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

To: John Pitera who wrote (7480)	12/19/2006 6:29:50 PM
From: John Pitera	Read Replies (2) \| Respond to of 33421

Dennis Gartman excerpt --12-19-06 ....... We look for the US dollar to gain then as it becomes once again the "safe haven" of the world's capital, despite the fact that the US continues to suffer a high and rising imbalance of trade and a higher and even more severely rising imbalance on current account. As reported yesterday, the US had a new record current account deficit in the 3rd quarter of $225.6 billion. This is 6.8% of GDP, and was the reason for a great deal of wailing and gnashing of teeth on the part of the "hard money" advocates yesterday. Much is always made that the current account is the "broadest measure of US trade" given that tracks both the flow of funds as well as the flow of goods and services. Were we living still in the mercantilist 18th or 19th or even the 20th century, we too might make "something of the current account deficit. However, we live in the 21st century, where the flows of funds move at the speed of light and where the US exports "assets" that are missed by the census takers and measurers of trade. In the modern world, where we export design, and intellectual property, and software and the like and where we no longer export "stuff," the old measures of trade fail miserably. We therefore note the reports on trade and investment flows, yawn visibly and move on to other more important concerns... like Thailand's and Dr. Watanagase's economic lunacy noted above. Finally, as we finish writing, we note that the newswires are this morning carrying a report that Mr. Sarkozy, the gentleman most likely to run against Ms. Royal for the French Presidency next year and the leader of the centre-right forces there, has said that the EUR is "over-valued" and that that over-valuation has made "European labour expensive and the labour of the rest of the world cheap" in comparison. Mr. Sarkozy has gone on to say that if we carry on like this, we won't be able to manufacture Airbus in Europe. The dollar will have become so cheap that we will have to go and make Airbus in the US.... There is not a single country in the world where the currency is not an instrument of economic policy for growth and for employment. I will not be the President who allows the Americans a monopoly with an all-conquering dollar. I want a strong currency supporting a strong economic policy. We are left all the more confused the more we read and then re-read what Mr. Sarkozy has just said. The contradictions leave us dizzy. We expected better of him; we've gotten far worse.