-->- The surprising drop in the trade deficit seemed to
validate - momentarily - Greenspan's gospel of"salvation
by devaluation." For two years, Greenspan and his
pinstriped minions have been coaxing the dollar lower,
while threatening to print limitless amounts of greenbacks
if the currency refused to decline. And for two years, the
chairman has assured us that devaluing the dollar would
boost the economy and narrow the trade deficit.
Unfortunately, for most of the last two years the economy
languished and the trade deficit ballooned. And the trade
deficit seemed destined to expand forever... until
yesterday.

- The deficit finally narrowed, thanks to an improving
balance of trade with every major trading partner. The
deficit with the European Union, the second-largest trading
partner of the U.S. last year, narrowed to $7.4 billion in
November from $8.7 billion, while the deficits with Canada,
Mexico, China and Japan all contracted as well.

- But the Fed did not allow itself even one brief moment to
relish its achievement. Instead, it continued tirelessly
preaching the gospel of"salvation by devaluation." One day
after Greenspan amazed a Berlin audience with his audacious
disregard for the dollar's swoon, Ben Bernanke wowed
another gathering of European bankers in Geneva with a
similar message.


Quelle: The daily reckoning