People are not stupid. Self interest drives behaviour in the market. Growth based economies have hitherto provided win-win for seller and buyer alike. This is what might be the basis for change .... we simply can't keep going along the growth path where that becomes inconsistent with the welfare of the community and indeed the planet! It is the way we address the real issues in front of us now that will determine what happens in the market. The market is not a place of mystery or random events, as so many want to characterise it. Everything happens for a reason. So information becomes vital in understanding the market and its movements, and thus information becomes the real commodity, and its management is tightly regulated. As funds under management grow (through flourishing Super schemes mainly) the market investment decisions become more rational and conservative. This is set to become the real force in market outcomes. We are entering a new era .... market values determined more by the money supply side than by performance / value analysis in isolation, and low risk playing a greater part in establishing market favourites. Greedy individuals will continue to be seduced by scarcely understood derivatives, which will become even more irrelevant to the mainstream. But the Market will behave in such a way as to produce solutions to our issues - that is its big opportunity.

I sympathise with James' view and agree a sudden unwinding of the carry trade would precipitate a financial disaster. But the fact is people have been rumbling about this for years and nothing happens.

Stephen Roach of Morgan Stanley has been the chief whistle-blower on the global imbalances which involve Asian saving surpluses under-writing the profilgacy of the American and Anglo-Saxon economies.

You still have to ask where all that money will go, if not into US Treasuries. The fact is there is too much at stake for global policymakers to let it get out of hand.

The USD like all national currencies has no lasting intrinsic agreed worth. Nixon with drew from the Bretton Woods agreement in 1970 when France wanted to exchange dollars for gold which left the dolar unvalued and unwanted. All national currencies are debt currencies, that is the money does not come into existance until a loan is made. The bank does not lend you money it creates money for you. If all loans were repayed money would cease to exist. This is unlikely but what would happen if debtors were unable to repay. A lot of debt can be, has been "restructured". Is there a tipping point beyond which currencies can not hold their value? One might reasonably think is likely to happen in the bigger debtor nations like US and UK. Europe is more debt adverse.
IN the US and UK house mortages are not the 20 year affair we have in OZ. They are for 1-3 years fixed interest, then renegoiated. At the end of this year very large sums of mortage are to be renewed in US. Some say 20% can not pay the higher mortages with lower house prices and will hand over the keys. What will happen, no one knows. I think the bottom line is that money is not wealth but merely a fluid representation of wealth and one prone to change. I favour fixing currencies to a basket of goods as suggested by the Belgium ecomonist Bernard Lietear. This should give greater stability.

There sure is some "shuddering" going on in the stock market.
Doesn't this institution run on "fear and greed"?
There has been talk of the U.S. doing away with its currency to introduce a new one called the "Amero." This currency will be set up to include Canada and Mexico as well. It is being said that the U.S. dollar is not doing well and could collapse in a heap at any time.
We all know what will happen then, don't we?
It is also being said that Iraq was invaded because its dictator was going to align his economy with the European Euro, therefore, the invasion was not about oil alone.
Readers, do not believe everything the pollies (Marxist Fabians) hiding behind the banner of Liberal Party, Labor Party, Democrats et al, tell you. They insult our intelligence every minute of the day.

AMERICANS THINK OF THEIR DOLLAR AS THE WORLD CURRENCY THAT IS WELCOME EVERYWHERE. MOST AMERICANS THINK THINGS WERE ALWAYS THAT WAY. NOT SO. IN THE 19TH AND EARLY 20TH CENTURIES, IT WAS THE BRITISH POUND THAT WAS THE WORLD'S RESERVE CURRENCY AND BEFORE THAT, THE DUTCH GUILDER.
CURRENCIES COME AND GO LIKE EMPIRES.
WHEN IT RAN A COSTLY EMPIRE, BRITAIN WAS THE WORLD'S BIGGEST CREDITOR.
WITHIN A GENERATION, BOTH THE BRITISH EMPIRE AND THE POUND WERE SHATTERED BY TWO WORLD WARS AND ECONOMIC MISMANAGEMENT.
AMERICA COULD GO THE WAY OF THE BRITISH.

Great to read Aus. recognition of the role of the US Plunge Protection Team (prob be another two years before reaches Australian newspapers), for bonus points tell us are Sprott Assett Management right in saying the PPT have also been involved in 'stabilising' the prices of gold and oil (to the benefit of the over-leveraged).

A prolonged significant decline in share values would see many many corporate and private debtors go belly up, commentators have been warning of this for years, everything seems to point to it, yet it hasn't happened - this suggests to me that PPT & allied banks globally must have a nifty suite of work-arounds and lines of credit to finesse and recover from any falls (eg. ever more cheap credit). How big a bag of tricks? How robust is corporate governance, how keen are the rich to hold onto wealth and privelidge, how strongly do political appointees value short term return over longer term stability?
Theres no 'if' it implodes, only 'when'.

I think a reversal of some kind is inevitable. What I would not like to see is the governments of the world bailing out speculators and gamblers with public money. That would just be another example of privatisation of profit and socialisation of costs.