Record deficits spell new incentive for Commodities Carry Trade
Today's Financial News - Posted August 12, 2009
The new U.S. budget deficit numbers for July are in. And they are horrifying! Find out what our lenders are doing right now!
by J. Christoph Amberger
Baltimore, MD — TFN: Good freakin’ L**d!
The numbers are in and they’re just staggering! The Treasury Department today reported that the U.S. current account deficit for July totaled $180.7 billion. That corresponds to what the Bush Administration on average ran up in 6 months — during a bad year.
The federal deficit has now hit $1.27 trillion — with two months remaining in the budget year.
Optimistically, the Obama Administration is projecting they’ll end the current budget year with a shortfall of “just” $1.84 trillion. That’s more than four times last year’s record-high.
It’s deficits like this — and the steadily shrinking revenues base — that have have foreign owners of U.S. Treasury securities running scared: The Japanese. The Europeans. And especially the Chinese!
Right now, they’re still nodding politely when U.S. officials grandly assure them we’re “good for it.”
But privately, they’re looking for the exits. China, Brazil, and Russia are openly discussing the establishment of an alternate international currency to say dosvidanye to the dollar. Giving the sheer amounts of U.S. debt and U.S. dollars weighing down foreign treasuries like so many dead albatrosses, this may not be practical of feasible in the medium or even long term.
But they’re other ways.
China, for example, is playing “hot potato” with every new dollar it takes in for exports. It can’t turn around fast enough and buy stuff with a better chance of not depreciating than the greenback.
Commodities, for example.
There’s one in particular that they just can’t get enough of. TFN’s options guru Andrew Snyder has just updated his hard-hitting report on what he calls China’s secret Commodities Carry Trade.
With U.S. deficits and expenses out of control, I urge you to read it over.
This may be one of the last opportunities to get in on this!
Next Article: TFN Grapevine Update: Why did MedLink (MLKNA) sell off?
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