Should They.....

Should they or shouldn't they....lower the interest rate. Of course I'm talking about the wonderful Feds. We all know what they are going to do. They will lower again. As they are consistently out of touch with the real world I am quite sure they will lower rates, the dollar will continue to weaken, oil will continue to rise, and the American people will suffer.

What should they do? Surprise everyone and raise the rates! Think of the shock this would cause. Oil would plummet, the dollar would strengthen, and it may just help check the rampant inflation and get America back on its feet.

Don't be fooled by the bogus inflation numbers. Inflation in the states is out of control. When the price of eggs is up over 30% that tells me inflation is rampant. Tomorrow I will fill everyone in on the falsehoods that are the inflation numbers, but hell, you don't need me to break it down, your wallets and bank accounts are telling you already!

Weak Dollar Good....

Is the weak dollar good? For international business it's great. Take a look at some of the companies that have posted better than expected numbers this month. What's the one thing that ties them all together? They do a lot of business outside the country. The weak dollar is a huge benefit for them. This is the same reason that European and British businesses are complaining about the strength of their respective currencies. Strong currencies make their goods more expensive, weak currency makes US goods and business cheaper. As with everything in this world, its a catch twenty-two, what is good for some is bad for others.

The weak dollar is certainly tough for the American people as a weak greenback is a primary reason for the high price of oil which has made gasoline a bit more expensive than the Americans are used to paying. It's a tangled web we all weave now isn't it!

G7

Changes in the G7 language regarding the volatility in the currency market, stability of financial markets, and the global economy were not enough to sustain a USD rally. The US dollar strengthened against the other majors but it was short lived.

What is the reason for this? Though the G7 changed the language, the markets believe there's not much behind the words. The G7 called for more investment bank self-regulation and higher capital requirements for banks. Of course the banks balked. We are now pretty much back where we started with the majors.

Not a problem, easy money with currencies filling gap from the weekend. Keep it simple stupid. K.I.S.S. that is the key to forex, and one of my favorite bands. Happy trading!

More.......

The government can implement all the rules and regulations it deems necessary but the bottom line is the people must change their ways. We Americans are way over extended. We have used credit upon credit to buy our new flat screens, to secure mortgages that are way over our budget, to drive the newest luxury suv's. Americans have forgotten the most important lesson-Live within your means!

We can blame the lenders all we want but the bottom line is we the people have created this mess.

So It Is!

So it is. Bernanke, in typical Fed speak, has mentioned "recession". What does this mean? Not much really. The US economy has been slow for quite sometime. Unemployment has topped 5% and growth has been stagnant for quite sometime. Is the world going to end? No. Most economists figure that the feds will continue to lower rates, some thinking they may keep lowering into 2009. Most all agree that the economy will start to pick up in the 2nd half-3rd quarter of 08'.

What does all this mean for the poor dollar? Lots of volatility, excellent trading opportunities, and an interesting time to watch the buzzards on Wall Street. As I have said numerous times, the buzzards feed of this and induce panic, making a self-fulfilling prophecy. The Bear Stearn mess was the perfect example of this.

Washington, in all their wisdom, thinks that thay can fix this mess. I am not so sure a few more regulations and restrictions will make much difference as I think the problem is much more involved. I think we must look at the american public and the habits we all have.

More to come.....