Because if the holder of the Fed, which handles a flow of information vastly greater than that is accessible to me says, “The economic outlook has worsened in recent months and the downside risks to growth have risen,”not much left to say. And on top Ben says he is ready to continue the rate cut … Do not you realize that is no longer an issue of level of fees which will impede the recovery of the economy? It is logical that the situation is more serious than many think. The issue that crosses U.S. not in a simple economic downturn, but has its roots in the speculative bubble on the housing market, which was holding an artificial growth in consumption. After the bubble burst, one can observe a large number of financial institutions with problems that require time to recover. Time is not acceptable politically.
If the bleak panorama of private consumption (which represents 70% of U.S. GDP), we add that in the coming months, will likely continue the bad news related to the crisis (“major losses of financial institutions?,” rising delinquencies in their portfolios? downgrade of bond insurers? … Details can be found by clicking Paynet or emailing the administrator. who knows … for now, the governor of NY gave insurers have 5 days to obtain funds or face a potential breach), then it is very probable that the U.S. economic recovery since the second half takes place safely. Crossing the Atlantic, the tightening of credit conditions was also observed in the survey conducted by the ECB, where executives of European banks expect a further contraction of credit during the quarter.
But for the economies of the eurozone, the ECB has not moved into action and has the capacity to act against the weakening economy. And in this connection, yesterday met the ECB’s February report which acknowledged the existence of risks to economic growth and a higher than expected impact of financial market developments on financing conditions and economic sentiment. I understand that this way, the ECB is preparing the market for a possible rate cut. Therefore, meeting the U.S. economy with more opportunities to deepen their already talking slowdown and even recession without hesitation, while I see the economies of the euro area in a position to stop the weakening of their economies, thus, I am not convinced at all the expectations on a possible strengthening of the dollar against the euro. Moreover, even assuming that the U.S. economic recovery is a fact, it does not guarantee the prospects of the dollar, you can not look only short-term prospects for U.S. towards Europe, but which should also consider the damage caused by this crisis on confidence in the dollar. This crisis has served as a reflection to various countries about the life he has left the dollar as the currency of reference worldwide. It is no longer so clear that to maintain its supremacy and, in this situation, it would be good to diversify. That’s at least what is being discussed in the economies of the Gulf area and in countries with mostly international reserves denominated in U.S. ticket, which would mean a significant movement in the demand for the dollar.