14 March 2008 - 11:40Market Commentary 3/14/08

Well USD/JPY did indeed break 100 again twice since my last post but it has not been able to stay in the double digits.  The argument can be made that Japanese exporters are defending the 100 level but even they must realize the futility of doing so and should soon give up. Of course there are always speculators trying to “buy the bottom” perhaps just because it’s a round number and a mentally important level if for no better reason. Certainly today’s CPI report did nothing to bolster the case for raising rates with a 0% growth in inflation over last month. That is not to say however that there is no inflation this figure is just supposed how much more the rate of inflation is increasing and indeed the figure is still showing a 4% yearly increase which should be unacceptable to anyone who is truly attempting to foster price stability and protect the savings (if any) of the people.  Meanwhile the U.S. consumer confidence was dreadful today and really puts a big nail in the dollar’s coffin with this U.S. economy being based on consumption and people being very pessimistic and not spending or likely to spend anytime to soon. Frankly most people have no money to spend anyways, only about a trillion dollars worth of unused credit cards which can only bury the deeper in debt and increase their dependence to the banks who own their possessions. Meanwhile those who reject this financial slavery are punished as the money they have worked hard for and sacrificed to save is being eroded by inflation. With oil prices hitting new highs there is no reason to expect any of this to change in the future either. In a nutshell what I am saying is forget all the BS you have heard about a soft landing. Even the head of Morgan Stanley in Asia is now saying that there is a world of hurt coming down and compared our plight in the U.S. to Japan’s in the nineties. He contends that a weak currency is essential to correcting imbalances and allowing America to export more and consume less. Meanwhile I am calling for the yen and renimbi to strengthen so I guess we both want the same thing, for our trade balance to be truly balanced. Maybe if we had truly free trade this would be possible, Unfortunately NAFTA and the WTO do the exact opposite. For example NAFTA is over 1800 pages, and if that is free trade I would hate to see managed trade.  All NAFTA really does is pave the way for the North American Union, much like the economic cooperation agreements in Europe paved the was for the EU and the euro. It also actually increases regulation of trade and gives government more control over it. On the other hand the Chinese dictate what, when and where things will be sold in their country, where as there are no such restrictions on Chinese goods in the U.S. For example Will Smith was recently miffed when Chinese Authorities did not allow his latest blockbuster I am Legend to be screened there. Hmm no wonder piracy is rampant in red China…