and into Word War II, Greece was in horrible shape in this regard. Before espousing on the relevance of Greece’s inability to manage its national finances to currency rates, try reading some history and figuring out why Greece is in trouble in the first place. The enlightenment that comes from history is clearly missing for the people thinking these connections are what they believe them to be.

Now I can return to my chuckling.