The Economy And The Credit Market

Traders and other market participants were looking for relief - or at least a sense of clarity - from the G20 meeting last week. For the US dollar, the stakes were especially high. American policy officials have gone out on a ledge in an attempt to turn a domestic recession around; but their efforts are clearly falling short as consumers, businesses and financial institutions realize the crisis is a global one. The best outcome for the summit in London would have been a clear set of actionable steps that would have spread the responsibility for recharging the global economy amongst the world’s largest nations. While the language of the statement was convincing, a critical review suggests a lack of responsibility and time line will inevitably render the promises made ineffective. This leaves the dollar at the mercy of speculation over its role as a safe haven and the potential for its economic slump to devolve into a depression. Considering the jump in the unemployment rate to a quarter century high and the dour forecast from the FOMC statement, it is difficult to locate the dollar’s good qualities.