Europe: Our economies are struggling, but the U.S.? Lord Have Mercy....

[marmar]

Euro records aren't typos
Commentary: Dollar bulls had it wrong underestimating U.S. housing drop
By MarketWatch



LONDON (MarketWatch) -- It's tempting to think it's a typo.

The euro rose to a new record high after data showing investor sentiment in Europe's largest economy, Germany, is at a record low.

But, alas, it wasn't a mistake -- confidence is so low in the U.S. economy and its financial institutions that all indications that the European economy is sputtering don't seem to matter.

And it's hard to fault the traders who exchanged their euros for $1.6036 -- when the prospect of Fannie Mae and Freddie Mac and trillions of dollars in home loans coming onto the U.S. government's book is a serious matter for debate, it's tough to have confidence in American paper.

But a currency pair is exactly that, and the other side of the euro/dollar story isn't looking too wonderful either.

There have been some high-profile European bank failures as well, as typified by the bailouts required for IKB and Sachsen LB of Germany.

The stock price charts on lenders from Ireland to France look nearly as unappealing as those from Washington Mutual, KeyCorp or National City.

It wasn't that long ago that the prospect of a bottom for the U.S. dollar looked likely. The argument at that point was that the subprime-originated problems that started in the U.S. would eventually derail the economies in Europe and elsewhere. The data out of Mannheim, Germany indeed shows the euro-zone economy is headed in the direction of no-growth territory.

But what the dollar bulls, or perhaps more accurately, dollar-non-bears had wrong was precisely the depths to which the U.S. would sink.

As always, it comes back to housing, and the lack of a bottom for the American housing market creating global-shattering gyrations. It's a bizarre world where the fortunes of an aircraft maker in Toulouse are largely determined by condo prices in Florida.

But this much is sure -- it's not a typo.


http://www.marketwatch.com/news/story/euro-record-against-greenback-not/story.aspx?guid=%7BB278544A%2D16A9%2D4CD5%2D9A47%2D8E4967A098DC%7D

[groovedaddy]

1. The Fed / FDIC , et al. are sure wanting to make it "appear" as though

everything is under control...wouldn't want to panic anyone or anything.