the dollar buzz: big firms on US$ "intervention watch"

GS, MS and others are promoting this risky idea, which would be a complete abrogation of the current administration's oft re-affirmed mantra of free markets. but, sooner or later, that is where we are headed, imho. and it shows just how serious the turmoil in equity and credit and currency and precious metal markets has become. the recent fed currency borrowing action and the earlier comments that they are consulting with other CB's was clearly an attempt to talk the dollar higher and to scare short dollar speculators. one thing this tells us is that bernanke doesn't really get it: he seems to think the dollar drop is not all fundamentals, even as obvious as the strong trend is to many of us. the first few attempts will feel good, for sure. and they may boost equity and credit markets, probably after another deeper swoon in both of these, for a few days. but i don't think it will work or even be very convincing from the get-go. there are WAY TOO MANY DOLLARS floating around in the world. the USA is in a much weaker position (economically and politically) than in 1994 or when volker did it. and, oh yeah, remember 1992 when the brits fought that battle and lost ignominiously ? it would be seen as desperation and would fail and things would be much worse because that threat would be gone and we SHOULD NOT TRY IT. so: i guess that means we will.

Edited by humble1, 14 March 2008 - 06:20 AM.

it has to happen, te dollar fall is not good news to other countries either. Ben is trying to "save" the banks caught in the credit crisis - I think he will ask for a "coalition of the willing" since the banks in trouble are not just US banks, and foreign CBs will cooperate. the ECB will, eventually, have to cut, UK has similar RE problems and likely will too, but Japan hasnt much room and probably wont. klh