Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (37140)	6/18/2002 11:43:12 PM
From: John Madarasz	Read Replies (2) \| Respond to of 52237

i'm not talking about a "strong dollar"...i'm considering the possibility of a firm dollar...temporarily, and the policy of protection from a freefall. How do you see this playing out with the $...? Equity...and currency.... markets are obviously targetted by the FED...for whatever reason... There are of course those who doubt the effectiveness of sterilized intervention in the currency markets. Such a view ignores the fact that all three cases of intervention by the Rubin-Summers Treasury worked in textbook fashion. Joint US-Japan intervention stopped and reversed the excessive strengthening of the yen in 1995. Similar intervention stopped and sharply reversed the excessive weakening of the yen in 1998. Joint US-EU intervention in late 2000 stopped the slide of the euro and prompted a 10 percent rebound. But the best evidence comes from the administration itself: why is it so afraid to alter the "strong dollar" mantra if it believes there would be no impact from doing so? Does anyone really think that the dollar would fail to decline toward a more desirable level if Secretary O'Neill and his G-7 colleagues were to start calling for such a correction? An effective alternative policy is clearly available. We also know that currency depreciation, supported by sound domestic policies, produces the desired changes in current account balances with a lag of two or three years. The large dollar decline of 1985-87, for example, led to virtual elimination of the US current account deficit in the early 1990s. The sharp appreciation of the yen produced a similar correction in the Japanese surplus. Hence there is a strong case for a new US policy toward the dollar. Virtually every sector of the economy is now calling for such a change, as indicated at this hearing: the business community through the National Association of Manufacturers, labor through the AFL-CIO, agriculture through the American Farm Bureau. Important parts of Wall Street, including former Fed Chairman Paul Volcker and the chief economist of Goldman Sachs, have issued similar calls. It is time for the Administration to change its policy toward the dollar, to improve the prospects for the US economy and US trade policy, and to reduce the risks of the much more severe adjustment that will inevitably hammer us later if it continues to ignore the problem. iie.com stockcharts.com