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Mix-Ansicht- Sinclair zu Massnahmen gegen Terror und Auswirkung auf intern. Kapital - kingsolomon, 06.06.2003, 10:22
Sinclair zu Massnahmen gegen Terror und Auswirkung auf intern. Kapital
-->International Deposits Fleeing the US
Although it is totally correct that illicit funds should not find comfort in the US banking system, the methods used for identification, blockage and seizure must conform to international agreements.
Failure to adhere to standards that conform to international law and procedures runs the risk of igniting a fire storm of flight capital.
Under the various counter-terrorism measures passed by US legislative bodies after the September 11 WTC tragedy, law enforcement officials are not even required to trace the funds back to the source of the alleged wrong doing before seizing the money.
The procedure thereafter to regain the seized funds equates to standing trial and being found innocent of undefined charges. A recent Times article quotes a State Department official as saying:"This might be seen by other countries as arbitrary or trying to extra-territorially impose our laws."
Now, if you were not a citizen of the United States, would you feel secure in placing a significant amount of your funds in the US.
Due process of law has always been one of the major assets that have directed flows of funds into the US and its banking system. Regardless of the crime, you always had protection of the law.
I am not commenting on the rightfulness or wrongness of these developments as that is best left to others in power to change. My comments are more from a market analysis perspective which is what my readers count on me to deliver.
There could not be a worse time in the history of the US dollar to make changes that have already ignited a firestorm that could consume the dollar and precipitate flight out of the USD banking system and in time out of treasury instruments.
The inability of the US dollar to break above resistance despite new recovery highs in US equities is inexplicable in normal terms. The common share of the USA Inc., the US Dollar, is crashing as the common shares of many US corporations reach new highs. That is a total contradiction in terms.
Technically speaking, the dollar is looking almost hopeless as speaker after speaker on financial TV lauds the potential of US companies. This can only mean that the physical offerings of US dollars is so tremendous that it has filled all the needs of international buyers of US securities in the entire rally from the index lows. Think about that!
Every day, the dollar looks more and more like Enron did breaking down from four Head & Shoulders formations. Do not think that just because this currency is backed by the strongest military power in the world, it is immune to gravity. Once gravity sets into a market, there is no force on earth that can prevent a total wash out.
If there is any case for a strong equity market in the face of a dollar disaster, it is severe inflation that first effects monetary aggregates and in time, consumer prices.
With US budget deficits forecasted to be ten times the present US debt or twice the size of the 2002 US GDP, and the government inviting non-US nationals to take their dollars, convert them back to their currency of domicile and then leave, the tenuous balancing act we have been in may soon come to an abrupt end.
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