And what if China buys a million houses in the USA?

Sir David Hale follows a quite plausible story line in his “There is only one alternative to the dollar” January 6 but he arrives to the wrong conclusion. Clearly if the confidence in the dollar drops demand for gold could go up but it is really hard seeing gold reassuming in today’s world its traditional role in backing currencies and many other developments, no matter how crazy, might be in store for us.

For instance what if China decides to buy one million of the actual stock of American houses to better guarantee their somehow shaky dollar exposure and to prop up the US housing market that was a main pillar in a business model that seemed to be working quite well for them?

Where the buck really needs to reach

Sir, David Hale in “The Credit crunch and the quandary of the Fed” August 14, is just another one in the long line of commenter on the current financial turmoil that refuse to apportion responsibilities where they should go. For instance when he says that “the rating agencies facilitated the boom by giving high credit scores to securities with loans of dubious quality” the facilitated is by all means an understatement since they in fact have a great responsibility for that boom. Mind you, not that the “buck” should stop with the credit rating agencies. In the first line of responsibility, without any doubt, are those regulators that instructed and even in some cases ordered the market participants to stop thinking for themselves and heed the expert opinion of the credit rating agencies.

If we don’t realize all this and furiously back-peddle from our current setup, if we survive this turmoil, we will not do so the next time around. There is just too much systemic risk fabrication going around.