Thursday, November 8, 2007

Stupidity Must Be Inherited

"The dollar was pummeled across the board after reports surfaced suggesting China may want to dump some of its enormous reserves of dollars and replace them with euros. ... Marc Chandler, global head of foreign exchange at Brown Brothers Harriman [BBH] in New York said yesterday's comments from Mr. Cheng [an advisor to China's parliament] 'lack merit and most likely do not reflect policy'," WSJ, 8 November.

BBH? I remember them. In 1961 Robert V. Roosa (RVR) joined JFK's Treasury as Undersecretary for Monetary Affairs. He had been a BBH partner. So? In 1962 he dreamed up what became known as Roosa Bonds (RB). RVR noticed Swiss Franc (SF) interest rates were below US dollar (USD) interest rates. So to save Uncle Sam money, RVR had the Treasury issue principally SF denominated bonds. In 1962 I thought this was brilliant. Cut me some slack, I was 11. As the SF strengthened against the USD, the Treasury lost billions in foreign exchange speculation. I wonder if Chandler is channeling RVR as I write. The Chinese should stop supporting the dollar and American domestic consumption.

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