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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (38876)	8/17/2008 10:50:47 AM
From: elmatador	Respond to of 217924

Global recession could be good news for dollar. US will go frugal! Will cut consumption while increasing exports. Global recession could be good news for dollarSunday News Published: Aug 17, 2008 00:02 EST By THE ECONOMIST Fund managers and bank executives have learned that investors are often more forgiving if their peers are losing money as well. That lesson applies to economies and their currencies too. The world's financial troubles may have been triggered by America's housing bust, but it is other rich countries that are hurting most. Figures released Aug. 14 show that the euro-area economy shrank in the second quarter. Japan's GDP also fell in the spring quarter. The Bank of England's governor, Mervyn King, said this week that Britain's economy is likely to stagnate for the foreseeable future. The mess in America suddenly seems less awful. Indeed, a surge in export sales in June probably means that GDP growth for the most recent quarter will be revised up from 1.9 percent at an annualized rate, which is already respectable. The foreign-exchange markets have sensed a change in the weather. Over the past week, the dollar has swiftly gained ground against the euro and the pound. The thinking in the foreign exchanges is that it makes less sense to punish the dollar if other economies are doing so badly. The fear of a dollar rout, which has long stalked financial markets and even prompted the Federal Reserve chief, Ben Bernanke, to talk up the currency as recently as June, now seems to have evaporated. Related Stories SDL going 'green' Pinching pennies, stre... Economy lags, but libr... Sometimes, the only re... HACC enrollment up in ... One reason for thinking that fear will not return is the broad foundation for the dollar's rally. Part of the story is the recent sharp fall in the oil price: America's economy has most to lose and least to gain from expensive oil. America is a big user of oil, compared with fuel-efficient Europe, so more dollars than euros flow into the oil- exporters' coffers when oil becomes dear. The euro area also gets more of its currency back through export sales. It ships more than three times as much in exports to cash-rich oil producers as America does. You cannot be sure that the oil-price fall will last. But markets may also sense that America is likely to recover more quickly than other struggling rich-world economies. The trigger for the dollar's rise against the euro was a reluctant acknowledgment Aug. 7 by Jean-Claude Trichet, head of the European Central Bank, that the bank's fear of a harder landing for the euro area was becoming reality. Few expect the ECB to cut interest rates soon. Inflation is far too high for comfort and is unlikely to drop much until 2009. But markets took Trichet's concession to mean that the next move in euro-zone interest rates is likely to be downward, with the first reduction possible next year. By then, American interest rates may be heading in the opposite direction. This chance of a narrower interest-rate gap has also helped lift the dollar. Many criticized the Fed for keeping interest rates too low for too long after the dotcom bust earlier this decade. If the oil price keeps falling and America's housing bust bottoms out soon — as it may — how far would a dollar rally go? On some measures, such as purchasing-power parity, the greenback still looks cheap against the euro. American visitors to Europe complain about how expensive everything is; travelers in the other direction are delighted by how far their budget stretches. But the dollar is cheap for a reason. Economists at the Peterson Institute for International Economics in Washington, D.C., reckon that the euro-dollar exchange rate required to keep America's current-account deficit at a sustainable level is around $1.47 — not far below today's value. Yet even if the dollar rally turns out to be modest, the lesson of the past week is that America's economy is not uniquely frail. Creditors, such as Germany and Japan, that played no direct part in the housing and credit booms have lived off the extra demand for their wares. They are now struggling to find other motors for their economies. And as the gloom spreads, one cloud has lifted. The dollar's revival is likely to make Asian central banks and other large holders of reserve assets more comfortable about sticking with the greenback. The risk of a dollar rout, with the incalculable wreckage that would imply for all asset markets, is thankfully greatly reduced.

To: KyrosL who wrote (38876)	8/17/2008 12:27:17 PM
From: glenn_a	Read Replies (1) \| Respond to of 217924

KyrosL. Thanks. ((no conspiracies in America remain buried for long, not even small ones)) If that is your premise, then I understand why you would not believe the US government was complicit in 9-11, because, well really, that would be the "mother" of all conspiracies. I would take the other side of that argument, however - that there are mechanisms in place to promote an "official narrative" if it is decided upon as a matter of national security. Obviously, these mechanisms must of necessity be highly invisible and covert - it would be "like" a very small inner circle with the CFR (although I highly doubt it would be tied to a single "overt" planning entity). You know, I read a really great book a few years ago called "Into the Buzzsaw: Leading Journalists Expose the Myth of a Free Press". amazon.com The book interviews 18 previously-mainstream journalists, that basically stumbled across a "black op", tried to report the truth that their journalistic investigation led them to uncover, and were blocked in their efforts by the media institutions themselves, and various government agencies. It's a wonderful expose for illustrating the mechanisms in place for controlling "black propaganda". Of course, it tells the story of Gary Webb, who later committed suicide, whose story is perhaps the most extraordinary of the bunch. And it doesn't tell the story of Catherine Austin Fitts or John Perkins, each of who also have a fascinating and well-documented story to tell. Now, if one a-priori rules out the possibility of institutionalized conspiracies (which really are basically to my mind significant black op operations with a serious effort to coordinate the black propaganda, then all the above will be meaningless - as the facts are irrelevant, because the conclusion has already been derived. But, just to present the other side of the argument. Best wishes, Glenn