The Fed is delaying the day of reckoning

[katty]

more: http://www.ft.com/cms/s/0/5e9f14d6-f039-11dc-ba7c-0000779fd2ac%2Cs01%3D1.html

The Fed is delaying the day of reckoning
By Charles Wyplosz

Published: March 12 2008 16:39 | Last updated: March 12 2008 16:39

In 1971, with the greenback weak and falling, US Treasury secretary John Connally famously told the rest of the world that the US dollar was “our currency and your problem”. Thirty years later, with the dollar strong and still rising, Robert Rubin, his successor, no less famously stated that “a strong dollar is in the interest of the United States”.

These days, because the dollar is weak and falling, we would have expected US officials to return to Connally’s mantra but they unexpectedly chose Rubin’s. On reflection, glorifying a strong dollar when it is so weak means they do not care. Connally without compassion, if you prefer.

Jean-Claude Trichet, president of the European Central Bank, is thereby left bemoaning “excessive exchange rate moves”. This, too, is an extraordinary statement. In the past week the dollar has barely lost 1 per cent vis a vis the euro. That is significant, but “excessive”? Yes, he may be reacting to the 6 per cent dollar depreciation in the past month. Or to the 17 per cent change over the past 12 months. Or perhaps the 31 per cent depreciation since the dollar was last strongish in late November 2005.

[JackRiddler]

1. until next week or so...

beware the Ides of March.

[durablend]

2. Nah--7 1/2 months to go....

Only need to keep the ship together with chewing gum until then. After that, "not our faults anymore"

[JackRiddler]

4. You are vastly overestimating the regime's magic powers...

Nobody who's afraid about collecting on their investments is going to put McCain ahead of their own calculations of bottom line. Carlyle's investors, for example, are not going to wait until November if they think the fund is bankrupt now. A Fed giveaway can only delay the crash so many times before everyone understands it's only further devaluing the dollar and wants out anyway.

That goes infinitely more so for the foreign holders of the dollar. They don't give a shit about holding it together for McCain, now, do they? In fact, they probably want to see the Democrats in power.

The market players will not wait for the benefit of a politician. They will move when they think they have to move.

[Angela Shelley]

7. You´re so right!

(like you are most of the time).

Cash now is better than promises of cash later ...

[Yavin4]

5. Think Surge In Iraq

Everything is about pushing the shit pile onto the successor, and blaming them for the stink.

[Ichingcarpenter]

8. Today's close will be around 2.3% or -250

As at yesterday's close, the 1st 5 months of this bear the Dow has averaged -2.88% per month.

The 1929-1932 bear averaged -2.84% per month over its duration. The Dow fell 91%.

The feds have been playing with major monies pimping the system since August
it hasn't been able to stop it since then, 7 more months will not fix it either.

[katty]

3. right!

[Birthmark]

6. I think...

...that they're playing for time and hoping they can think of something, anything, that works...or hoping for a miracle. I believe that's the only thing the Fed can do at this point. The problems besetting us now should have been dealt with years ago. But everyone was having so much fun making (borrowing) money, that no one seems to have thought we might actually have to one day pay for all that fun.

Well, that day is here.

[Angela Shelley]

9. A warm welcome to reality!

[aint_no_life_nowhere]

10. Whoever the next President will be, I'd hate to be in his/her shoes

Is there even a solution to the debacle at this point?