Wednesday, December 01, 2004


More Talk About the USD Today

Seems like we've gone from not much talk about the dollar to lots of talk. Apparently Snow and Greenspan have cleared the way for a weakening USD (as long as it doesn't go down to fast) as bowing to the inevitable, plus it makes good sense politically. It helps move the US back to a current account balance. It slows consumer spending and favors job creation here. We can tolerate a little inflation and the retirees will like slightly higher interest rates. The trick is to keep the negatives to just "a little"! Bill Gross has a great article about the dollar in his Investment Outlook. Steve Forbes at takes the other side, saying it's Time To Shore Up The Dollar
The administration and the federal reserve had better act soon to shore up the U.S. dollar. The dollar is deteriorating almost daily against the euro and the yen. A panic attack on greenbacks is imminent if the Fed doesn't act soon to mop up excess liquidity. The last thing we need now is a currency crisis. John Kennedy had it right 40 years ago when he observed that strong states have sound currencies.
The problem is the word "strong". We are strong militarily, but we are like a drunk before he takes the cure; financially bankrupt. I leave it to you to decide if we are morally and spiritually bankrupt. Some would argue that we are, others see signs of a rebirth, if all the talk about moral values is an indication.

Today the USD closed at a new low versus the Euro and it is trading lower in after hours trading. Gold closed at a new 16 year high and is higher, $455.80, in after hours trading.

There was good news of a sort. Jim Sinclair at says that

The China Aviation Oil Company has gone belly up after shorting crude.
Seems that they tried to fight the market and the market won. That sounds like a song!
Mover Mike

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