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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (5513)	2/7/2002 12:23:24 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

I am wondering when we saw a previous period of time in history when so many of the policy makers and business leaders of countries in the world are at least secretly pleased that they have "weaker" currencies relative to the key currency, the USD. The principle theme that we often hear is that countries find that their export competitiveness and economy are net beneficiaries of not having a currency which is too strong relative to the US Dollar. Indeed, The Argentinian economy appears to have imploded this past year due to being Pegged to the US Dollar. We seen some protesting in the US from domestic manufacturers notably Ford recently; but it's not been getting that much media coverage. I was reading last night a bit on The Presidential election of 1896. Which proved to be quite a political and economic battleground between the Hard Money Gold proponents; banking, business and some of the wealthy comprising much of that view. This group favored Ohio Gov. William McKinley for the Presidency. The Populist, farming and western states were mostly in the William Jennings Bryan camp. Bryan in making his Famous Cross of Gold speech at the Democratic convention in Chicago that year, argued eloquently for a bimetal standard and for a greatly expanded coinage of silver coins. This was a precursor to a expansive and stimulative Monetary policy, that we have kind of seen this past year. The severe depression of 1893, had created the very adverse business, economic and employment climate that made this monetary policy question such a pivotal issue in the election. iberia.vassar.edu The depression of 1993 and the following years was bad enough that it brought John D. Rockefeller back out of his recent retirement to run the Standard Oil firm. It also witnessed the US Government at the verge of bankruptcy. It took a last minute syndicate of House of Morgan, August Belmont, Rockefeller and The Rothchild's to save the Gold standard in 1895. The Gold Standard was established in 1879 and was simple in concept, "the Government pledged to redeem dollars for gold, thus insuring the value of the dollar" (Chernow, House of Morgan). As Chernow points out the seeds of the crisis started with big gold outflows from NY to Europe. Ironically enough, teh city of London in the 1880's was swept by a craze for Argentinian securities, which were said to comprise half of all British money invested oversees. Then the Argentinian wheat crop failed and a coup in Buenos Aires followed. The prospect of a default hurt the Morgan bank in London, but nearly wiped out the esteemed Barings Bank. This was 100 years before rogue trader Nick Leeson,based out of Hong Kong, was able to bankrupt Barings bank. That was an accounting and loss hiding episode that mirrors yesterday's revelations of the $750 million dollar loss that Irish allied Bank (AIB) sustained. .........more to come -g- iberia.vassar.edu