Pearce Financial (Financial Sense, yesterday), like Marc Faber, believes that the East is dangerously overheated and deflation could hit commodities as well as shares; also, the dollar could rise again, and the Japanese yen might break free from its moorings.
I'd like some help with understanding this last, as tides of returning dollars and yen would seem to argue inflation in their home countries.
Karl Denninger (Market Ticker, yesterday) explains it as a relativistic effect:
Our problems are bad. The problems that will be faced overseas are FAR WORSE. Overseas economies are dependant on us, not the other way around. When this sinks in the other currencies against which the DX is measured will collapse; this will appear to raise the dollar, but in fact it is the sinking of other currencies.
"Tom the cabin boy smiled, and said nothing."
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