Thursday, April 12, 2007

Our Dear Leaders

EUR/USD 1.3450 Hi 1.3480 Low 1.3427
USD/JPY 119.39 Hi 119.54 Low 119.21
AUD/USD 0.8251 Hi 0.8275 Low 0.8232
EUR/JPY 160.60 Hi 160.88 Low 160.26

There is an election campaign under way in France. There are three main candidates: an airhead, a proto-fascist and a guy who knows how to drive a tractor. Not surprisingly the guy who knows how to drive a tractor seems to have ambushed mainstream commentators by emerging as the "third" and unexpected candidate for the Presidency. Not that anyone is getting excited. Like everywhere else in the world, DEMOCRACY in France has been reduced to choosing the candidate who can reasonably expected to do the LEAST damage. No-one expects anything to actually improve. Particularly as political candidature seems to favour cynical, self-promoting individuals with no identifiable agenda EXCEPT self-glorification. The soulless cult of the LEGACY seeker is everywhere. And the electorate knows it, in a resigned kind of way.

Although being able to drive a tractor is seen as a hopeful sign that the man actually knows how to "do" something, voter enthusiasm is cautious. The Tractor Driver also supports "Europe". Europe as a "intellectual concept" that is. "Concepts" are big with politicians. These self-aggrandising fools seem to believe that their job is not to simply ADMINISTER the country but to get elected by selling an "IDEA". IDEAS are cheap. Everyone has one. The Tractor Driver seems to think that the "European Idea" is big with voters. He is wrong. The "European Idea" is only big with politicians who see bigger expensive accounts, less well defined constituencies and, of course, a larger stage on which to promote themselves. Voters see more taxes, a less accountable political body and trouble.

Regardless the politicians are trying to forge ahead with the "European Project". Soon even the European Constitution is likely to rise from the dead. Another unstoppable monster.

Voters simply want COMPETENT ADMINISTRATION and none is on offer. So in France as elsewhere everyone is mildly depressed.

Not that this particular mood is likely to diminish the certainties of one Monsieur Trichet, who is scheduled to "talk" today. Trichet is is expected to explain why more rate hikes in the EuroZone are necessary. It will be the same old blather about M-3 and how he knows why rates must rise and doesn't have to explain himself.

So what if the U.S. economy is slowing? Even the IMF has worked that one out. Though, of course, they are not worried. (What us worry? Never.) So what if the EURO just hit a record against the USD? So what if an economic slow down in the U.S. together with a further fall in the USD will feed directly into an economic slow down in Asia via reduced demand for Asian Exports? So what if that all adds up to a rather substantial global slow down. Nope, we have our M-3 data and this means rates must rise. And if that puts at risk economic growth in the EuroZone, then so be it. Economic growth is not part of the ECB's mandate.

What Trichet is really looking to do is secure his LEGACY. Perhaps he has a future in politics? Yes, the Central Banker with the mostest wants to have the strongest currency. What a LEGACY. Quelle Grandeur. When did simple competency go out of fashion?

Meanwhile back on the farm the FEDERAL RESERVE scared everyone by suggesting that more rate hikes may be necessary. Even as economic conditions are worsening. And, even the IMF concedes that economic conditions in the States are worsening. This is bad news for Stock Market bulls and doesn't seem to have done much for Treasuries either. Oh, and did I mention that there has been no real reprieve for the USD? The USD/JPY is holding, thanks to positive interest rate differentials and lots and lots of speculators, but real capital inflows into the United States are not expected to start rising any time soon. Further USD downside is on its way.

Don't watch Baghdad watch the States. The mood is explosive. Except on Fox News, which everyone knows is fair and balanced and therefore completely irrelevant. George W. is sinking, Cheney is a hate magnet, Rudolph Giuliani is starting to look like a chump and no-one seems to be thrilled by what the Democrats have "achieved" thus far. The politicians are counting on voter complacency. That complacency seems to be turning to anger.

As economic conditions deteriorate in the States and rates continue to rise across the yield curve the mood of the U.S. electorate is unlikely to improve. A rate hike by the FED would be the icing on the cake. None of this can be good news for U.S. financial markets. And that's without considering that the U.S. is engaged in a WAR OF CHOICE with Iraq and Afghanistan and seems poised on the brink of a confrontation with Iran. Oh and there seems to be this little problem about starting a new COLD WAR with Russia. A trade war with China looks possible. Ah, the joys of incompetent leadership. While no-one in Europe is particularly happy with "Our Dear Leaders", the incompetence on offer in Washington is just breathtaking.

How long before this extraordinary level of incompetence leads to an all-out debacle on U.S. financial markets? No idea. But not that long.

OIL 62.34
GOLD 683.50

No new news.

Labels: , ,


Comments: Post a Comment

Create a Link



<< Home

This page is powered by Blogger. Isn't yours?