July 3, 2007
>>> Weakness in The US
Dollar Will Likely
Bring Higher US
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July 3, 2007
The Weakness in The US Dollar Will Likely Bring
Higher US Interest Rates
The British Pound
has just made a 26 year high versus the Dollar. The last time the
Dollar was this weak was in June 1981, a point
when the DJI and the US market
were about to fall by almost 20% over the next
Market of 1981 began when British ound Was Last This High.
| British interest
rates are going to be raised.
The Deputy Governor of the| Bank of England
has stated that UK interest rates are too low.
Many analysts forecast that the Bank will raise
interest rates to 5.75% this week. When Gordon
Brown (now the Prime Minister) took over as
Chancellor after the Labour Party's landslide
victory in 1997, he quickly granted the Bank of
England, which is responsible for setting interest
rates, independence from the government. Now
as Prime Minister, he may regret this. The Bank
of England had been privately owned until 1946,
when an act of the Labour controlled Parliament
nationalized it, with compensation.
Chanellors Who Become Prime Ministers
Follow The Orthodox
Persuasion of "The City", Britain's Wall Street.
My dissertaion at Columbia University was about how Chancellors of the
Exchequer, who live at 11 Downing Street, commonly became Prime Ministers,
provided they did not "rock the boat" and followed the orthodox expectations
of the Bank of England and protected the Pound and cut back governmental
spending, no matter the cost. By way of example, Neville Chamberlain had
been Chancellor before becoming Prime Minister in 1933. He fought over
and over with Churchill in the mid 30's and denied the latter's Air Ministry the
funding needed to prepare for World War II.
A tighter fiscal and monetary policy from the ex-ExChequer
who is now PM will boost the British Pound (which made a new high today),
but it will slow the economic boom down and probably force the US to tighten its
interest rates, to compete for international financing. Higher interest rates
Europe will spread here quickly, since the dollar is so weak. That explains why|
US Housing stocks were so weak today, even with the big rally.
The chart below shows TigerSoft's Index of 32 US Housing Stocks. Not the
| Scottish Humor:
Gordon and the
Many years ago a young Scot called Gordon bought a
donkey from an old farmer for £100.00. The farmer agreed to deliver the donkey the next
day. When the farmer drove up the next day, he said, "Sorry son, but I have some bad
news...the donkey is on my truck, but he's dead."
The young Scotsman replied, "Well then, just give me my money back." The
farmer confessed, "I can't do that. I've already spent it." The Scotsman said,
"OK then, just unload the donkey anyway". The farmer asked, "What are you
going to do with him?" The young man said, "I'm going to raffle him off."
To which the farmer exclaimed, "You can't raffle off a dead donkey!" But the
Scot, with a big smile on his face, said "Of course I can. Just watch me. I just
won't tell anybody that he's dead."
A month later the two met up again and the farmer asked, "What happened with that
The young Scot said, "I raffled him off. I sold 500 tickets at two pounds a piece
and made a huge profit." Totally amazed, the farmer asked, "Didn't anyone
complain that you had stolen their money because you lied about the donkey being
dead?" And the young man replied, "The only person who found out about the
donkey being dead was the raffle winner, when he came to claim his prize. So I gave him
his £2 back plus £200 extra, which is double the going value of a donkey, and he thought
I was wonderful."
The young Scotsman grew up and eventually became the Chancellor of the Exchequer,
and no matter how many times he lied or how much money he stole from the voters, as long
as he gave some of them back some of the stolen money, most of them thought he was
The moral of this story is that, if you
think Gordon is about to play fair and do something for the everyday people of the country
think again my friend, because you'll be better off flogging a dead donkey