[J. Abizeid]

Originally Posted by dodzi

It wasn't minor. It decreased from 1.58 to 1.50 in less than 2 days...

In any case, what I got angry at is that my mother is visiting the states in less than 2 weeks from now... I told her to change her money a month ago coz it was so high but she didn't do it. The fluctuation is actually great, so there will be a great difference in what she might change!

The dollar was being heavily bought by the Chinese government, early in the week. This happened, most likely, after the green light was given to them by the American administration, which had always objected to such manipulation, in the past. The operation is being done under cover of "controlling currency flows to stop inflation."

The truth is that the Chinese are buying dollars with the blessing of the U.S. government. It doesn't take much encouragement to cause such habitual currency debasers to start debasing again. It is what they do best. So they were buying, more and more heavily as the week progressed.

By Wednesday and Thursday, some big banks started covering short positions. By Friday, a large number of western institutional currency market players panicked, and started covering all their dollar short positions. Most currency dealers were heavily short on the dollar. This created the biggest dollar short squeeze in the history of the world.

The Federal Reserve clearly had foreknowledge of this, because behavior that would indicate such knowledge was evident at the repo and discount windows, yesterday morning.

In short, the current dollar strength is nothing but a ploy, although a desperate one, to reduce the price of oil. Reduction in the price of oil is necessary to pump up the fake rally that Fed/PPT has been trying to catalyze for several weeks, now, and has failed repeatedly at doing.

The primary dealers of the Federal Reserve, along with many of the smaller banks that they service, desperately need capital. Bank stock prices are far lower than the executives would like. They own lots of their own stock, and don't want to dilute their positions by issuing new shares at reasonable prices. So, they want to inflate share prices before selling shares. They need a rally to do that. They are desperate to raise capital, but they have not been able, even with a lot of Fed help, to stimulate the rally that will help them sell overpriced shares to the public.

The current dollar surge is not a sign of a strengthening hand for the United States, or renewed faith in the dollar's value. It is a combination of the problems that are arising in the euro, which has also been heavily printed, along with manipulation by the Fed/PPT, which is now desperate enough to be working with anyone, even the Chinese.

Here is the reality. Fannie and Freddie both gave dismal earnings reports. Productivity and employment reports were also dismal. There is every reason to believe that bailouts of F and F is going to require printing another $500 billion dollars, because the $5 trillion mortgage portfolio is likely to lose at least 10% in value, over the next year or two. Bailing out the FDIC has every likelihood of costing the taxpayers another $500 billion, with hundreds of banks, large and small expected to fail. Yes, I know, they claim that the number will be far lower than back in 1989. Baloney! No less a personage than Alan Greenspan, the architect of our current problems, has admitted, in an editorial for the Financial Times, that many more big banks (not just small ones) will need to be bailed out by the government.

Here is a link for live currency exchange rates,(lower right page)
http://www.avafx.com/