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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (14359)	10/29/2003 10:44:02 AM
From: LindyBill	Respond to of 793709

Weak/Strong Dollar. Take your pick. Makes my head hurt. _____________________________________ PORTFOLIOS, ETC. Traders Wonder if U.S. Will Reverse Weak-Dollar Policy By JONATHAN FUERBRINGER NEW YORK TIMES The Bush administration's virtual weak-dollar policy has not done any damage so far to the American financial markets. There are some reasons for concern, however. So foreign-exchange traders and analysts will be watching closely on Thursday when Treasury Secretary John W. Snow is scheduled to testify before the Senate Banking Committee to see if he will be able to clarify the administration's current desires for the dollar. Jeremy P. Fand, senior proprietary currency trader at the New York office of WestLB A.G., a German bank, believes that Mr. Snow will make an attempt to back away from the unofficial weak-dollar policy. "They know a weak dollar can be bad," he said. But getting through a clear message could be difficult, especially amid the criticism expected from senators whose states' economies have been hurt by competition from China and Japan and want a weaker dollar, which would increase the price of imports from those countries and others while making American exports cheaper. What will be critical, Mr. Fand said, is how Mr. Snow "responds to the fact that we know he has been trying to talk the dollar down," although he has not admitted it. One reason that the virtual weak-dollar policy is raising some concerns is that it is likely to be very difficult for the administration to change its tune on the dollar with the election just a year away and many congressmen and corporate executives demanding a weaker dollar to make local companies more competitive and able to rehire workers. Another reason to worry that the decline may pick up pace is that some European officials are now saying that a stronger euro is not a problem for them, a switch in recent sentiment. Wim Duisenberg, the outgoing president of the European Central Bank, made such a remark last week, saying he was "not worried" about the euro's current strength against the dollar, according to Bloomberg News. These kinds of comments are usually taken by foreign-exchange traders as openings to sell dollars. In addition, the dollar is not getting the lift that would be expected from data showing that the American economy grew very fast in the third quarter and is expected to have a good performance in the last three months of the year. That lift can act as a key stabilizer for the dollar, preventing it from falling too fast and too far. The last complication is that officially there is no weak-dollar policy, so how can it be adjusted? It has just been assumed in the foreign-exchange markets that the strong-dollar policy of the Clinton administration has been dropped. But there is pretty good evidence for this assumption, if no official word. Treasury Secretary Snow and President Bush have been calling on China to allow its currency, which is pegged to the dollar, to float freely, allowing the dollar to drop sharply in value against the yuan. Mr. Snow has said he wants more flexible exchange rates, a position that has been taken as a message to the Japanese to allow the yen to rise in value and the dollar to fall. So far this year, the Japanese have spent trillions of yen buying dollars in the foreign-exchange market to prevent the yen from rising in value against the dollar. So far, the dollar's fall has not been precipitous and it has not disturbed either the bond market or stock market. Since the Bush administration began jawboning China and Japan at the beginning of September, the dollar has fallen 5.8 percent against the euro, 5.5 percent against the Canadian dollar and 7.4 percent against the yen. Bond prices are up in the same period, with the yield on the Treasury's 10-year note down to 4.18 percent from 4.47 percent. The Standard & Poor's 500 stock index is up 3.8 percent, while the Nasdaq composite index has risen 6.7 percent. The testimony on Thursday comes in conjunction with the Treasury's release of its report on international exchange-rate policies. The report is supposed to single out countries that are manipulating their exchange rates. But because such a designation comes with penalties, no designation is expected. That will clearly annoy some members of the Senate Banking Committee. In a letter to Mr. Snow on Oct. 16, the day after the Treasury delayed the release of the currency report, Senator Charles E. Schumer, Democrat of New York, and two of his colleagues said both China and Japan were manipulating their currencies. "As you also know, China is not the only country engaged in illegal currency manipulation," the letter said. "We are also concerned with Japan's ongoing and massive intervention in global currency markets. These actions, intended to obtain an unfair competitive trade advantage for Japanese export industries, amount to a substantial subsidy of its major exports." Philip Suttle, global head of foreign-exchange research at J. P. Morgan, finds it hard to argue with that contention. "In a very basic sense, it seems hard to see how they can avoid saying that China and Japan are manipulating." nytimes.com

To: Nadine Carroll who wrote (14359)	10/30/2003 8:02:54 PM
From: Dayuhan	Read Replies (1) \| Respond to of 793709

Don't let me see you fall into the simple-minded trap of saying, either America's motives must be totally pure, or they're totally cynical. I didn’t say that America’s motives were purely cynical, I said that they had nothing to do with the welfare of the Iraqis. If our only objection to Saddam, or even our principal objection to Saddam, was that he was abusing his own people, we’d have done nothing, just as we are doing nothing to help most of the other abused people in the world. It’s amusing to note, of course, that before the war, all we heard about was WMDs, and how, in your words, anything short of immediate invasion would “effectively cede control of the Gulf to Saddam”. After the war, when it became clear that, as many of us said all along, Saddam was in no position to take control of anything, all of a sudden the overwhelming motive became the liberation of the poor oppressed Iraqis. That sort of shuffle begets a degree of cynicism