Paging Mr. Paulson
Look out… The Euroweenies* are starting to worry about the falling dollar:
Eurozone policymakers will urge the US and other countries at the next G7 meeting to take a strong stance against exchange rate volatility in an effort to halt the dollar’s decline against the euro, European Union officials said on Tuesday.
Finance ministers of the 13-member eurozone plan to forge a common position in Luxembourg next Monday, 11 days before the meeting in Washington of central bankers and finance ministers of the Group of Seven leading industrialised countries.
How exactly they plan to do this, no one is saying. But we got this priceless statement from one of the chief Euroweenies:
Christine Lagarde, French finance minister, said in an interview with Les Echos: “I’d really like to hear again [US Treasury secretary] Henry Paulson saying loud and clear that a strong dollar is good for the American economy.”
Does Mme. Lagarde really think this will do any good? I mean, how many times has Paulson said he supports a strong dollar, even as it's done the Great Slide? Let's see here, there was August of last year:
"I believe that a strong dollar is in our nation's interest and that currency values should be determined in open and competitive markets in response to underlying fundamentals," Paulson said in a speech to students at Columbia University's School of Business in New York. Copies of his remarks were distributed in Washington.
And then there was an interview with Charlie Rose back in April:
"As I think you know, I believe very strongly that a strong dollar is in our nation's interest, and I'm a big believer in currencies being set in a competitive, open marketplace," Paulson said. August of last year:
Is it not good enough for Mme. Lagrande that he said the same thing less than two weeks ago as the dollar and loonie achieved parity?
"I feel very strongly that a strong dollar is in our nation's interest and we believe currency values should be set in a competitive market place based on underlying economic fundamentals," Paulson told reporters after a meeting with Canadian Finance Minister Jim Flaherty.
I'm sure Paulson would be happy to oblige Mme. Lagarde’s request. But what good would it do? Paulson has proven time and again that talk is cheap — almost as cheap as the dollar itself.
*Apologies to P.J. O'Rourke