Here’s a link to an article in today’s MarketWatch:

http://www.marketwatch.com/story/qe3-and-the-looming-currency-war-2012-08-29-11103146

It’s an instructive article, reminding me of the effect of QE2 in 2010 that shook up the Chinese and suggested to them we were attempting to devalue the dollar to benefit American exports to the detriment of Chinese exports. Bernanke insisted the dollar’s weakness was a byproduct, not the intent of the Fed policy. But frankly, improvement in American exports was the net effect. Here’s a graph of American exports, in particular to China, over the past couple of years:

The article suggests another Quantitative Easing this time around would put the biggest burden on Chile, South Korea, Australia and New Zealand. However, it’s highly unlikely any of those relatively friendly countries would complain to the World Trade Organization about it. China, on the other hand, would most assuredly complain, as suggested in My Post of August 12th. They took a big hit last time, along with Brazil, Japan and the Euro. Brazil has taken steps to defend its currency, Japan has bigger problems to solve and the Euro is in such trouble, we are the least of their worries. But interestingly enough, Australia’s economy is already being affected by the glut of steel manufactured in China. Australia is a big exporter of iron ore, and the double whammy of less demand from China, along with our dilution of the dollar, will indeed affect their economy.

This article was written today at 11:02 am, EDT. However, another article, written at 7:31 am, EDT seems skeptical:

http://www.marketwatch.com/story/bernanke-might-not-take-the-plunge-2012-08-29?dist=countdown

The title of this one is: “Bernanke might not take the plunge”, indicating the Fed will wait for the September 7th jobs report to act.

So once again, we see the Fed hint at an easing, the stock market goes up, they fail to act, the stock market goes down. Remind you of Charlie Brown and Lucy with the football? Or how about this little ditty from one of my favorite guys, Eddie Izzard, the cross-dressing Brit?

The relevant part starts at about the halfway point, but it’s all pretty funny.