The U.S. dollar is now under incredible pressure, and the timing couldn’t be worse. The U.S. economy is also sinking fast. This places the Fed between a rock and a hard place. To support the greenback, the Fed needs to raise U.S. interest rates…but their classic response to the threat of an economic recession is to lower those same rates.

We were hearing some “old” music and my wife turned to me and said, “The music we grew up with stayed longer on the charts because there were not that many new songs. Now, there are so many new songs and so many new bands and singers that “new” music does not stay on the charts for long any more.”

About a year ago, my father asked if the Merrill Lynch bond he was thinking of investing in was okay. I looked it over … noted its high rating … and said sure. A little less than a year ago, I was speaking to a vice president of Bank of Nova Scotia. I was asking him about the bank’s exposure to the subprime crisis. He said it was negligible.

Since the beginning of the U.S. credit crunch last August, U.S. indices and even some of the international indices have taken a nosedive. Investors are getting antsy watching their portfolios shrink.