Currency manipulation epidemic

Manipulation!

It is a mania! There are currency manipulators everywhere you look. Now we all know about the Chinese and Treasury Secretary Tim Geithner who is going to give Congress an earful about those well known currency manipulating scoundrels as our fine men and women in congress begins a second day of hearings on China and their manipulative currency ways. But who could have thought that the Japanese were manipulators as well! Well Senator Carl Levin is deeply disturbed with the Japanese and exclaimed that, "China is not the only country with a predatory exchange rate policy”! He said that the United States needs to watch the Japanese and what they are doing! Now of course we all know that currency manipulation is a very wrong thing to do. And if Senator Levin is deeply disturbed with the Chinese he must be even more disturbed with the Federal Reserve that should be grouped in with the rest of the currency manipulators. Don’t tell the honorable senator this but when the Fed prints more money to save the economy they are manipulating our currency. Also when the party’s in power, and I am not mentioning any names, runs up deficits and borrows money from the Chinese and pays them back in newly printed bills it kind of encourages that naughty behavior.

And don’t tell the Senator that all that stimulus and printed money is really working the way it should. Well at least that's what former Fed Chair Allan “Maestro” Greenspan says according to the Wall Street Journal. He said fiscal stimulus efforts have fallen far short of expectations, and the government now needs to get out of the way and allow businesses and markets to power the recovery. “We have to find a way to simmer down the extent of activism that is going on” with government stimulus spending “and allow the economy to heal” itself, former Fed Chairman Alan Greenspan said . At this point, “we’d probably be better off doing less than more” because “you’d be far better off to allow the normal market forces to operate here,” Greenspan said. That’s largely because stimulus spending is not proving as effective as many had hoped. “To the extent the evidence suggests very large deficits concurrently crowd out capital investment, there is a debit to the stimulus program that is somewhere between a third and a half of what the gross stimulus is,” he said. He also said that gold still represents the “ultimate means of payment.” What is happening in that market “is a signal there is a problem with respect to currency markets.” He reckons the problem is not a large one, but the jump in gold prices could be “the canary in the coal mine to keep an eye on.”

We also have to keep an eye on the storms. Tropical storm Karl, according to Dow Jones, drenched Mexico's Yucatan Peninsula on Thursday and is headed toward Gulf oil installations and is forecast to gain strength, as a rare duo of hurricanes roiled waters out in the Atlantic. Karl, the 11th named storm of the season, which forecasters have predicted could be one of the worst on record, dumped yet more rain on Mexico which is already struggling with heavy flooding in southeastern states. The storm made landfall near Puerto Bravo, in Quintana Roo state, unleashing heavy rains in the extreme west of the Yucatan, affecting Maya ruins in Tulum and leaving some 10,000 homes without electricity. Karl was heading over Campeche, threatening to "pass very nearby" Pemex oil company installations, said Jaime Albarran of the National Weather Service. Pemex said its operations around the eastern Campeche Sound, where most of its crude is produced, appeared unaffected so far.

Oil prices have seen pressure as the Enbridge pipeline is coming back.

Overall the petroleum complex is acting like one of the weak sisters of the commodities complex. If the dollar rebound and stocks falter we could break hard!

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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