Category 6 Central Banker Lashes Europe

Hurricane Rita is clouding more than the skies over the Gulfcoast. The betting on Rita's impact is muddying the fallout of the Fed's rate increase. It has been a rough few days for the stock market but it is hard to parse out what is Rita and what is Alan. Soon though, Rita will yield the stage completely to Alan. Notable though is the Euro trading, which after a Rita-induced mini-mini-spike is headed down again, which I recall reading somewhere. It seems that any Euro strength is completely related to US weakness, as opposed to anything positive happening over there. Germany, apparently without a system of laws and procedures that anticipate electoral deadlocks (or evil, black-robed zealots to appoint someone), is holding meetings on what the future government will look like. (If this drags on too long, it would only be half joking to say that they might be better served by a game of rock-paper-scissors or a good, solid eenie-meenie-miney-mo.) Adding to this picture is a Bloomberg TOP story about how the Mafia is tightening its grip again on the Italian economy (can't provide a link b/c not all TOP items get posted on bloomberg.com). One can be wary of media sensationalism here but Italy's drop from 26th to 47th in the World Economic Forum's competitiveness rankings, which the WEF attributes partially to organized crime, is hard to dismiss.

While Euro bulls latch onto the slimmest of reeds, like forecasts for France's GDP growth getting revised upward from 0.7% to 0.725% (how do you say "Rock n' ROLL!" in French?), to make their case, the broader picture for the Euro looks just so challenging. With Alan all but promising better rates on your dollar holdings real soon, I think it is safe to say that he is an opposing force to Rita. Rita is now a Category 4 storm lashing the Gulfcoast of the US. Alan is a Category 6 Central Banker lashing the money of Europe.