Friday, Aug 04, 2006

Does this mean that the Fed will pause raising interest rates?

BBC News: Jobless rise as US economy slows

US unemployment rose last month for the first time this year, providing further evidence that the economy is slowing. The US economy added 113,000 new jobs last month, fewer than expected, and this pushed the jobless rate up to 4.8% from the 4.6% reported in June.

Posted by webmaster @ 11:30 PM (454 views)
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1. markd said...

Much depends on whether the Fed will want to prop up the dollar-as with the HPC the long awaited dollar crash is taking longer to materialise than expected (although I hope we are now really seeing the beginning of the former!). I note from Friday's business news on the Telegraph site that the Bank of Italy has quietly undertaken a significant reduction in its exposure to US debt. We now have to wait for the Chinese and Japanese to do the same!

Saturday, August 5, 2006 01:31PM Report Comment

2. sirgoogle said...

Perhaps the long awaited switch from Dollar to Euro as the Reserve Currency is coming.

Watch this space - see if OPEC countries start to price their oil in Euros.

A country that loses the Reserve Status has to pay back its debts. Look what happened to the UK in the 20s when the reserve currency Sterling switched to the Dollar. Maybe, just maybe, this is what China has been up to all these years. It can't "win" militarily against the US but it sure can win economically - especially if it keeps its currency artificially low and does not allow it to float freely, enabling cheap exports to the West to gradually wipe out Werstern industry.

At the start of 2006, 66.3% of the identified official foreign exchange reserves in the world were held in United States dollars, 24.8% in Euros. Each year this has been growing.

Saturday, August 5, 2006 04:29PM Report Comment

3. Mike Parry said...

Sorry Sirgoogle,
But if the Chinese did float, yes the currency would rise in value for a short while due to perceptions, but . . . China's economy is as much a nonsence as our own. The State Owned Enterprises are effectively bankrupt, they are just continually bailed out by the Communist Party controlled state banks, printing monopoly money the same way the UK/USA does. These companies were 'designed' to manufacture as much product as possible regardless of whether anyone wanted the products in the first place. The SOE's where not designed to be profit making organisations which grow organically, therefore their cost structures are, to put it mildly 'completely crackers'. Under the un-natural system of socialism, when people know they don't have to be efficient, they won't be. I read recently that, in reality, it costs 30% more to manufacture a car in China than it does in South Korea. (Read Gordon Chang's book - The Coming Collapse of China). China also has the prospect of a coming revolution against the Communist Party. In 2001, there were over 60,000 demonstrations in China against the dictators. Remember, socialists (particularly the one's that control the media) will only send out messages that fit with their flawed socialist ideologies, i.e., Blair's Broadcasting Corporation).

Saturday, August 5, 2006 08:28PM Report Comment

4. sirgoogle said...

Mike. My point on China was that its currency would not be allowed to float, thereby allowing the SOEs to continue to manufacture cheap exports at an advantage - and defeat the "West" on this front. The effect if it did allow a float being what you mention (and this is what the "West" should be demanding).

However, my point about the Reserve Currency is serious. Many asian economies (China included) are peed off with the Dollar returns and apparently have contemplated moving their massive piles of dollars ... to the Euro. It is concerns like these that the Fed has to think about - and given the size of the Dollar mountain outside the US, may be part of the real reason behind the rate rises - and ot the decline of the local US economy.

Sunday, August 6, 2006 05:39AM Report Comment

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