It’s a small world: what leaders must do to achieve a healthy global economy

By Money Matters Editors

The previous global economic expansion was riddled with structural imbalances. Provided the balances are addressed, a global economic recovery will follow, but the task is huge.

Economists and policy makers are starting to call the previous economic expansion the ‘Bush era’ or the era of the pseudo-economic boom - a period when unsustainable borrowing by American citizens masked, for a short period, structural imbalances that almost guaranteed that the U.S. and global economies would fall into recessions.

Those imbalances were laid bare once the U.S. home-as-ATM era ended when the U.S. housing sector collapsed, and the correcting of those imbalances is one reason the recession has been long and deep. Investors should monitor the major economies’ progress at ending these imbalances. Here’s an update:

U.S. inches closer to universal health care

By Money Matters Editors

Those who sampled the Senate Finance Committee’s debate on health care reform on Monday and Friday on C-SPAN undoubtedly came away with one certainty: some type of health care reform bill will be passed this year. It’s exact shape? Stay tuned.

That the United States is likely to reform its gargantuan $2.5 trillion health care sector is a plus, for citizens and corporations alike. That’s because the nation will slowly move away from the current untenable system of the uninsured showing up at hospital emergency rooms for basic care, at a cost of $1,000 per hour and up.

Further, it doesn’t take an MIT mathematician to figure out that any insurance or comparable health care program that enables those without insurance to access primary care from a local doctor/general practice physician eliminates a major cost increase area in the system. The United States should have implemented a basic health insurance plan decades ago: had it done so, many hospitals would not have incurred the enormous costs that they have from treating the uninsured in emergency rooms.

Could the U.S. experience a strong economic recovery?

By Money Matters Editors

Can one make the case that the U.S. economic recovery will be stronger than expected? Hey, it’s a dirty job, but somebody has to do it.

Here’s why the U.S. economy might register stronger GDP growth in the initial stage of the recovery:

First, there’s the manufacturing sector. The Institute for Supply Management’s manufacturing index rose to 52.9 in August from 48.9 in July. Readings above 50 indicate an economic expansion; under 50, a contraction, but the important point is that businesses have cut inventories for 40 straight months.

The significance? Companies and manufacturers have become super-lean: along with cutting costs, they’ve been unwilling to store products, for fear of being left with goods they can’t sell, in the event the longest U.S. recession since the end of World War II continues through the fall and into winter. However, those super-lean inventories mean many corporations will be ‘product-short’ if the economic recovery takes hold, requiring them to hire to increase production and rebuild inventories. If that occurs, U.S. GDP will benefit from the increased purchasing poer and additional commerce.

For prospective U.S. home buyers, time is on your side, yes it is

By Money Matters Editors

Some economists and realtors are forecasting a quick snap-back in the U.S. housing sector. Nope. Sorry, it doesn’t work that way, as the grade school kids say in the states. Here’s why:

First, there’s the inventory bulge from the housing sector’s bust. As the National Association of Realtors’ August existing home sales report released Thursday indicated, there’s still an 8.5-month supply of existing homes on the market in the United States at the current sales pace.

True, that total is down from the 9.3-month supply level of July, but it’s still well above the inventory level during typical conditions: a normal, healthy housing market has a 3-5 month supply of existing homes.

Institutional investors, the big guns who make markets, follow several housing statistics (and other stats), but they closely monitor existing home sales data because they constitute the bulk of home sales. Moreover, because the housing sector affects so many lateral sectors (furniture, appliances, landscaping, insurance), housing, at least historically, has been a barometer of overall U.S. economic health.

Is the U.S. dollar about to plunge?

By Money Matters Editors

Where’s the U.S. dollar headed from here? Well, if you’re in the camp that argues that both monetary and fiscal stimulus guarantee rising U.S. inflation, the dollar will likely weaken in the immediate quarters ahead, and probably for longer.

But if you’re in the camp that argues that given asset destruction, massive job lay-offs, and price power that is non-existent, the dollar will hold its own against the world’s other major currencies.

The dollar weakened about one-half cent Wednesday to $1.4811 and $1.6436 versus the euro and British pound, respectively. The dollar was virtually unchanged versus Japan’s yen at 91.13 yen. The dollar has weakened about 7 percent versus the euro and about 8.5 percent versus the pound so far in 2009. The buck is virtually unchanged versus the yen this year.

Natural gas' U.S. prospects rise as its price falls

By Money Matters Editors

A ‘perfect storm’ of new technology, producers’ reluctance to cut production, and a pricing anomaly has created a new opportunity for natural gas to emerge as a dominant energy source in the United States in the decades ahead. Here’s the low-down:

First, there’s natural gas’ low price. Natural gas hit a 7-year low earlier this year, falling through the psychologically-significant $3 per million BTUs (MMBtu) level on rising supplies and low demand from industry and power plants. Traders say prices could fall to $2.25-2.50 per million Btus before demand picks up, assuming the U.S. economy’s recovery track continues to progress. Natural gas is currently trading at about $3.65 per MMBtu.

Second, long-term, natural gas will likely at least remain competitive with oil, and probably remain cheaper on an energy delivered per dollar basis. The main reason? Large storage capacity in the United States, and the to-date unwillingness of natural gas producers to stop producing the stuff. New technology, including a process called hydraulic fracturing, enables the tapping of natural gas sources in the previously cost- prohibitive U.S. regions of Appalachia, the Mid-Continent, the Gulf Coast, and in the Rocky Mountains.

A savvy investment strategy for the next decade? Pay down your mortgage faster

By Money Matters Editors

What’s the best investment strategy for the next decade? Well, that varies, depending on your risk tolerance, investment horizon, and investment goals, among other factors, but here’s a good investment tactic if you own a home in the U.S.: pay down your mortgage quicker.

That’s correct: paying down your mortgage quicker will help you achieve your financial goals.

Here’s how:

This decade, the Americans got into a lot of problematic - and in some cases very risky – habits/practices regarding debt. One of them was the now well-publicized teaser-rate mortgage, where borrowers were granted loans at very-low ‘temporary’ rates, even though, in some cases, the loan would become unaffordable for borrowers after the mortgage reset to its regular rate. The result was predictable: an increase in U.S. home foreclosures to record levels.

What’s more, there’s a variant of the above that Americans of conventional, fixed-rate mortgages probably don’t recognize, but it’s also problematic: paying the minimum on your mortgage.

Now don’t misunderstand: if you pay your mortgage on-time each month you’ll be in good graces with your bank/mortgage lender, and your credit score will not be affected.

Americans: Save, but not too much

By Money Matters Editors

This is not a polemic against saving. Americans – and others for that matter, but especially Americans – need to save. And how.

A decade of unsustainable over-consumption fueled by home equity loans and refinancings has left the United States with too little saved.

Americans reversed the above trend during the recession, with the nation’s savings rate rising to about 5 percent of gross income.

The paradox of thrift

But now there’s an equally difficult problem: the U.S. is saving too much, all at once. The great economist John Maynard Keynes said saving is a good thing, but if everyone saved everything, all the time, it would be a disaster. Keynes called it the ‘paradox of thrift.’

That’s because some consumer spending is needed to stimulate the U.S. economy. In fact, in recent decades consumer spending has accounted for 60-65 percent of U.S. GDP, and in some years the figure was closer to 70 percent. During the recession the U.S. has entered the ‘frugal consumer’ era and it remains to be seen whether consumption will account for as much of GDP as it has in the past, but one constant remains: some consumer spending must occur for U.S. GDP growth to approach historical rates.

Welcome to Money Matters

By Money Matters Editors

Welcome to Money Matters, a web site about stocks, sectors, investing, macroeconomics, and more. Our focus is on the markets and the economy, but really, if it’s about money, it’s fair game here. We offer independent news, analysis, commentary, and research to help you, the investor, make more-informed investing decisions.

Further, because our focus is on you, the investor, we want to hear from you to make our service better. Please offer your thoughtful comments in the comments section provided.

Money Matters has assembled a team of experienced reporters, analysts, columnists, and economists with one goal in mind: to help you navigate through these challenging times.

Our Stock Reviews by our stock analysts are based on an independent, proprietary stock investment formula, not affiliated with any bank, brokerage, or research service. If you’re looking for a stock to invest in, low risk to high risk, be sure to check out our Stock Reviews.

Thank you for visiting Money Matters, and visit us again soon.

-Money Matters Editors

President Obama: As American as apple pie

By Money Matters Editors

There’s been a great deal of banter, and, frankly, static and hysteria, concerning President Obama’s economic policies. The most-vocal critics, really a fringe of the American voting public, assert that Obama is ‘a socialist.’ Nothing could be further from the truth: Obama believes in corporate capitalism, and fits into the tradition of a long-line of American reformers who are capitalists.

Europe looks at America with amusement: how can a President who ardently believes in the private sector’s virtues (entrepreneurship, ingenuity/innovation, dynamism, a more-efficient use of resources, reward for work, wealth building, and job creation, among others), and whose systemic reforms largely rely on the private sector, be viewed as a socialist?

Philistines, obstructionists, or both?

The reason is based in the United States’ political culture, which is 1) very private sector-oriented, and contains 2) the fear of a strong central government. There is a long history in the U.S. of autonomically - and in some cases mindlessly - opposing any economic/social reform. President Franklin D. Roosevelt (FDR), a liberal, was called a socialist during the debate over Social Security, the now bedrock pension system for most Americans. (Try opposing Social Security now, and see what happens to you, politically.) President Harry S Truman, an ideological moderate, was called ‘a traitor’ for taking, in the interpretation of the extreme ideological right, too weak a stance versus the Soviet Union and communism in the 1940s after World War II. President Lyndon B. Johnson was called a socialist during the successful effort to pass Medicare, the popular health insurance program for senior citizens. In short, any time an American president attempts economic / social reform, the fringe right wing goes into overdrive: it’s opposed to nearly all government programs, except defense.

On U.S. health care reform, half-loaf may be all that's possible

By Money Matters Editors

Our friends in Europe, and our friends in Asia, too, sometimes must look at the United States and simply shake their heads in amusement.

The U.S. Congress – specifically a Senate panel with 3 Democrats and 3 Republicans – has just spent nine months negotiating a health care reform bill, and at the end of all their work, do know what the end result was?

A bill that no one likes, The New York Times reported. Unbelievable. U.S. Finance Committee Chairman Max Baucus’, D-Montana, backroom wheeling and dealing, compromising, and logrolling has resulted in a bill that many liberal Democrats are saying they can’t support because it doesn’t contain a public option, and one that conservative Republicans are saying still does not represent an affordable health care bill, nor one they can support. All of Baucus’ work and delays did not garner one vote from Republicans on the committee. Talk about spinning your wheels.

Can the U.S. economy adjust to globalization?

By Money Matters Editors


It is not, to put it diplomatically, a stellar time for the U.S. economy.

The unemployment rate is approaching 10 percent, and most economists would be very happy if it stopped rising at that level. Home foreclosures hit a record during this recession, and while not rising, are still way too high for economic health. And, of course, the manufacturing, business investment, and export sectors, while having recently displayed signs of stabilization, are not, in recovery-mode yet. And the U.S. consumer, after a decade of over-consumption, is saving like never before – a 5 percent annual rate – good for investment, long-term, but a depressor of GDP growth, short-term. In other words, all the key sources of demand are stagnant or barely growing – not nearly the conditions for robust GDP growth that one typically sees during the initial stage of an economic recovery.

The above is not a prescription for a robust U.S. recovery. Then what will turn it all around? What will get the ball moving in the correct direction, or ‘get this economy moving again,’ as President John F. Kennedy said in 1961.

The answer may be, ironically, the American economic system itself. In other words, the U.S. economy's ability to adapt, to innovate, and to renew itself may be the grease that gets the gears in motion, to use a machinery metaphor.

Dow jumps, but recession continues: what's going on here?

By Money Matters Editors

Some investors, particularly those new to investing in stocks, are bewildered by the stock market’s ability to rise, even while the economy is still in recession, with high unemployment.

The reason has to do with how institutional investors – the players who move the market operate. Institutional investors (IIs) are always looking ahead, or ‘down the field,’ to borrow a U.S. football analogy.

Typically, IIs are reviewing currently data, comparing to forecasts, then they make an assessment of the condition they think the economy will be 6-9 months into the future. If they believe economic conditions will improve, and corporate revenue and earnings will rise, they bid stocks up, and the market rises; worse, they sell stocks, and the market declines.

U.S. worker productivity continues to increase

By Money Matters Editors

An experienced economist will tell you that for almost every economic statistic there’s an upside…and a downside.

And that’s perhaps no truer than with U.S. worker productivity. Another way of putting this is, to paraphrase the great writer Charles Dickens, ‘It is the best of times, and the worst of times for the American employee.’

The best of times: In Q2, the American worker, already the most productive in the developed world, became even more productive, with U.S. worker productivity increasing at a 6.6 percent annual rate – a six-year high, according to the U.S. Labor Department. During the quarter, hourly compensation rose just 0.2 percent, with unit labor costs – a key indicator of inflationary pressure, and one watched closely by the U.S. Federal Reserve – plunging 5.8 percent – its largest decline in nine years. In other words, American employees are more productive now – on an output per unit cost basis – that any time in the modern era.

What's more, in the past year, productivity is up 1.8 percent, while unit labor costs have dropped 0.6 percent.

Obama administration slaps a tire tariff on China: terrific or terrible idea?

By Money Matters Editors

Some say the new U.S. tariff on China’s tires will be terrific while others say it will be terrible. What’s going on here?

The Obama administration has imposed a 35 percent / 30 percent / 25 percent, 3-year tariff on passenger vehicle and light truck tires from China, arguing that China’s current monetary and economic policies ‘artificially depress’ the cost of China-made tires exported to the U.S., hurting U.S. tire manufacturer sales, resulting in lost jobs. China’s share of the U.S. tire market has risen to 16.7 percent in 2008 from 4.7 percent in 2004.

China, conversely, says it’s doing nothing wrong and will defend its position. China also accused the U.S. of protectionism, or establishing a tax designed to restrict imports into the U.S. “The Chinese government will continue to uphold the legitimate interests of China's domestic industry and has the right to take corresponding measures," Chen Deming, China’s minister of commerce, told the Associated Press.

President Obama’s political base includes organized labor, and Obama was under pressure to impose a tariff from the United Steelworkers union. The union, which represents about 30,000 tire production workers, had filed a complaint with U.S. International Trade Commission.

Welcome to Money Matters

By Money Matters Editors

Welcome to Money Matters, a web site about stocks, sectors, investing, macroeconomics, and more. Our focus is on the markets and the economy, but really, if it’s about money, it’s fair game here. We offer independent news, analysis, commentary, and research to help you, the investor, make more-informed investing decisions.

Further, because our focus is on you, the investor, we want to hear from you to make our service better. Please offer your thoughtful comments in the comments section provided.

Money Matters has assembled a team of experienced reporters, analysts, columnists, and economists with one goal in mind: to help you navigate through these challenging times.

Our Stock Reviews by our stock analysts are based on an independent, proprietary stock investment formula, not affiliated with any bank, brokerage, or research service. If you’re looking for a stock to invest in, low risk to high risk, be sure to check out our Stock Reviews.

Thank you for visiting Money Matters, and visit us again soon.

-Money Matters Editors

At equilibrium, the political support for health care reform exists

By Money Matters Editors

Political scientists and public policy types have this phrase they use to describe the temperature for public policy during normal times: ‘at equilibrium.’

Ignoring for the moment that nothing economic or political since the onset of the financial crisis can be considered ‘at equilibrium,’ the phrase describes a political condition on the ground in Washington when there isn’t a crisis, a gaff, a major mistake, an international event, a point of fear/hysteria, or some other idiosyncratic event that can hinder (or help) a policy's chance for passage. And in case one hasn’t noticed, there are a lot events that can distort equilibrium in Washington, and the health care reform debate is a good case study.

Remembering And Honoring The Victims Of September 11, 2001

By Money Matters Editors

On this day we remember and honor the 2,998 persons whose lives were taken away from them during the terrorist attack on New York’s World Trade Center, the United States Pentagon, and on a plane that crashed in Shanksville, Pennsylvania eight years ago, on September 11, 2001.

Across the United States, and in communities round the world that also love freedom and democracy, citizens will take time to attend services to remember all who perished on that New Day of Infamy. We mourn the loss of their lives, and our prayers and thoughts are with their families and friends. In the words of Mr. Lincoln, it is altogether fitting and proper that we should do this.

But let us also, re-quoting Mr. Lincoln, continue with the great struggle of our epoch, and in doing so each day honor those who perished. Let us bring to justice every last remnant of the perpetrators of this act of intrinsic evil, and the tyrannical cult that supports it - so that liberty and democracy can flourish and so that government of the people, by the people, for the people, reigns victorious across the Earth.

The Dow is rising, but robust U.S. growth is not here: what's going on?

By Money Matters Editors

Some investors, particularly those new to investing in stocks, are bewildered by the U.S. stock market’s ability to rise, even while the U.S. economy is still in recession, with high unemployment.

The reason has to do with how institutional investors – the players who move the market - operate. Institutional investors (IIs) are always looking ahead, or ‘down the field,’ to borrow a U.S. football analogy.

Typically, IIs are reviewing currently data, compare it to forecasts, then they make an assessment of the condition they think the economy will be 6-9 months into the future. If they believe economic conditions will improve, and corporate revenue and earnings will rise, they bid stocks up, and the market rises; worse, they sell stocks, and the market declines.

Obama's speech reinvigorates health care debate

By Money Matters Editors

 President Barack Obama, D-Illinois, did indeed restructure the debate Wednesday on health care reform, in a substantive, succinct, upbeat speech that could very well lead to solving one of the biggest economic problems facing the nation.

Obama’s task now is to: 1) lure House Democrats without losing Senate Democrats on concerns that a possible public option will be too expensive, and 2) lure Senate Democrats, without losing House Democrats on concern that the new health care program will not incorporate as many working uninsured poor individuals and families soon enough. If Obama garners one or two Republican Senate votes for the administration’s reform package, that would be a major victory. Don’t look for any House Republicans to support any reform legislation: if the Republican Party is ‘the party of no,’ the House Republicans are 'the captains.'

Obama speech Wednesday will attempt to jump-start health care reform

By Money Matters Editors


Wednesday night, President Barack Obama, D-Illinois, will try to right the U.S.’s ship of state in a speech before a joint session of Congress on health care.

The administration’s initial strategy - to lay low, and let Congress fill-in the details - has been a major disappointment for backers of health care reform, as it let opponents structure the debate on the issue. The result was gross distortion of the impact of health care reform legislation, confusion, and a mockery of the public discussion process called town hall ‘debates.’

Tonight, Obama has to re-energize his plan by outlining his goals, which will likely include: 1) a plan to subsidize care for those uninsured who can’t afford to pay for insurance, 2) a strategy to lower costs throughout the system, especially Medicare and Medicaid, 3) a viable way to pay for the costs of the new health care spending likely to ensue.

Oil surges to $71 on OPEC meeting, weaker dollar

By Money Matters Editors


It didn’t take much to reverse the trend in oil prices.

One weekend after crude slide below $70 amid renewed talk of a glut of supply, oil reversed and raced ahead $3.08 to close at $71.08 per barrel Tuesday.

Tuesday’s culprit? The weaker dollar and the belief that OPEC, which meets this week in Vienna, will maintain current oil production quotas.

Institutional investors view current production quotas as bullish for oil, as they have already discounted rising demand on the U.S./global economic recoveries, and rising demand amid unchanged production sends oil in a vertical direction.

For U.S., natural gas is an alternative energy source for the next decade

By Money Matters Editors

What to make of natural gas? Well, if the United States is smart it will ‘make’ something of it, soon, as in making it a major energy source for at least the next decade, and perhaps for longer.

And the reasons are obvious enough: driven in part by a new technology called hydraulic fracturing, estimated U.S. natural gas reserves have increased 35 percent, mostly on the ability to access new or ‘unconventional’ gas sources, with estimated reserves totaling 2,074 trillion cubic feet in 2008, up from 1,532 trillion cubic feet in 2006, according to the Potential Gas Committee, The New York Times reported.

The technology is enabling exploration and extraction of natural gas in previously cost-prohibitive U.S. regions in Appalachia, the Mid-Continent, the Gulf Coast, and in the Rocky Mountains.

The new technology, plus producers’ reluctance to cut production, are two reasons natural gas is trading at 7-year-low prices, falling through the psychologically-significant $3 per million BTUs (MMBTUs) level. Further, traders say prices could fall to $2.25-2.50 per million Btus before demand picks up, assuming the U.S. economy’s recovery track continues to progress this fall. Natural gas traded Thursday down 18 cents to $2.53 per MMBTUs.

Welcome to Money Matters

By Money Matters Editors

Welcome to Money Matters, a web site about stocks, sectors, investing, macroeconomics, and more. Our focus is on the markets and the economy, but really, if it’s about money, it’s fair game here. We offer independent news, analysis, commentary, and research to help you, the investor, make more-informed investing decisions.

Further, because our focus is on you, the investor, we want to hear from you to make our service better. Please offer your thoughtful comments in the comments section provided.

Money Matters has assembled a team of experienced reporters, analysts, columnists, and economists with one goal in mind: to help you navigate through these challenging times.

Our Stock Reviews by our stock analysts are based on an independent, proprietary stock investment formula, not affiliated with any bank, brokerage, or research service. If you’re looking for a stock to invest in, low risk to high risk, be sure to check out our Stock Reviews.

Thank you for visiting Money Matters, and visit us again soon.

-Money Matters Editors

In the battle of technical vs. fundamental analysis, the best tack may be a combination

By Money Matters Editors

In the battle of technical vs. fundamental analysis, the best tack may be a combination.

Many investors in stocks know that there are numerous ways to evaluate the suitability of a stock. Two major methodological camps are fundamental analysts and technical analysts.

Each camp is broad and diverse, with teams of analytical brainpower - not to mention tens of millions of dollars in Wall Street research money - dedicated to each methodology.

Fundamental analysts concentrate on revenue, earnings, cash flow, revenue per employee, same store sales, book value, operating expenses, long-term debt and other balance sheet and income statement data etc. Fundamental analysts argue that performance data determines a stock’s price, i.e. that very little can be deduced from a stock’s price absent information on fundamentals.

Technical analysts, meanwhile, concentrate on clues provided by a stock’s price, emphasizing such indicators as chart formation, the 50-day and 200-day moving averages, its relative strength indicator, the MACD histogram, stochastics, and Bollinger Bands, among other technical data. Technical analysts argue that all public information about a company’s performance as already been priced in to a stock.

High U.S. savings rate has an upside and a downside

By Money Matters Editors

In financial/business circles, a discussion of the U.S. savings rate is little like what writer Mark Twain said about the weather: 'Everyone talks about it, but no one ever seems to be able to do anything about it.'

Well, here’s what investors need to know about the U.S. savings rate: according to the latest U.S. Commerce Department data, the savings rate in July remained high at 4.2 percent, and long-term that’s good for the U.S. economy. The reason? It’s part of a process where Americans - who’ve seen their 401k and home values decline with the recession - begin to rebuild their nest eggs. The increased savings rate also will provide a larger pool of capital for investment- something that will keep interest rates lower than where they would be with a low savings rate, and that will make it easier for businesses to access capital to expand operations and investment in equipment.

'Frugal consumer': long-term trend?

Short-term, however, there’s a downside for the U.S. economy. Americans’ new ‘frugal consumer’ trend will result in dampened consumption, and this unwillingness of the consumer to spend will put a cap on GDP growth, again, at least short-term. In a frugal consumer era, it’s highly unlikely that U.S. GDP will increase as much as it historically has done at the start of an economic recovery. And that 'new normal' will also likely result in fewer new jobs, and also weigh on corporate revenue and earnings, particularly in the retail sector.

Further, it remains to be seen whether the high savings rate represents an enduring trend, or just a short-term phenomenon compelled by a decade of U.S. overconsumption caused by excessive debt (primarily home refinancings and home equity loans). If it’s a long-term trend - if Americans continue to saving more than roughly 5 percent of their disposable income annually - that would suggest that the U.S. will have to undergo another structural change, in addition to the structural changes already being prompted by globalization.

What would that additional structural change be? Undoubtedly it would mean that millions of jobs in the retail sector, as well as in other sectors (such as manufacturing, financial services) will be shed as the U.S. economy becomes  more-focused on production, quality of life, and infrastructure concerns, and less on consumer goods. That transition will take at least a decade and will not be without pain, but ultimately it will lead to a more-productive, more-capital-rich, and balanced U.S. economy - one capable of sustainable economic growth.

When will the great American job creation machine kick into high gear?

By Money Matters Editors

Economists, market analysts, and public policy professionals are hinting at data that will show an end to the U.S. recession sometime in Q3/Q4, if a recession bottom hasn’t already occurred yet.

But the real end to the recession - at least in terms of aggregate demand and the typical person’s daily life - concerns when the U.S. job market will turnaround. And that begs the obvious question: when can investors and Americans in general count on an end to the large job losses that have characterized this pronounced recession?

Where is the U.S. dollar headed from here?

By Money Matters Editors

Where’s the U.S. dollar headed from here? Well, if you’re in the camp that argues that both U.S. monetary and fiscal stimulus guarantee rising U.S. inflation, the dollar will likely weaken in the immediate quarters ahead, and probably for longer.

If you’re in the camp that argues that given asset destruction, and massive job lay-offs, price power is non-existent, the dollar will hold its own against the world’s other major currencies.

The dollar weakened about one-half cent Tuesday to $1.4319 and $1.6232 versus the euro and British pound, respectively. The dollar was virtually unchanged versus Japan’s yen at 93.27 yen.