Dollar Flat vs. Euro But Hammers Pound
Nov 13th, 2008 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar was dead flat against the euro. Late Wednesday, the euro was trading at $1.2508 vs. $1.2507 on Tuesday.
The buck was, however, a big winner against sterling. The British pound got whacked down to $1.4953 against the buck. That was the lowest level since 2002.
The pound was hurt by deflation-fighting comments from Mervyn King, governor of the central Bank of England. That led Richard Snook, of the Center for Economic and Business Research to comment that, “We expect to see interest rates fall to 1% by the end of 2009 … the lowest level since records began in the 17th century.”
Back on this side of the pond, all the buzz was about Hammerin’ Hank Paulson’s about-face. The Treasury Secretary said that in the next stage of the government’s financial-market rescue package, the original plan to buy troubled mortgage assets (i.e. the toxic junk that got us into this mess) will be replaced by a focus on nonbank financial institutions and consumer finance.
Basically admitting that he screwed up, Paulson conceded that buying up mortgage assets “is not the most effective way” to use government funding.
Now, apparently, they’re just going to inject hundreds of billions of new cash right into the system, and many, including Alex Merk, of Merk Investments, say that market participants are frustrated with Paulson’s communication skills and changing tactics.
“He’s been flip-flopping on every plan and it doesn’t look like he has a plan,” Merk said.
Merk added that the rescue plan is failing to get banks to lend money, and that holders of mortgage assets who had been hoping to sell to the government at a good price have now seen these hopes dashed.
Is Paulson simply the wrong man for the job?
Source: Dollar Flat vs. Euro But Hammers Pound
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