It was a terrible week in Euro land. Greek bond spreads broke 10%. A
restructuring can’t be too far away. They are performing a bank stress
test that appears to be a joke. The results will exclude sovereign risk.
Exactly where the risk lies. With this as a backdrop the Euro should
have been slammed. It would have been in the market we had just a month
ago. But not this week. Some charts of the larger reserve currencies
versus the dollar.
The dollar has backed up in a significant way since the first week in
June. Some would say that the Buck is just suffering some indigestion
after a big move up in a short period of time. A very good case can be
made for the Euro to be 10-15% lower than it is today purely on
fundamentals. But that is not what the tape is telling us.
Currencies have two roles. They are a medium of exchange for settlement
of cross boarder trade and finance. All the reserve currencies do a good
job in that function. The other role of a currency is as a store of
wealth. It is not clear to me if any of the major currencies are doing
well in that capacity.
In the long run things like trade imbalances and current account
deficits are determinants in setting exchange rates. In the course of
any given month those influences have almost nothing to do with how
rates are set. In the short term it is all about sentiment.
I see the US losing the sentiment battle. With all the problems in the
UK and the EU at least the governments are attempting to address the
fundamental problem of fiscal imbalances. Even Germany is taking up the
issue. This is probably going to prove to be the kiss of death for
Greece. But a failure of Greece is not by itself the kiss of death for
the Euro.
This weekend’s G20 meeting may give us some clues on the sentiment
issue. We are going to see some battle lines drawn. Both Obama and
Geithner will be pushing for a growth package. It is likely that some of
the other countries are going to give the US a thumbs down on that.
America is going to be the only major country left that is continuing
down the path of fiscal insanity.
The final communiqué will have some nice talk about global coordination
and a big “thank you” to China for stepping up to the plate and
adjusting its FX policy. Behind the scenes it will be less friendly. A
number of countries will attempt to chastise the US for its profligate
ways. No one at the meeting will really be satisfied that China adjusted
its FX rate against the dollar by a measly ½% as a ticket to the show.
Should the US be held up as “the way not to do it” or if we getting some
snotty comments from a finance minister or two then we will see this in
the FX markets on Sunday night. The one thing that no one is thinking
about in the summer of 2010 is a dollar problem. That is probably the
best reason why one might pop up.
Doubt it. All the gov't has to do is keep the cellular towers up for the iPhone/Facebook crowd and they'll stay in their trance-like state. News of a USD collapse would be no more than your crazy friend's status update. But you always thought that guy was cookoo anyways...
I expect it to come sometime before the November elections as Bernanke's thank you to the incumbents in Congress who protected him from Ron Paul and the Audit the Fed brigade and in the Senate for the reconfirm.
I agree, but not so much as a thank-you but as the November elections figure prominently in the economic mood of the electorate and their support for the status quo. The so-called conservative governor of Virginia just went along with a scam initiated by the legislature to steal from the future so that the state budget would show a surplus and he could give state employees a bonus. Virginia is crediting itself with 13 months of sales tax revenue and applying it against 12 months of obligations. Voila! A balanced budget with a surplus. Performance bonuses all around! Happy state employees are happy status quo voters!
This, of course, is precisely one of the fundamental flaws in the economy-governments and their unionized employees take more than their share, as the private sector is supposed to carry the can. Unemployed private sector employees are a major drag on the economy alongside the employed public parasite sector.
good read, thanks
Women in summer would like to become beautiful. Everything can grab other's eyes is their best friends.Products make them beauty and confident is their favourite. Look in the street,you can see many different types of make up to show women's personality.
Welcome to the shop, the following is our products, free shipping.
Soccer Shoes Cheap Soccer Shoes Nike Soccer Shoes Adidas Soccer Shoes Nike Soccer Shoes sale Adidas Soccer Shoes sale UGG UGGs UGG Boot UGG Boots UGG Boots Sale Cheap UGG Boots UGG Boots Cheap Women UGG boots ugg boots cardy ugg cardy boots Timberland Timberland sale Timberland boots Timberland boots online Timberland on sale New timberland boots UGG UGG boots UGG boots sale UGG boots short Short ugg Short ugg boots Ugg boots tall Nike Air Nike Air Max Nike Air Max Shoes Nike SB Nike Dunk Nike Dunk SB Nike Dunk SB Shoes Nike Shox Nike Shox Shoes Women Bags Women Bags Sale Women Handbags Women Handbags Sale Women New Bags Cheap Bags Cheap Bags On Sale New women bags New women bags sale New women bags sale online Louis Vuitton Handbags Gucci bags Nike Nike Shoes Nike Shoes Sale Nike running Nike running shoes Nike trainers Nike trainers shoes Timberland Timberland boots Timberland boots sale Timberland boot Timberland boot sale Timberland boots cheap Men timberlands MBT MBT Shoes MBT Chapa GTX MBT Men Shoes MBT Women Shoes Discount MBT Shoes LV Handbags Gucci Handbags Chanel Handbags Chloe Handbags D&G Handbags Dior Handbags Fendi Handbags Hermes Handbags Jimmy Choo Bags Marc Jacobs Bags Miu Miu Handbags Mulberry Bags Prada Handbags Versace Handbags Yves Saint Laurent Balenciaga Bags Burberry Handbags LV Handbags Gucci Handbags Chanel Handbags Chloe Handbags D&G Handbags Dior Handbags Fendi Handbags Hermes Handbags Jimmy Choo Bags Marc Jacobs Bags Miu Miu Handbags Mulberry Bags Prada Handbags Versace Handbags Yves Saint Laurent Balenciaga Bags Burberry Handbags
Those who want to become most beautiful in the world should try them. Just ones can make you different. Girls who want to grab your boyfriends's heart is necessary to use them.