"We got a Dollar down, we got a Dollar down" (crackle)

Not sure if you can see this article from John Authers of the FT, but he raises the idea that the FX markets may be more worried about inflation than the Fed. Admittedly, the Fed is not expressly mandated to focus on inflation; while "independent within government", it has the unenviable job of balancing growth against inflation.

He ends with a comment on the recent strength of the S&P... in USD terms. Rebased into Euros, it's rather less thrilling.

SPX in USD

Hurray - the pain's all over... phew!










SPX in EUR


Unless you're an investor who's not denominated in USD...



(Is it really that obvious that I am only an occasional chartist?)





A N Y W A Y . . . I think the point is that there is more to the decision making than Bernanke appears to focus on - the inflationary consequences of rate cutting and the ongoing demise of the Greenback through imported inflation seems to be a sacrifice he is willing to make (or ignore?) in order to boost growth via the relatively moribund export manufacturing sector (and the overseas revenue translation gains of big MNCs) and reduced imports? OK - here's a bit of a stretch, but will the future US look anything like this?

• "The government boosted the country's exports and mollified the private sector not by encouraging research, development and innovation, but by cheapening the currency"... "breathing 'the last sigh of an industrial system' that was shored up 'with enormous public expenditure'" ... "narrow-minded venality"... "74 percent... say they are worried about the economy... 71 percent... say they are satisfied with their own lives"... "years of great missed opportunities"... "utterly dependent on the world market for high-cost energy"
  

(OK, so it's a really big stretch!)

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Great FT Weekend article from last year on Italy. Maybe this is why they're all happy?