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'Seismic Readjustment' for Dollar Likely in 2009, Harrison Says

Posted Jan 08, 2009 12:32pm EST by Aaron Task in Investing

Part of the reason Todd Harrison, CEO of Minyanville.com, expects more wild swings and the potential for S&P 600 in 2009 is a view the drama of late 2008 did not resolve the credit crunch and its broader ramifications.

"Despite lower equities and massive government intervention, the equilibrium between equity, credit, commodities and currencies remains elusive," Harrison writes in his "10 Themes for 2009" piece.

Critically, the credit markets have thawed a bit but they're still a long way from being unfrozen, he says. This isn't a U.S. only issue, either: Germany has struggled with debt offerings this week while the Bank of England slashed rates today to their lowest level since the central bank's formation in 1694.

As a result, Harrison forecasts "seismic readjustments" this year in various asset classes, most notably the dollar. "You could walk in one day and see a currency market readjustment where the dollar could open significantly lower, thereby punishing those who did the right thing," he warns – although his long-term account remains 100% in cash.

 

140 Comments

Reedersong
Reedersong - Thursday January 08, 2009 12:34PM EST

OIL TO 30!!

Koots
Koots - Thursday January 08, 2009 12:44PM EST

the only thing keeping the dollar afloat is that the European economies are getting bashed just as hard as us. Hopefully for the dollar's sake, they will recover after the US.

william
william - Thursday January 08, 2009 12:45PM EST

everyone wants their money back, so no recovery for at least a year, each time up profit takers will push down (funny same people who will buy back in at inflated prices) anyway sit tight until at least August 09

william
william - Thursday January 08, 2009 12:46PM EST

Gee that 40 bucks a payday Obama's genius has worked out makes me drool for a new car DUH they will never get it.

william
william - Thursday January 08, 2009 12:47PM EST

Economic stimulus plan STOP collecting all fed taxes on incomes below 100K and raise taxes on incomes above 400K to 90% end of story all problems solved. Consequence? A few less rich people stealing from the working poor

william
william - Thursday January 08, 2009 12:48PM EST

Rasie taxes OBAMA! Save the US from destruction and greed

corelon500
corelon500 - Thursday January 08, 2009 12:49PM EST

well prediction always go the other way...europe is going to enter a big recession..dollar will go up ..1.25 against the euro is possible.

Pat G
Pat G - Thursday January 08, 2009 12:49PM EST

Pity the folks who save their pre-tax dollars in 401k accounts. Nothing to show since 1996!!! wonder if 401k's are even worth putting money into. All it is fat fees for the fund managers....

Nick B
Nick B - Thursday January 08, 2009 12:50PM EST

How is the dollar going to plummet versus the Euro when the Euro zone is dragged down by the admission of near-Third-World countries in the East? The dollar is worth as much as toilet paper, but the Euro is worth even less. The Euro will hit new lows versus the dollar this year.

william
william - Thursday January 08, 2009 12:50PM EST

America in toilet, hmmmm wonder how that happened EH Gates, Buffett, etal?

Yahoo! Finance User
Yahoo! Finance User - Thursday January 08, 2009 12:53PM EST

Reduce the friction and eliminate the prostrate of the governmental histories.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday January 08, 2009 12:53PM EST

GET MORE WHISKY AND YOU WILL BE BULLISH.........NOW EVERYTHING IS CHEAP WHICH MEANS THE DOLLAR CAN PURCHASE MORE GOODS AND SERVICES........ WHAT MAKE YOU FEAR US BULSHIT......GO TO THE MALL EVERYTHING IS CHEAP.........DOLLAR WILL BECAME MORE POWERFUL IN........ A....... YEAR TIME.......NO MORE WILD SWING YES THERE ARE SET BACK BUT IT IS TINY THING COMPARE WHAT TO BE GAIN THIS YEAR........REMEMBER STILL JANUARY 2009 ANOTHE 12 MONTHS TO GO........WHY ARE YOU TELLING THIS ALL GARBAGE...... ALL NONE SENSE......YOU DO NOT KNOW YET THE OUTCOME OF LL PACKAGE.....BONANZA.....

t
t - Thursday January 08, 2009 12:54PM EST

if the dollar goes down then which currency goes up? What would replace it as a world currency? Which western country has not been on a credit binge?

Christopher
Christopher - Thursday January 08, 2009 12:54PM EST

Everyone should listen to Todd, he was exactly right last year about the call on the market. Kudos Todd...

boulio
boulio - Thursday January 08, 2009 12:58PM EST

when these bozos make predictions they usually go the other way,europe and asia are in a lot worse shape then it seems,and are less likly to be able to cope with the problems as they will soon start to appear.

Daniel
Daniel - Thursday January 08, 2009 01:03PM EST

Long live the Euro! At least Europe does not have as great a deficit as the US, nor are we fighting or paying for a senseless war in Iraq.

blank
blank - Thursday January 08, 2009 01:03PM EST

harrison is my favorite but i have to listen to the video 10 times to understand it

Kevin
Kevin - Thursday January 08, 2009 01:04PM EST

about the only agreement here is that "everyone else is wrong".

Art
Art - Thursday January 08, 2009 01:04PM EST

Bend over.

Davewx
Davewx - Thursday January 08, 2009 01:05PM EST

mogleytheman: Just how many people do you think make over $400k? I'll answer that for you, very few. You couldn't run the government much less the economy on their money. Once you've confiscated and spent all their income at 90% taxation, where will you get the money to run the government next month, because those big income earners will be gone. It's called communism. It didn't work last century. Why would it work in this one?

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