The weak dollar is pummeling equities, disrupting the economy, distorting global trade and giving hundreds of billions of dollars in windfall revenues--through skyrocketing commodity prices--to our adversaries such as Iran and Venezuela. Not since Jimmy Carter has the U.S. had a President so oblivious to the damage done by an increasingly feeble greenback.
The Federal Reserve can rally the markets for a day or two by finding some new mechanism through which to lend more money to banks and other financial institutions. But this is the proverbial Band-Aid for a patient who is beginning to hemorrhage.
The Administration acts as if the dollar were like the sun, its rising and falling beyond any control. Countless times experience has shown that notion to be false. The U.S. Treasury Department could buy dollars in the currency exchange markets. Our allies would gladly cooperate with such an operation; their exports are being hurt more and more. The Fed could mop up some of the excess liquidity it has created since 2004, even as it makes targeted loans to beleaguered banks and financial houses.
I agree with most of this, especially the weak dollar and the write downs part.
Back in the S&L days a “healthy” institution was coerced into merging a bankrupt one with the promise that the loss could be carried on the books as goodwill and amortized over many years.
When Bush’s father got in, the rules were changed to make these “white knights” book them as immediate losses thereby spiraling it all out of control.
The banks prospered in this long sought play (just look what rates are paid for your hard earned savings) but the institution that built American homes was destroyed.
One wonders what promises have been given to JP Morgan/Chase and others this time and will they be honored by the next administration?