The dollar is rallying in tandem with stocks and commodities for the first time since before Lehman Brothers Holdings Inc.’s bankruptcy last year sparked the financial crisis, signaling the worst may be over for the greenback.

The currency, equities and raw materials are on pace for their first simultaneous two-month gain since 2008 as the U.S. Dollar Index rises the fastest in 10 months. The gauge has moved in the opposite direction of either the Standard & Poor’s 500 Index or the Reuters/Jefferies CRB Index of commodities for 15 months straight and diverged from both in all but four.

Correlated trading reflects growing confidence in the U.S. economy and increasing expectations that the Federal Reserve will start draining some of the $12 trillion used to battle the worst global recession since World War II. Until now, the dollar climbed when traders sought protection from turmoil created by the credit freeze that started in 2007. It weakened when they took advantage of record-low interest rates by selling the currency to finance holdings of higher-yielding overseas assets.

It is purely mathematical at this point. China is buying less Treasuries because their trade surplus with the US is shrinking.

China is the largest insolvent bank in denial. The US will be the only buyer if China decides to dump TSYs and it would be at a steep discount. Who really loses? Who really loses if the US defaults. The US would be forced to live within its means. That is bad because…why?

When foreign investors stop buying our Treasuries then we will be forced to stop selling them.

You read something that was not discussed in the link referenced by Marcus Aurelius. In your case common sense is not very common…bravo!

I presume that when you refer to our “shrinking deficit” you are referring to our trade deficit and not our budget deficit. Our buying less trade goods from China may oblige them to buy less of our Treasury debt, but our ballooning budget deficit means that we need foreigners to buy more of our debt, not less.

There is an obvious and implicit clash in all this.

Is that “common sense” enough for you?

hahahahahahaha- that gave me my biggest laugh today (-:

Zimbabwe became independent of the UK in 1980. Mugabe has been in power since 1987.

Per capita GDP is ~$200. No, I didn’t forget any zeroes.

Zimbabwe ever being “prosperous” must be one of those things limousine liberals divine from looking at Nat’l Geog photos of happy children and colorful costumes.

If they ever met you in person, F411, they would smile and say, “Suck my dick, bwana.”

I have to agree w/ f411, here. In light our personal and public debt levels, a strong dollar makes perpetual slaves of all of us. The alternative — a very weak dollar and its attendant inflationary spiral — while nasty and ultimately fatal to the dollar, would take less time to unravel while equalizing the disparity between the ‘haves’ (top 2%, or so) and the ‘have nots’ (me and you).

Either way, middle class gets screwed and our nation is in the shit can. The difference being that a strong dollar protects the people who derived benefit from our current indebtedness. If we get screwed, so should they. F ‘em.

Commodities are not in a bubble. I hope gold falls back to $1K so I can buy more.