Here’s someone talking about financial markets offering a different perspective to the doom and gloom we have been hearing (and seeing) for the past year.
It’s a really interesting piece that holds a contrarian view to the way people suggest things are and will be mapping out in global capital markets. I’ve started to develop a similar view only because everyone has an extremely bearish opinion on the US economy, the US dollar and global economic health. So being long the US dollar has been a fairly lonely time over the past few weeks.
I think this guy has been able to connect all the dots reaching the conclusion that the US dollar is about to make a major turn ( even if a slow one) and if it does it will eventually carry the global economy to a better place. In terms of the big picture the major problem of late has been the weakness of the US dollar as most things could be de-constructed down to that poblem. Turning this oil tanker around is going to be hard; however once it (if) does turn things may begin to improve over time. I think he’s hitting in the right ballpark.
The current weakness and the possible recovery of the US dollar cannot be overstated in terms of improving the world’s economic direction. In fact part of the tension we have been experiencing globally has been the result of a weak US dollar.
Is it coincidence that we may see such a different outlook with regards to interest rates so quickly around the world? Is it that the economic wheels of change are spinning in a new direction, and the timing is unique? Or was it a coordinated hand shake deal at the April G7 meeting? History will only tell us that. But, if you listen to Treasury Secretary Paulson, you have reason to believe that “benign neglect” is no longer the standing policy for the USD and that there is some kind of coordinated effort on the parts of the world’s financial ministers to shore up the USD. Regardless, this scenario of a stronger USD with a financial sector in a much healthier environment is in the very best interest of every single country out there.
Most economic pundits are looking around for the next big upset in the financial sector. And who’s to blame them when we’re all sitting around looking at dire news coming in left and right. But, the world’s financial ministers have been there every step of the way. Look no further than the efforts of the Federal Reserve to stave off a potential catastrophic event that keeps rearing its ugly head almost every other week. There is a plan, and it’s the single best plan available to put a final nail in this imbalanced coffin.
Unlike the 1985 Plaza Accord, however, where the G5 finance ministers came out of the meeting pounding their chests about their intention for the USD, this time around, considering the fragile state of the world’s financial system, finance ministers can’t risk rocking the boat too much, too fast.
So, quietly, they will walk…. and carry a really big stick. And this week, that really big stick is going to be swung…. Very Hard…. Very Loud…. And Very Clear.
It’s worth reading the whole thing to get a different perspective rather than the doom and gloom mongering the pundits are selling these days.