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15th September 2008
The euro is hanging around $1.44 today in the Asian market where it reached $1.4479.
In general, the Asians have more appetite for the dollar. I wouldn’t be surprised if I saw the $1.45 barrier broken in the US market today even though oil is not moving much anymore.
Apparently, the simple reality is sinking in.
The real-estate mortgage will need 2 trillion dollars over the next 2 years before it gets back on its feet. Over 100 financial institutions are in trouble and will need to be bailed out by printing more federal dollars therefore diluting its value. The other worst option would be to allow them to collapse and default on the Chinese and European depositors/investors which would trigger them to pull the rest of their investments away and go somewhere else they can trust.
Bear Sterns, Freddy and Fanny, and now Lehman are just the tip of the Iceberg that could no longer be concealed until after the elections.
Another peace of information is that the Feds are contemplating an interest rate cut instead of a hike under the pretext that lower oil prices helped reduce inflation.
It will be a rocky road for the US. Don’t feel bad if your favorite presidential candidate loses. I’m happy mine has no chance at all! |