Tags: fleckenstein | dollar | euro

Fleckenstein: U.S. Will Finance Debt in Euros

By Julie Crawshaw   |   Tuesday, 04 Nov 2008 09:55 AM

At some point, the United States will not be allowed to finance all of its debts in dollars, says Fleckenstein Capital CEO and famed short seller Bill Fleckenstein.

"We have proposed better than $1 trillion worth of bailouts, and there will be more money thrown at the economy, I'm sure," Fleckenstein writes on MSN.com.

"I cannot see why foreigners would fund a couple of trillion dollars in spending in our currency, given our recent behavior,” Fleckenstein writes.

The United States might then have to borrow in foreign currencies, like euros, “which would cause an additional set of problems,” he warns.

“As far as the funding crisis goes, I don't think folks even realize that game is on the schedule,” Fleckenstein observes.

Expect a dollar collapse, and soon, writes MarketSkeptics.com blogger Eric de Carbonnel.

“As it becomes obvious that consumer spending will not to pick up and that U.S. will never be able to repay its mountain of debts, investors will begin dumping dollars,” a move that will accelerate the collapse of U.S. asset prices, de Carbonnel says.

He advises investors to keep a close watch on the yield of long-term treasuries.

“If the yield on the 10-year note goes up while stocks fall, it will be a sign that confidence in government debt and the dollar is failing,” de Carbonnel says.

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At some point, the United States will not be allowed to finance all of its debts in dollars, says Fleckenstein Capital CEO and famed short seller Bill Fleckenstein."We have proposed better than $1 trillion worth of bailouts, and there will be more money thrown at the...
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