GENERAL COMMENTS ON THE
CAPITAL MARKETS
ON BEING REALLY, REALLY
PREPARED FOR THE HOLIDAYS
We Must Get Ready For
A Weak Dollar World
We’ll grant him the title, and we’ll grant him the
argument for his case is well made, although the dollar
may well have a day or two of further strength before it
has gone from having been egregiously over-sold early
last week to becoming swiftly over-bought as it has
bounced materially from those lows. He argues that
the budget deficit is unmanageable; that the US trade
problems can only be repaired by a material
weakening of the dollar to make US goods cheap
abroad and foreign goods expensive here, and he
argues that Washington really has no choice but to
adopt “the time honored course for big time debtors:
print more dollars, devalue the currency and service
debt in ever cheaper greenbacks.” His arguments are
nothing new, although the weight of his voice makes
them resonate a bit farther.
However, what caught our eye was a paragraph well
down toward the end of the letter when he said that
Treasury Secretary Geithner should move swiftly
To invite his colleagues in the US, euro zone,
Japan and China to meet secretly, perhaps
between Christmas and New Year, to start
discussions out of the public spotlight. The big
question: what kind of monetary system will be
best serve the world given deep-seated
changes in the balance of economic power,
and what process can be followed to develop
it
.
We cannot imagine that Dr. Garten is speaking wholly
out of school on this issue; we cannot believe that this
is nothing more than idle meanderings on his part. We
have to believe that he’s had talks with ranking officials
here in the US and perhaps in the UK and even in
Europe regarding such a meeting, and it gives us
reason to be very, very concerned about what is
coming at us given an Administration that is openly leftof-
centre, openly solicitous of the foreign powers, and
openly given to “Change.” Perhaps we are reading far
too much into Prof. Garten’s public missive in The FT.
Certainly we hope that we are, but discretion and
caution are the far better parts of valor. Forewarned is
perhaps modestly fore-armed.
: We
are not talking here about having one’s gifts bought
and wrapped , nor having one’s home decorated
properly, nor having one’s liquor cabinet well stocked
(although the latter will help immensely with the former
duties and we do strongly recommend making certain
that the latter is done first if the former are to be
properly accomplished!), but we are instead talking
about an ominous letter-to-the-editor written by Dr.
Jeffrey Garten, a long standing Washington insider and
a current professor of international trade and finance at
the Yale School of Management [Ed. Note: For those
who do not know who Dr. Garten is, we note that he
was the Undersecretary of Commerce for International
Trade in the Clinton Administration. Professor Garten
served in the Nixon White House’ Council on
International Economic Policy and also served on the
policy planning staffs of Secretaries of State Kissinger
and Vance during the Ford and Carter Administrations.
Professor Garten has written five books and is
currently the Juan Trippe Professor in the Practice of
International Trade, Finance, and Business at the Yale
School of Management, where he was once the Dean.
Thus, when he speaks, people tend to listen. Certainly
we do.]. The letter’s “title,” written in very bold print was
