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Forcing dreams down our throat ... and creating a mess in the process by George Dagnino 04/17/2008 The government convinced us the American dream was to own a house. They were so convinced that it has orchestrated to sell houses even to those who cannot afford it, thus creating a mess. We do not need the government to intervene in our dreams. It is like our “love affair” with the car. Nonsense. We need sound public transportation to solve our energy problems, which have been created in the pursuit of our “love affair” (blessed by the auto industry). The government should convince us that one of our “dreams” should be to ride a cost efficient fast train. More on https://www.peterdag.com/. George Dagnino, PhD Financial risk is declining Our proprietary measure of financial risk has been declining in the last few weeks. The Fed seems to have stabilized the markets, at least for the time being. The decline in financial risk is very positive for the financial markets and bank stocks (among others). Real interest rates, meanwhile, remain unusually low, favoring very specific sectors and asset classes. George Dagnino, PhD The Europeans keep quoting oil in US Dollars. It does not make any sense. by George Dagnino 04/15/2008 European newspapers keep quoting oil in US Dollars. It does not make any sense. Oil is up about 57% in US Dollars since early 2007. So, they panic. It is stupid! Their currency is the Euro, which appreciated about 30% relative to the US Dollars in the same period. It does not take a genius to figure out that oil in Euros is up only 27% in the same period. I agree, it is a big rise, but certainly not as much as for us US citizens owning the US Dollar. By the way, this is one of the many advantages of having a strong currency like the Euro. Commodities costs much less in Euros because commodities are quoted in US Dollars. More on https://www.peterdag.com/. George Dagnino, PhD Pessimism is rampant by George Dagnino 04/14/2008 Investment advisors are very bearish according to the latest data released by Investors Intelligence. Unusually bearish. The most bearish they have been at least since 1996. This bearishness is bullish, in my humble opinion. Why? Because it is a historical fact that there cannot be so many people right at any point in time. Do no despair. Keep your eye on the ball. The risk is being left behind the next move...on the upside, of course. When? Our proprietary indicators will give us the green light. More on https://www.peterdag.com/. George Dagnino, PhD Do we need the Fed? by George Dagnino 04/12/2008 This is an excerpt from an article in Barron's by M. Mayer, guest scholar at the Brookings Institution and author of numerous books about finance and banking on April 14, 2008. The truth is that the Fed had plenty of authority to take the steps that would have avoided today's dangers and its own embarrassments. The problem was that the Fed lacked the will to supervise. Before we can restore the self-confidence of the market, we will need to create a Federal reserve that believes in its own regulatory mission more than it believes in prudence at the banks. It is a classic. When the bureaucracy fails it seeks more power (and more people and more money) to get the job done. This is what is happening right now as proposals are submitted in Congress to take care of future problems. This is how power is transferred from the people to a few bureaucrats. The country has a financial problem because the authorities were asleep at the wheel. More on https://www.peterdag.com/. George Dagnino, PhD What you did not know about the dollar and were too afraid to ask! Nonsense. Nonsense. Nonsense. The President and the Treasury Secretary are criticized for not speaking more forcefully in favor of a strong dollar. Other pundits pontificate in various media making us believe our low interest rates are the cause of the weak dollar. Nonsense. In the 1970s Brazil had the highest interest rates in the world. Yet, its currency was falling apart. In the same decade, the USA had interest rates rising at much higher levels than Germany and Japan. Yet, the dollar collapsed against the Yen and D-Mark. I was fortunate to grow up and finish my master studies in Italy. In those days the Swiss, the Germans, and the Dutch had very strong currencies against the Italian Lira. Their cars were bigger and the Italian government was giving them special coupons to buy gas at their home price, not at the outrageously expensive Italian prices. It was not difficult for me to learn that a country with a strong currency is a wealthy country. No doubt about it. The dollar has been in a downtrend since 2002. Why? Because there is more demand for non-US Dollar denominated goods and services than US Dollar ones. Since 2004, exports of emerging economies among themselves increased a steady 22% per year. Exports to the USA slowed from 23% to 5%, according to The Economist. Developing nations, in other words, are learning to live without the USA. Technology is easily transferable if you have the money to buy it. The steady decline of the dollar is a strong indication that we are becoming a lesser player in world trade as the rest of the world raises its standard of living. A currency reflects the productivity differential between two trading areas. Our politicians are ignoring this. We have to produce goods with the quality and performance required by our foreign partners. The decline of the dollar reflects our failure to achieve this endeavor. A strong currency is a challenging feat in a global market. You just do not "talk it up". George Dagnino, PhD
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