STILL LEARNING

I'm sorry about yesterday. I was hoping to have some serious comments on the traveling circus that started at the Dardanelles and wound it's way back to the respective home ports by way of all of the capitals of Europe. Sorry, but you're going to have to wait until tomorrow as the usual sources failed me. Therefore, a continuation of Monday's theme is in order.

Yesterday, the Australian Central bank boosted interest rates a smidge and the immediate reaction was, "Wow, the global economy is cured!!" The fact that Australia is the world's home base for commodities these days and that's about the hottest thing around was apparently overlooked. Not so the dollar which continued it's downward spiral in the face of this new interest rate competition. In case you missed it, it's down over 15% since March. On top of the move down under, rumors circulated in London that there was a cabal forming that would soon announce that oil trading would be occurring in a basket of currencies which didn't help one bit in the level of the greenback. The usual suspects were named: the Gulf states, China, Russia, Japan and lo and behold, La Belle France. "Absolutely incorrect, " "Nyet," "Mais non,"Ie," were the immediate reactions except for the Chinese--probably because nobody speaks the damn language and can't quote them. The other silent voice, however, was The Suit and his minions--does he have enough for a minion--at the Treasury, leaving no doubt the the attitude of the U.S. Government is that they could care less how far falls the mighty dollar. So the die is cast; we're going to inflate our way out of this and pay back these chuckle-heads with 50 cents. I did talk to my smart friend Larry, however, and while he feels that the Chinese are still in a "dollar trap," the tone of his comments was not as convincing. Of course Larry has convinced himself that when it comes to markets, if you put all The Suit, his gang and all the handlers of The Leader in a room you might be able to summon up a triple-digit I.Q. and that might be the source of his lesser confidence in the direction of Chinese Policy. Or maybe I'm reading him wrong...or maybe...whatever. Despite the denials, where there is smoke there's fire and there is no doubt in my mind that these conversations took place. How far they proceeded is an entirely different matter.

Also last week was the specter of Gentle Ben rolling over and exposing his throat to Barney Frank and the House finance committee. And that dear reader, is my segue into tomorrow's bit on the goings on in Europe. Stay tuned.