DOW,
One thing I've never understood, and probably never will due to lack of real access behind the curtain, is how the currency arrangements are negotiated between the US and the rest of the world.
I imagine there is a framework agreed to by the majors and then each exploits unforeseen "problems" to move the exchange in their favor, i.e. it is not our fault these crazy Greeks can't balance their checkbook.
Or, the US bullies everyone and always has multiple threats to toss across the table. War is of course that final and more rare choice, but after all the other games are played, it can become a real choice.
Still, I also think there is an understanding that the US provides world security and CONSUMERS and this affords a majority voting power on currency, even when the US is only one vote in eight or one vote in twenty.
Again, I do not know how it works, but I'm sure there is tremendous friction. And as I've been screaming for the past 2-3 years, currencies should NOT move like they do. It is absurd that the central bankers have made currency one of the primary tools for moving markets. The whipsaw in the dollar/euro creates so much waste it is truly impossible to estimate. When we would get 3% moves up or down in a month, I would spend many, many hours readjusting pricing levels for active bids, not to mention the excessive hedging cost it added to the companies expenses. All of these things are PURE WASTE, created by central bankers with no real awareness of the incredible stress they are creating in the market. Sure there needs to be adjustment, but make it up or down, move it slow, and keep it at the target level. That is not what we have. We have a "gear effect", where the currency is wacked, markets move, and then the other party takes a turn while the first party tries to defend the market move. Something for nothing in the end is the goal, but of course like 99% of what central bankers do, it does not work and creates waste. Waste that is simply lost wealth.
All par for the course when you are Ponzi. Not having to deal with currency is something I absolutely do not miss from my previous position.
GT
TH |
