Dollar hits 15-year low
Back when I was a kid I loved faking sick to get out of school. Who didn't? The puppy dog eyes. The moan and groan. Rolling around on the floor in the fetal position.
Being seriously sick, however, is not laughing matter. Sometimes your body just needs to get rid of the germs that have been piling up. Getting better means getting worse first.
Since I have spent enough time making you guys aware of my disgust with our current fiscal policy, I will give the monetary policy issue a gander from a different perspective.
As many of you are aware, the dollar reached a 15-year low against the Japanese Yen yesterday along with a 9-month low vs. the Euro.
Inflationary and deflationary paranoia has quietly reached new levels as several commodities, most notably gold have shot to long-time highs.
I am satisfied with this situation. The dollar's long been overvalued and it is always better to chop of a toe than to lose your whole leg to gangrene.
The game is becoming more and more rigged, which is bringing out the most desperate and heavy handed tactics on the part of market participants. Why not give China a taste of its own medicine? You can argue it's cutting off your nose to spite your face, but if my nose is big and crooked...I can stand to gain from it.
As I wrote some weeks back this is only the beginning . Though I have never been for government involvement in markets, I don't mind a regulatory presence if it actually regulates something that needs it.
The dollar drop is a natural reaction to our unnatural (more accurately, irrational) economic behavior of the past decade. If the Fed can do a little added currency manipulation of its own to snap China back into reality...I'm with it.
Everything we are seeing in markets today that is making people nervous, has started to calm me down. It looks as though we are finally taking some small steps toward taking all of our medicine like the big boys and girls that we are.
The way my mom got me to stop faking sick when I was a kid, was a combination of cod liver oil lunches followed by dessert doctor's office visits and preventative flu shots.
When I realized that missing school meant swallowing mud and getting stabbed, I accepted the boredom of my homeroom as something not-so-bad.
Now that our currency is falling back in line with its actual value and the likelihood of Australians using America as a cheap vacation paradise increases, we may finally start seeing that the reality is not so harsh.
We will trim some fat, write down some toxic waste and eventually move on.
Our system is beginning to cleanse itself. Get your vomit bags ready.
The USDCNY has reached a new low and I doubt it would do any good for US except that Walmart stuffs will be more expensive. "Someone has to pay that money, and it's not going to be me".
mark my words treasury bubble just poped.
And this in the WSJ sums it up beautifully:
The Australian dollar leapt to parity with the U.S. dollar Friday, reflecting the commodity-rich country's sparkling economic performance and the broad-based firestorm hitting the U.S. currency.
that's the thing with currencies. they fluctuate. at one stage, people were talking about parity with the euro
I seem to remember that the dollar is right at or slightly above the 200 week moving average as of the end of last week but I can't recall. So I would agree with ZBB in that they fluctuate but I think most of use would agree that now is a particularly bad time. Deflation is definitely starting to look more and more possible and I doubt QE2 will do anything to fix it.
You know what I find funny. So everyone rants and raves about President Bush and how the rest of the world hates the USA and how we need to reestablish these relationships. We elect the great unifier and all we have done is drive the dollar into the ground. I remember when Snow first backed away from the strong dollar policy.
I wonder how much China and the rest of the world feels about us now that we have devalued their stock piles of currency and repay them in monopoly money. Long story short is the USA fucks the world when we see fit.
You know what, I am fine with that.
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