the FedReserve blinked first, but both US & Germany lose
for almost a full year, the US Fed has urged the German dominated European Central Bank to cut rate
but no, Duisenberg has his own stupid ideas about how economies work (or dont work)
my interpretation is that for a few months now, GreenScam has waited to lower rates until the Germans did first
they didnt
so we did, after watching our economy falter, our consumer confidence wane, and our REFI-driven debt-suffocated citizens lose momentum
during this game of CHICKEN, both the US and European economies have moved closer to outright recession, which I believe is unavoidable for each
Ireland remains a thorn in the ECB's side, with 4% inflation and still some tepid growth
the motive for waiting has been to defend the indefensible USDollar
the shorterm interest rate differential is an Achilles Heel
we blinked first
which means the US is in worse predicament than Europeans
GreenMan had to know the Germans would not lower interest rates
US policymakers could not wait any longer
now the US FedFunds is at 1.25%
and the German ECB Funds remains at 3.25%
if you want to find even stupider economists than our Fed, look in German where Duisenberg was quoted last night
"lower inflation will encourage growth"
how about DEFLATION WILL LEAD TO BANK DEATH ???
the US leaders will now permit a benign neglect of the dollar
but they are in for a surprise
BOTH TRADE GAPS AND FEDERAL DEFICITS WILL CONTINUE TO RISE
for two tough reasons:
1. US goods contain a plethora of Asian components
2. Foreign economies, dependent of US markets, will weaken and thus see demand for our exports slip
since the beginning of 2002, the USDollar has moved from a trade-weighted 120 to 105
the trade gap has widened to $38B per month
the twin tower debts will both worsen before they improve
and I dont expect our exports to pick up much at all
what the hell do we export anymore anyway
since Y2K, almost 5 years worth of demand was consummated in sales around the turn of the millennium
these forces are critical ingredients to a Dollar Freefall
coming soon, maybe two months, maybe 12 months
/ jim |
