Tuesday, March 20, 2007

Getting the Hell out of Dodge

EUR/USD 1.3300 Hi 1.3316 Low 1.3272
USD/JPY
117.19 Hi 118.06 Low 117.04
AUD/USD 0.8000 Hi 0.8035 Low 0.7962
EUR/JPY 155.87 Hi 156.99 Low 155.59

All you really need to do is follow the money. George W. and all his buddies are lining up telling everyone that the U.S. is never leaving Baghdad. And maybe they aren't. And maybe they will start another conflict with Iran. This time with bigger and better missiles. But that doesn't mean they don't know they are in trouble. All you have to do is follow the money.

Halliburton, Dick Cheney's old hunting ground, is getting out of Dodge. And fast. Suddenly one of the principal beneficiaries of the Iraqi Invasion is leaving the United States and setting up in Dubai. You can listen to Bush all you want. The truth is: they are in big trouble. When the only thing that counts is money and plunder, and for these guys that is all that counts, then following the money is the only game in town.

And what exactly is the problem? Has Middle America suddenly discovered that the Iraqi Invasion was illegal and immoral? I wouldn't count on it. The American media bleats on about the 3,000 or so U.S. Troops who have died during the American WAR OF CHOICE but there is almost no coverage about the 650,000 Iraqi casualties, about the devastation of Iraqi towns and Iraqi infrastructure and the U.S. is certainly not welcoming the 2 million Iraqis made homeless by George W.'s destructive little foray into GEOPOLITICS. Middle America still can't find Iraq on a map and they certainly haven't discovered that Iraqis have rights.

Nope the problem lies elsewhere. George H.W. Bush (the man is an endless source of inspiration) once reportedly remarked that: "The American People" are "The BUD People, The Broke Useless and Depressed. We are the MPBs, Money, Power and Brains. As long as we keep food on the BUDSTERS tables, a roof over their heads, a car in their driveway and gas in their gas tanks to go to and from work. We can keep the BUDSTERS at bay." So much for the "vision thing".

And that is the real problem. The Average Joe in the USA doesn't think there is anything even slightly wrong with using America's big guns, and all the other fun toys they spend endless time and resources developing, to go steal other people's resources. Or to invade sovereign nations. That's just what the U.S. does. So long as the U.S. wins, gets the plunder and manages to shout down the United Nations, the European Union and anyone else who dares get in their way. The assumption, of course, is that the use of FORCE is not only a feasible policy option it is the U.S. preferred foreign policy option. Just so long as the lifestyle of the Mr. Joe Average is not adversely impacted. And that's where the real problem is right now. And it's a biggie.

The lifestyle of Mr. Joe Average is not being just adversely impacted but economic prospects for Middle America look grim. It's all very well if the Sub-Prime Mortgage Market should disappear down a black hole, after all the Sub-Prime Market only really involves minorities, but should CONTAGION start to be a problem, and it's hard to see how it won't, then Mr. Joe Average is going to get mad and he's going to start looking for someone to blame. And the billions of dollars wasted on the Invasion of Iraq and the Invasion of Afghanistan, which have provided NO DISCERNIBLE benefit to Mr. and Mrs. Average, are likely to be a good starting point for the BLAME GAME. A lot of those billions went right into the pockets of Halliburton and other war profiteers. So they're leaving town while the going is good. Or at least before the impact of the economic plunder which has taken place under George W. becomes obvious.

The good news is that the BoJ didn't hike today. On the back of that fairly unimpressive piece of good news (well that the best there is at the moment) the USD/JPY managed to rally all the way back up to 118.00 in European trading. But it didn't stay there very long. And even if the FED indicates that NO RATE CUT is coming (none is) that still won't do all that much for the USD/JPY. What happened when Cheney went to Japan is significant. The Japanese met him with due courtesy and then dismissed his visit as a big non-issue in their press. The USD/JPY has been under pressure ever since.

USD/JPY is going lower. The Carry Trade is being closed all over town. Hedge Funds are in trouble. We just don't know which ones yet. The USD/JPY is headed back to the recent 2007 low and there is no real reason for it to stop there.

Other U.S. Financial Markets will struggle as the USD comes under further pressure. But the main game, for now, remains the USD/JPY and the unwinding of one of the bigger speculative bubbles of the past few years. Easy come, easy go. No point picking bottoms quite yet.

OIL 56.62
GOLD 660.20

GOLD is seeing more strength as everyone scrambles for an alternative to the USD. Onwards and upwards while the price of OIL languishes as the entire world reassesses global economic outlook. That is as the markets try and figure out what a U.S. Recession is likely to do for the price of OIL. All up, no news on either market.

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