saltymoney

Rescuing the U.S. Dollar

"The US financial rescue will also calm the world’s financial markets and rescue the dollar"

How will it rescue the dollar exactly? It's going to be a bit of a balancing act between saving our economy and inflating the hell out of the currency, isn't it?

US Dollar Gets an Independence Day Boost from Europe

Bernanke believes a weaker dollar would have headed off the Great Depression. The US economy is headed for serious trouble. Bernanke knows this. That should tell you exactly where the dollar is going. We're going to keep hearing lip service that runs contrary to policy, for all kinds of obvious reasons. Bernanke said it best when he used the term "managing expectations." Go ahead, expect what he and Trichet want you to expect. Baa-a-a-a-aah.

Start of the Next Wave of Dollar Strength?

Action counts. Whatever Trichet said, he showed a willingness to sacrifice the eurozone's growth for the sake of its currency. Bernanke will just never do the same for the US. The French government is now trying very hard to sway the ECB on the issue of interest rates, and Trichet is trying to appease them with lip-service. But even the French rationale for low interest rates, which you quote here, is a fallacy. Europe's trade with the US will become less significant as American consumerism moves into long-term decline, and Europe's developing neighbors gain in significance. Trichet knows this, and unless Sarkozy somehow gets his way, the ECB will remain more hawkish (in action) than the Fed for some time.

As the Czech Koruna Shows, Currency Allocation Makes Sense

I'm always amazed at how people pooh-pooh self-directed currency investment, and nonetheless have major exposure to their home currency. My portfolio consists mostly of currency funds (FXA, FXC, FXE, FXF, FXY, CYB, MERKX, MEAFX, PSAFX) to fully offset my USD exposure. Sure, it would be better to hold lots of currencies as real deposits, but not being wealthy enough for that kind of service from an international bank, I consider this the next best thing. These funds have their expenses and market/management risks, but in terms of currency risk I feel I'm on a better wealth preservation track than people living mostly in the USD universe.