posted on Mar, 2 2004 @ 04:41 PM
It seems that there is a crossroad. A fine line. A fragile position to be in.
To me I hope this is overcome, and the 'planned' path to recovery is a valid one.
Just to think of the possibilities otherwise, are concerning.
"The chairman is preparing the markets for an eventual rise in the federal funds rate," said Lynn Reaser, chief economist at Banc of America
Capital Management. "At this point it remains not a question of whether, but just when, it will be appropriate to raise the federal funds rate
The value of the dollar, compared with the currencies of this country's major trading partners, has declined about 12 percent from its peak
in early 2002. A weaker dollar makes U.S. goods cheaper to foreign buyers and makes foreign-made goods more expensive to Americans.
I always like the last statement, but I still wonder what it is americans buy made at home, and manufacture and export out anymore?
America's current account deficit, the broadest measure of trade, hit $550 billion last year, requiring the United States to borrow that
amount from foreigners during a period when the value of the dollar was falling.
Many private economists worry that if foreigners suddenly should become spooked and start dumping their U.S. holdings, stock prices could plunge
and interest rates soar.
On China, Greenspan cautioned that if the country were to swiftly move to let its currency float freely, it could pose a further risk to its
fragile banking system and to the global economy.
Fed Chairman Says Interest Rates Eventually Must Go Up
It appears that there are several points of interest that when combined, produce this environment,
that seems to be very much on the edge. It just gives me that uneasy 'all-the-eggs-in-one-basket' feeling.
(I am still watching for a pattern in the gold,euro,usd futures market to finish forming.)
[Edited on 2-3-2004 by smirkley]