Personal Dork Assistant

It Was An Idea

Thought about a trip to Italy sometime, but not if the dollar is stuck at record lows against the Euro. This in the face of rocketing U.S. growth in factory output, productivity, and hiring in the service sector, thanks to a strong start in holiday shopping. The stock market is rising with the good news, so why does the greenback continue to suck wind?

The brutal U.S. government and trade deficits (even if some folks aren't worried) will eventually force interest rates to rise. That would be okay, if the government debt were being spent to create economically beneficial infrastructure, and the trade deficit went toward pro-growth, profit-making vehicles. Instead, the government money is being pissed down the black holes of Iraq and Medicare, and the trade deficit is being spent on consumer goods that do nothing but depreciate. The nominal justification for a weak dollar, that it would help exports, doesn't fly with China, since the Chinese Yuan is pegged to the US Dollar, a policy that's not likely to change. This forces China to eat Treasury Bonds to counteract the trade imbalance. I'm sure they're doing their share of risk-hedging in the meantime, which would only drive interest rates up (i.e. drive bond prices down). That's all well and good when it's (nuclear-armed) governments dealing, but currency traders aren't known for niceties when they smell blood.

At least the job market is picking up a little bit, or so the numbers say. They hired 137,000 more people in October, 57,000 people in November, and unemployment rate is down to 5.9%. Um, seasonal adjuments anyone? The extra Christmas greeters at every store and mini-mall in the land easily accounts for those jobs, not to mention the scabs they had to hire to run SoCal grocery stores. If the moron who tried to check me out at Best Buy on Black Friday were any indication (although it's not really their fault that the WinNT-based POS terminal crashed), most of these folks will be dumped out on their asses as soon as the XMas rush is over.