Dollar Slips
Feb 10th, 2009 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar sank against the euro. Late Monday, the euro was trading at $1.3056 vs. $1.2932 on Friday.
Like everyone else, currency traders awaited the Treasury Secretary’s “comprehensive” financial rescue plan, the sequel to the Troubled Asset Relief Program.
“With the focus on the Senate [stimulus package] vote and details of Treasury Secretary Geithner’s TARP plan [due Tuesday], the currency markets are likely remain cautiously negative on the dollar,” wrote Marc Chandler, of Brown Brothers Harriman.
Obama’s chief economic advisor Lawrence Summers tipped Americans to what is coming on Sunday, saying that the bank plan “can’t all be private capital, but with the right kinds of government guarantees and the right kinds of financing, strategic approaches, Geithner believes we can bring in substantial private capital.”
One thing under consideration is creation of a “bad bank,” or “aggregator bank,” that would buy illiquid mortgage securities. It could be partly funded by some of the remaining money from the existing $700 billion Troubled Asset Relief Program fund, but the majority of the funds would come from the private sector, according to a Wall Street Journal report.
And Marketwatch.com wrote that, “The Treasury is reportedly considering using a chunk of the remaining $350 billion in bank bailout funds to make capital injections using a form of preferred security that would pay interest like bonds but would be convertible into common shares after a set period of time, perhaps seven years.
“Banks would have an incentive to buy out the government’s stake before the conversion because once they become common shares the investment would dilute existing common shareholders, lowering the value of the bank’s shares.”
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.