Tug Of War

The day began with weakness in the Euro, and thus strength in the Dollar as Euro zone retail sales came in week this morning. It amuses me to no end that currency traders would dump the world's "strongest" currency of late to purchase the world's weakest because of a fractional decrease in retail sales month to month. Especially in light of the fact that the Euro zone retail numbers were identical to the revised number in the previous month. Oh, but they missed estimates.

So the Dollar is stronger because of weakness in the Euro. Hey, I should sell my Gold. (I should really be buying it because it's better than either the Euro or the Dollar) But wait, weekly US jobless claims reach a two year high. I better sell my Dollars and buy back the Euros I never should have sold, and while I'm at it I better buy back that Gold I foolishly sold because weakness in the Euro convinced me to buy the purely weak Dollar.

Wouldn't it just make sense to just own Gold, and forget about the rest?


Jobless Claims Highest Since Sept. 2005
WASHINGTON (AP) -- The number of new people signing up for unemployment benefits last week shot up to the highest level in more than two years, fresh evidence of the damage to a national economy clobbered by housing, credit and financial crises.

The Labor Department reported Thursday that new applications filed for unemployment insurance jumped by a seasonally adjusted 38,000 to 407,000 for the week ending March 29. The increase left claims at their highest point since Sept. 17, 2005, following the blows of the devastating Gulf Coast hurricanes.

The latest snapshot of labor activity was worse than economists had anticipated. They had predicted claims would be much lower, around 365,000.
http://biz.yahoo.com/ap/080403/economy.html


U.S. ISM Non-Manufacturing Index Unexpectedly Rose
(Bloomberg) -- Service industries in the U.S. contracted less than forecast in March, easing concern the economy was deteriorating quickly.

The Institute for Supply Management's non-manufacturing index, which captures almost 90 percent of the economy, rose to 49.6 from 49.3 in February. A reading of 50 is the dividing line between growth and contraction.
http://www.bloomberg.com/apps/news?pid=20601103&sid=asYiVUWjKegg&refer=news


Late payments on consumer loans at 16-year high
(Reuters) - More Americans have fallen behind on consumer loans than at any time in nearly 16 years, as credit problems once concentrated in mortgages spread into other forms of debt.

In a quarterly study, the American Bankers Association said the percentage of loans at least 30 days past due rose to 2.65 percent in the fourth quarter from 2.44 percent in the third quarter, and from 2.23 percent a year earlier.

The rate of delinquencies was the highest since a 2.75 percent rate in the first quarter of 1992. It provides a fresh sign the nation's economy is slowing, and may be in recession.


For a truly educational read, please find the time to peruse the following two essays:

Before applying a solution it is necessary to clearly understand what the problem actually is.


In the case of the unfolding financial debacle taking place on a global basis with its originations within the U.S., it is not easy to identify what the problem actually is. Obviously it appears to be a banking problem that has its beginnings with the issuing of credit to borrowers who were not creditworthy to begin with. But one must also ask the question as to whether the lenders themselves who were making these loans were qualified to do so.

ROCKET SCHOOL OF ECONOMICS (Part 1):
http://www.usagold.com/gildedopinion/rocketschool/20080327.html

ROCKET SCHOOL OF ECONOMICS (part2):
http://www.usagold.com/gildedopinion/rocketschool/20080331.html


A must read is the test of is the text of remarks that Timothy Geithner, president of the New York Federal Reserve Bank gave to Congress today. A fascinating tour of the Bear Stearns bail out.

N.Y. Fed's Geithner explains Bear Stearns deal
http://www.marketwatch.com/news/story/new-york-fed-chief-geithners/story.aspx?guid=%7B9165450A-F288-45E9-B6BC-47CD1A57CB0E%7D&dist=hplatest