Be sure to check out the WSJ article (Doctor the Dollar? Depends How Sick) on page C1 this morning:
"The dollar has fallen 9.5% against major currencies
since Henry Paulson became Treasury secretary 16 months ago. His
response has been to repeat the mantra that a "strong dollar is in our
What would it take to make Mr. Paulson and Federal
Reserve Chairman Ben Bernanke, who has seen the dollar fall 11% since
he took office in February 2006, respond to the dollar’s drop? And what
could they do?"
When a currency falls as precipitously as ours has, it is, in no small part, a referendum by foreign governments (and their private investors/traders) on a country and its government. We know that the current administration is not particularly popular overseas. Its no coincidence that since they took office on January 20, 2001, the dollar has fallen ~35%.
The false conceit of the article was summed up in the sub-heading: "Bush Administration Prefers to Let Markets Operate, And Cures Open to Fed and Treasury Are Limited."
This is, of course, sheer nonsense. This government, like the ones that preceded it, only like Free Markets for the upside of the cycle. When the cycle turns down, and things get dicey (as always happens), they become interventionists, interfering with the Free Markets to avoid the real and necessary pain markets regularly mete out. Hence, the ultra-low interest rates and the all so regular Open Market Operations.
Of course, the Free market mantra is "The Big Lie." Repeat something enough, regardless of how obviously false it is, and even otherwise intelligent people (and reporters) begin to believe it.
Doctor the Dollar? Depends How Sick
WSJ, November 12, 2007; Page C1
The FRB Atlanta trade-weighted dollar index is a summary statistic for tracking and analyzing the foreign exchange movements of the U.S. dollar: Dollar Index Data
Greenback worth nothing in terms of American pride
Toronto Star, Nov 09, 2007 04:30 AM