We still think the tide has turned. Stocks are going down, along with housing.

But gold is over $800 again while the dollar is mostly steady.

What’s ahead for the dollar? As we said in The Economist, its long-term value is zero. But the fact that The Economist picked up our quip makes us worry. Bashing the dollar has gone prime time. So, the buck could actually be over-sold – at least in the short run. Will it rise against the euro (EUR)? The last report we got, put Euroland cash growing at more than 12% per year. Not exactly Zimbabwe, but still three to four times faster than GDP. It’s not just the dollar that will go to zero. All paper currencies will get there. Which one takes the lead now? We have no opinion.

And who says you can’t make money in hedge funds? Hedge funds must be one of the dumbest asset classes ever invented. It is like getting someone to put coins in a slot machine and then splitting your winnings with him. Over time, you will lose all your money, but occasionally, you can get lucky. Look at this, and pity the poor dopes on the other side:

“A Californian hedge fund has made more than 1,000 per cent return this year by betting against U.S. subprime home loans, making it one of the world’s best-performing funds of all time,” reports the Financial Times.

“Lahde Capital, set up in Santa Monica last year by Andrew Lahde, last week passed the 1,000 per cent mark, after fees, following the latest leg of the credit market turmoil. The fall in the value of subprime-linked securities has boosted a group of funds which spotted the problems in advance.

“The decision to use derivatives to short, or bet against, low-quality U.S. home loans taken by a select group of hedge funds last year appears to have become the most profitable single trade of all time, making well over $20bn in total so far this year.

“However, Mr Lahde, whose fund is one of the smallest specialists shorting subprime, has now begun to return money to investors, telling them in a letter: ‘The risk/return characteristics are far less attractive than in the past.’

“In his letter, Mr Lahde said he expected the collapse in value of subprime mortgage-linked securities to be repeated for bonds backed by commercial property loans in a deep recession - which he also predicts.

“‘Our entire banking system is a complete disaster,’ he wrote. ‘In my opinion, nearly every major bank would be insolvent if they marked their assets to market.’ He also said he would be putting some of his own profits into gold and other precious metals.”

Hmmm...looks like a little bit of luck – and a good understanding of the actual trends at play here.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.