Red Skirt: Monetary Models
Posted by Anne Leary on Nov 16th, 2007
For a time we had the phrase "buy your stocks where you buy your socks." Now I guess it's buy your stocks where you buy your frocks? Or something. I really do question BlueSkirt's taking as her financial guru Brazilian übermodel Gisele Bundchen, who supposedly wants to be paid in anything but dollars. And we are supposed to care.
| • Read the Blue Skirt entry Anne is responding to. |
We are all supermodels now.
To my mind it shows how many Joe Lunchbucket workers are suddenly priced out of their dream trips to gay Paris!
Ah yes, the Democrats are the party of the rich now. Hedge fund managers, supermodels, and liberal blue-skirted professors are worried about the prospect of having to postpone their sojourn to sunny Spain or Tuscany.
Bundchen spins a grim fairy tale, but no poor little match girl she. Actually, the fair Gisele may be a leading indicator that the dollar has bottomed out.
And sorry liberals, but Bush is not the master of the universe, much as you like to hate him for everything. Oh, no, is Gisele having a bad hair day? Blame Bush. For sure.
Talk to the Fed, last I looked they were in charge of monetary policy.
As far as fiscal policy, the Dems hold the power of the purse in Congress while the dollar is dipping.
Let's step back and think a bit.
Herbert Hoover was in favor of a strong dollar.
Italy is in a permanent recession, with anguished about a strong Euro.
Liberal US professors may have to patch their pockets! Patch their elbows! Forgo the truffles and the coq au vin!
But with a more competitive manufacturing and farm sector, airplanes and wheat in demand, Joe Sixpack will be able to take his kids to Disney World.
BlueSkirt blames spendthrift conservatives in the last Congress — a fair point, that's why I started this blog in protest — and I look forward to BlueSkirt's list of spending cuts — but a weak dollar has nothing to do with our budget deficits — because if it did, why are people overseas still loaning us money by buying 10 year US Treasuries at an interest rate of only 4.2 percent?
Inflation is at historic lows, and is expected to rise slightly from 2.8 percent to 3.4 percent according to one authoritative estimate, given volatile food and energy prices, but core inflation still sits about 2 percent. So the real interest rate investors are getting on Treasuries, nominal minus the inflation rate, is slim to none. Obviously the U.S. is still a reserve currency for the world, Gisele's angst notwithstanding.
And the Chinese must like Gisele's hair, they've been complaining too. They don't like a weak dollar — because they get paid less for exporting to us, and they have to buy their oil in more expensive euros. But isn't this a good thing? Everyone says — Sen. Schumer, please, it's Gisele's turn for the camera — they were artificially deflating the yuan, so this kicks up their currency to where it belongs!
But if BlueSkirt really, really wants a strong currency — there's one quick and sure way — agitate for the Fed to raise interest rates and tip us into recession. (added bonus — lots of instantly affordable housing! ... to buyers) I look forward to this as part of the Dems' platform.
Professors and models don't like a weak dollar — they might have to limit themselves to only one glass of vin ordinaire as they sit and sip by the Seine.
They've obviously just got to do something!!! I suggest to the Dems —
The Supermodel Relief Act.
But Gisele doesn't need it. She is willing to take dollars after all .
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