Trying to Devalue Currency

Wednesday's 7-yr Treasury auction was a great success. Foreign central banks (indirect bidders) tendered $26 billion in bids and took $20 out of $32 billion.

The problem with FCB's trying to devalue their currencies against the dollar by buying treasuries is that they're lowering yields and getting blowback on the speculative anti-dollar trade. This completely negates their efforts.

So the anti-dollar carry trade remains in a vicious, out of control cycle. Short-term, it's self-reinforcing, but anyone who takes the time to discover the whole cycle, let alone analyze the implications, can see the obvious self-destructive and unsustainable nature of this imbalance.

Timing is the only question for me. And I think the pressure is starting to make the mine timbers "talk." A Dubai default could cause an unwind, or it could just be another sign of impending collapse.