Any rally seen right now is on the backs of the consumer, many of whom can afford it, but unfortunately it is also hurting many who cannot.

The problem lies in the fact that half the country has been left behind. During our economic explosion high end salaries increased dramatically, while the salaries of lowe wage earners remained the same. Minimum wage was just increased last week to $6.55 hr. This is sad.

If this gap between low income and high wage salaries continues to increase there is no way that the economy can function as it did before. This should be obvious to everyone.

Millions of Americans have had their homes foreclosed or about to lose their homes. Tens of thousands have been laid off from their job and that number continues to ascend. I am an out of work business analyst with a Master’s degree and I have not secured a decent job. Many of us are on the same boat. It is a deplorable economy when the vast majority of college educated people are either out of work or underemployed.

I agree mostly with Shannon. Unfortunately, I don’t think we will see a .90-1:1 range with the USD:Euro for at least 10 years (based on the currency cycle.

We have peaked at the 1.61 point where a lot of resistance was met and will make a slow way down to 1:1 over the next decade.

Frankly Europe has been benefitting from the weak dollar as it has afforded them to deal with the over inflated oil prices (imagine what their price for gas at the pump would’ve been without the huge dollar weakness). With oil less of a factor, it can come down now.

BTW, many currency traders lost massive amounts of money in trading the wrong way when the dollar went to 1.58 instead of 1.61+. The small time players lost enough to be out of the game and now we will see the dollar strengthen…. but it won’t get much better than 1.35 for a while.

Money = labor. In a global world, the value of labor will equalize. When the value of an hour’s work by comparably skilled workers in China, Korea and Thailand matches (in terms of purchasing power) that of workers in the US, Japan and Europe, the correction is finished.

Worldwide, economies have cooled sufficiently for commodities to begin their correction downwards. Let’s hope the economies don’t cool too much.

Whether Central Banks intended this to happen, we don’t know. But they will claim credit, if it turns out well.

If the FED soon moves short-term interest rates up by one-half of a percent, the dollar will move even higher, in an explosive manner IMO.

Oil (in U.S. dollars) will correct down even more, and I would predict that the stock market would also ‘explosively’ move higher.

The Talking Heads will say that the market is relieved that the FED thinks the economy is strong enough to withstand the rate increase, and is happy that inflation is being dealt with in a timely manner.

The markets don’t like inflation and the perception that ‘inflation is under control’ and that the FED is ‘in control at the helm’ will be reason enough for the Dow to gain perhaps 448 points on the day of the announced rate increase.

It will not take much to get there either…
1. Just a couple of nations dumping their US dollar reserves would start the stampede.
2. Oil trading in Euro’s instead of dollars would be sufficient enough reason to dump greenbacks.
3. Perhaps China/Japan/Saudi stop buying our bonds. The only way for the US to raise money via bond issues would then be by way of interest rate hikes. (Remember the 1980’s and 22% interest?)

Buy Euro’s, Buy Precious Metals, buy just about anything, but get your assets out of America ASAP.