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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (22738)	9/14/2009 10:35:43 AM
From: RockyBalboa	Read Replies (1) \| Respond to of 71479

Here: > Goldman’s O’Neill Sees ‘Silly September’ as Yen Appreciates Share \| Email \| Print \| A A A By Brian Swint and Rishaad Salamat Sept. 14 (Bloomberg) -- Foreign-exchange markets have embarked on a “silly September” as traders focus too much on government debt in the U.S. and U.K. while pushing up the value of the yen, said Goldman Sachs Group Inc.’s Jim O’Neill. “There is a very popular notion that you’ve got to sell the pound and the dollar because of the rising government debt, whereas the one that everyone’s seemingly buying is the yen,” O’Neill, head of global economic research at Goldman, said in a Bloomberg Television interview in London today. “It’s ridiculous” and “I think of it as ‘silly September.’” Currency strategists are trying to calculate which economies will benefit most from signs of a global economic recovery. While the dollar has dropped 11 percent in the past months on a trade-weighted basis, the yen has appreciated 9 percent against the U.S. currency and 6 percent against the pound since April. “If I look at the underlying fundamentals, virtually everything that drove the yen stronger in its floating exchange history isn’t there anymore,” O’Neill said. “The yen doesn’t deserve to be anywhere near this, and I don’t see it lasting.” The Democratic Party of Japan, which won the election last month to oust the Liberal Democratic Party that had governed Asia’s biggest economy for all but 10 months since 1955, has pledged not to increase new bond sales to avoid expanding a debt burden that’s the largest in the industrialized world. The Japanese economy grew at an annual 2.3 percent in the second quarter. The yen rose as high as 90.21 against the dollar today, the highest level since Feb. 12. The currency traded at 90.79 against the dollar as of 10:28 a.m. in London. Stiglitz Comments O’Neill said that the world economy is in better shape than it was a year ago, in contrast to Joseph Stiglitz, who said yesterday that the U.S. economy is “far from out of the woods” after the government allowed Lehman Brothers Holdings Inc. to collapse a year ago. “It looks like the third quarter is going to be pretty strong for many countries,” O’Neill said. “The underlying message seems to be that the emerging world seems to getting through it better than the developed world.” O’Neill also disagreed with Stiglitz by saying that gross domestic product is probably still the best measure of wealth. Stiglitz is urging world leaders to drop a “fetish” for focusing on GDP in favor of broader measures of prosperity. “It’s the perennial search for happiness,” said O’Neill, suggesting that people might be as well off watching his favorite soccer team. “Our profession and others have been trying to find the right measure of contentment, and happiness I think is what Joe seems to be on about for a long time. Maybe everyone should become Manchester United fans, I don’t know.” Manchester United finished the last soccer season at the top of England’s Premier League. The team came from behind to beat Tottenham Hotspur 3-1 on Sept. 12. To contact the reporters on this story: Brian Swint in London at bswint@bloomberg.net; Rishaad Salamat in London at rishaad@bloomberg.net. Last Updated: September 14, 2009 05:57 EDT bloomberg.com