Chris Wood, who publishes the famous Fear and Greed newsletter, which Zero Hedge has republished on many occasions in the past (and whose latest edition can be found here), has some very scary things to say about the dollar in his interview by the CNBC lunch brigade. While Wood is still optimistic on Asia, and specifically China, due to lack of deflation in the region (for now), and expects an appreciation of the yuan soon, he is about as pessimistic on the dollar and "developed" economies as they come.
My view is that there is an inevitable endgame as a result of all this massive spending of taxpayer money in the West and Japan to bail out bankrupt banking systems, so in my view unfortunately the end game will be systemic government debt crisis in the western world. It will probably happen in Europe and will climax in the US, and i am expecting on a five year view the collapse of the US Dollar paper standard...The key reason why that is the endgame is that this credit crisis we
saw in the west in 2008 and 2009 has simply been deferred, because 95%
of the so-called government policy solutions to deal with this crisis
have simply been to extend government guarantees. So the problem has
been transferreWd from the private sector to the public sector. It is just a matter of time before investors revolt against these sovereign guarantees...The crisis is going to happen first in Europe, the US will be the endgame.
Wood is more optimistic on Japan and its 200% debt/GDP as the bulk of the debt is held by Japanese investors, which is not a new topic and has been discussed previously by SocGen's Dylan Grice, who however comes to the opposite conclusion. And to be sure, Chris' optimism on China has recently met with some stern opposition, including some of the most respected hedge funds, who see a simmering crisis in the world's most populous country which will make all existing bubble seem tame in comparison.
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