Dollar slides to new lows
Posted by alifinmath on February 27, 2008
In the FT:
The euro broke new records above $1.50 against the dollar on Wednesday, pushing oil and precious metals to fresh peaks, while weighing on equity markets.
The dramatic moves followed weak US data and comments from the Federal Reserve which reinforced expectations of further aggressive US rate cuts.
Dollar weakness was widespread. There were records for the euro, which gained 0.8 per cent to $1.5087, and the Swiss franc, up 0.8 per cent at SFr1.0668. The dollar index, a measure of the US unit’s strength against a basket of currencies, fell to a record low of 74.264.
Tumbling US house prices and weak consumer confidence overshadowed rising producer price inflation on Tuesday. Later, the Federal Reserve’s Don Kohn said slowing growth was a greater risk than rising inflation.
The authorities are in panic mode. At the moment, the US economy appears to be in freefall. And the only instrument of economic policy the US government now allows itself is interest rate adjustments (no industrial policy nor price policy nor wage policy). What stupid chumps. This is something that’s been brewing for several years and comes as no surprise to people like myself. No more speculative bubbles on the horizon by which to hide the anemic and enfeebled nature of the US economy and postpone yet further the day of reckoning, with insufficient indigenous production capacity, insufficient demand, crumbling infrastructure, ill-trained workforce, insufficient savings and investment, and record disparities in wealth and income. The Banana Republic States of America.
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