Euro Cracks Lows After Possible Greek Deal

Wednesday, March 24, 2010

  • The euro is taking a beating this morning after a possible deal with eurozone leaders would force Greece to exhaust all its options in capital markets before receiving any help. If help is provided from Germany and others, it would include IMF participation as well. The euro has broken through the lows of the year trading down nearly 1% at 1.33 currently.
  • A report from the Economic Policy Institute alleges that Chinese yuan valuation is responsible for the loss of 2.4 million jobs in the US from 2001-2008. The report claims that the yuan should be revalued by 40% or the trade deficit will continue to enlarge. This is insane! Protectionism is bad policy. We cannot blame our problems on other countries. In time, China will allow its currency to float because it will be good for them as well. For now, they're keeping a lid on inflation by pegging to the dollar. While this has created short-run dislocations between economies, attacking China is the wrong policy.
  • 14 state attorney generals filed suit against the Health and Human Services department, the Treasury and the Labor department challenging the new health care law as unconstitutional. This might get interesting.
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