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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (46099)	2/12/2004 4:42:03 AM
From: smolejv@gmx.net	Respond to of 74559

Yeah, the weather in Nice is great and one can enjoy sublime highlights of the American SitCom on CNN. Life and AG are good to us...

To: TobagoJack who wrote (46099)	2/12/2004 6:36:49 AM
From: elmatador	Respond to of 74559

ECB can change euro-dollar balance By PierGiorgio Gawronski Published: February 4 2004 4:00 \| Last Updated: February 4 2004 4:00 From Mr PierGiorgio Gawronksi. Sir, Two recurring views on the dollar-euro exchange rate, echoed in Samuel Brittan's article "The dollar needs benign neglect" (January 30), seem slightly misleading to me. The first view holds that the current euro appreciation cannot be stopped by the European Central Bank through interventions in the currency markets because markets are too strong to be fought. However, the ECB has "fire power" (against the euro) far greater than the markets: it can print money. Unless the Fed deliberately offsets these interventions, the ECB can change the euro-dollar balance. The case of Japan in 1995-2003 shows the practical feasibility of such a strategy. The true limit of a (downside) policy of non-sterilised intervention in currency markets is the risk of inflation, which today is absent in Europe. The second view holds that Europe cannot grow with a euro/dollar exchange rate between 120 and 140. On the contrary, the factors of production released from productive duties through increased (Chinese?) imports could be used to boost innovative sectors, as the flexible US economy did in the 1990s. The euro appreciation is - on paper - an opportunity to engineer a recovery of the flagging European productivity: if only Europe could co-ordinate its economic (monetary, fiscal and micro) policies! In the long run, current exchange rate trends prevent - as long as they do not overshoot - the accumulation of global imbalances and more disruptive future corrections. For all these reasons, the ECB could stop the euro's rise, but should not do so yet. PierGiorgio Gawronski, 00165 Rome, Italy