The bears were out to play on Wall Street overnight. US dollar down, oil above sixty dollars again, Walmart reporting slight fall in sales in October and the Dow Jones down 1.3% – its worst day in four months.

The Greenback has fallen in each of the last five sessions, giving Wall St the heebie-jeebies and pushing the Aussie to year-high levels. Wal-Mart, the world’s largest retailer, reported a 0.1% drop in same-store sales – indicating that the US may be in for a less-than-bumper Christmas season.

The slumping US dollar is cause for concern among world economy architects – OECD Secretary General Angel Gurria said yesterday that the huge current account deficit in the US and similarly large surpluses in the Asian economies is making the US dollar less competitive. Guriia also stated that the weak US dollar could lead to more rate hikes, further stifling global growth.

Could the excessive global monetary imbalance start having a palpable impact on the health of the world economy? Time will tell.

Henry was fascinated to read a Washington Post article looking at why the US housing slump has not driven the US economy into recession. The reason? A non residential housing boom.

According to the article, “The money spent on private non-residential construction nationally rose a sizzling 19.2% over the 12 months that ended in September, according to Census data. In addition, state and local governments are building roads, schools and other public buildings. Public construction rose a robust 11.6% in the year ended in September.

“Add it all up and the increase in non-residential work more than offset the 6.7% decline in home building over the same period, so the value of all construction rose a net 2.9%.”

Downunder, AWB dominates the news. The company executives are the ones under the hammer, but the big question remains whether the bureaucrats or pollies knew or ought to have known what was going on. It certainly seems to Henry that it’s either pollies telling porkies (believable) or incompetence (equally believable).

When Henry explained the facts of life on this issue to Mrs Thornton her response was “It’s very unfair”. All too true of course, but one reason these guys stay in office is that they are bloody ruthless, and do not care a fig for natural justice. As they say, cynicism is an unpleasant way of saying the truth.

Read more at Henry Thornton.

Peter Fray

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