Bernanke Not Making Friends in Europe

Ben Bernanke is giving the stock market what it wants and simultaneously giving Jacques Chirac and Silvio Ber...scratch that...Romano Prodi a headache. In comments today, Bernanke let it be known that he is indeed cognizant of all the gnashing of teeth that he may "go too far" and plunge us into a monetary policy-induced recession. The stock market has been desperate to get precisely this type of clue from Bernanke as to when rate increases might slow or stop. Meanwhile across the pond in some of the lesser competitive nations of old Europe, it looked like competitive devaluation had a chance to help economies limp along for awhile. No longer. The USD has tanked close to 6% against the EUR since March and 7.5% since November. That means that European goods are that much more expensive for USD buyers. As ravenous as US equipment buyers are these days, I doubt that they are willing to absorb that kind of hit. This should hurt Euro production. Look for the political heat to be turned up again on Jean-Claude Trichet to proclaim his undying dovishness on inflation.