Sunday, December 10, 2006

Mirth and the Falling Dollar!

As if there wasn't enough excitement from the pundits on Friday by way of the slightly stronger than expected non farm payrolls report (which had to have induced the need for underwear changing among some of the more rambunctious of the pundits), the New York Times weighs in with some glee over the recent slide in the dollar. This article (free sign up required) in Sunday's Business section reports that the entire 2006 U.S. trade deficit has been offset in the eyes of foreigners by the dollar's slump this year. Poof! No worries! Just two days before, the NY Times had left me thinking that the East Asian Central Bankers were going to have to engage in a round of coordinated Financial Twister (left foot here, right hand there) in light of the dollar's travails. But, hey guys.... why bother since we've got a "best of all worlds" greenback sitchy-ation? I guess there must be a new Dollar P.R. team at work in Washington? The Sunday piece in the Times would be exhibit-A for why the Volatility Index is near a multi year low - nothing seems to be a problem to Mr. Market anymore.

For the record and for a variety of dubious reasons, the dollar index has come down from above 120 to just 80 in the span of 5 years; while gold has gone up about $400/oz over the same period of time. Don't bet on the "dominoes" not eventually falling.

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