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Wednesday, March 05, 2003

Not Particularly Concerned

More Grist to the mill for those of us addicted to tea leaf reading. John Snow declares he is not particularly concerned about the fall of the dollar. Monumental gaff, or calculated strategy. If, like me, you think that fighting deflation is currently the number one priority in US economic policy, then getting the dollar down is important, doing it while those who might suffer the consequences (the eurozone governments) do not notice that this is intentional could also be important, after all, what you are trying to do is export deflation. I can't help feeling that the Bush administration (with Cheney as mastermind, or Rove?) is turning image fabrication of themselves as a 'wild bunch' of crazy cowboys, dedicated, if not to robbing banks, then at least to pilfering the contents of the social security system and the oil reserves in Iraq, into something of an art form. This it seems to me is what they WANT the world's press to believe. But could it be that while they try to keep us mesmerised with their 'irresponsibility' what they are actually about is something far more responsible? Like I keep saying, don't watch what they say, watch what they actually do.

The dollar fell to a four-year low against the euro on Tuesday after John Snow, US Treasury secretary, said he was "not particularly concerned" about the greenback's recent decline. Following his remarks the dollar dropped to $1.0984 against the euro though it strengthened to $1.096 after a US treasury department spokesman said Mr Snow still favoured a strong dollar. The dollar also slid to a four-year low against the Swiss franc and was trading at Y117.24 from Y117.65 in Tokyo trading on Wednesday.The comment was the first time Mr Snow has publicly remarked on the value of the dollar, as opposed to reiterating the administration's rhetorical "strong dollar" policy.

Paul O'Neill, Mr Snow's predecessor, caused several sharp movements in the dollar by attempting to explain the policy or commenting on the markets. Mr Snow's remarks followed an appearance in front of a congressional committee on Tuesday. He said: "I am not particularly concerned" about the recent slide in the currency. "The dollar is going to rise and fall some. The dollar is in the marketplace and it's within normal ranges," he said. Mr Snow's comments seemed to have caught the dollar at a vulnerable point, when thin trading volumes at the end of the US session made it particularly vulnerable to sharp movements.
Source: Financial Times

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