-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Today's Lesson From The Wave Principle of Human Social Behavior by Robert R. Prechter, Jr. Pointing both to long, persistent financial trends and to sudden giant changes in valuation, neither of which are ever generally anticipated, author J. Orlin Grabbe, straight to the point of this chapter, says, "It would seem that changing images of the future . . . are endogenous . . . . They are neither rational or irrational; they are pre-rational." In other words, they are within men, not brought about by outside events. They are not irrational because they have a purpose, no matter how ill-applied in modern life. Yet neither are they rational, as they are within men's unconscious minds, i.e., their basal ganglia and limbic system, which are equipped to operate without and to override the conscious input of reason. ===== Single Currency Jaw-Boning to Stop the Euro's Slide Against the Dollar How about letting NATO bomb the Italian budget deficit? Senior European policy makers yesterday intensified their verbal campaign to stem the slide in the euro. Signalling growing concern at the currency's fall towards parity with the dollar, Ernst Welteke, the Bundesbank president designate, said the euro would require close monitoring, but cautioned against direct intervention in the foreign exchange markets. The euro could come under renewed pressure this week after falling on Friday to a record low of $1.039, about 11 per cent below its launch level. The latest bout of weakness was sparked by concerns about budget deficit concessions made to Italy last Tuesday, but may also be compounded by fears over growth. A report by several leading independent forecasters will today cast fresh doubt on hopes of an early pick-up in euro-zone output, warning that a recovery this year is "far from assured". The study, carried out by the UK's National Institute of Economic and Social Research, Germany's Institut für Weltwirtschaft an der Universität Kiel, the CPB Netherlands Bureau for Economic Policy Analysis, the Observatoire Français des Conjonctures Economiques and Prometeia, predicts that growth in the euro-zone in 1999 will be just 2 per cent. In two newspaper interviews published yesterday, Mr Welteke said the euro's weakness was "cause for careful observation", but he expressed confidence that its external value would recover. He also warned that intervention by the European Central Bank could backfire. "You can't reverse a market trend with intervention. You can only support the trend," he said in the Berlin Tagesspiegel. Lionel Jospin, France's prime minister, said at a Franco-German summit in Toulouse on Saturday: "One must not try to judge [the euro] on three months - a currency is judged over the long term." He felt the euro had the potential for "a real revaluation". Gerhard Schröder, the German chancellor, insisted at the summit that last week's decision by EU finance ministers to allow Italy to soften its budget deficit targets was "unique". It did not signal a retreat by governments from their commitments to financial stability. Direct intervention in the currency markets to support the euro was seen as unlikely by analysts. Under its founding provisions, the European Central Bank is able to intervene only to maintain price stability within the euro-zone. Intervention for any other reason requires the authority of the Euro-11 Council, comprising the finance ministers of the 11 euro-zone member states. Avinash Persaud, currency analyst at State Street bank, said intervention was not justified on economic grounds and, in any case, would be unsuccessful because of the structure of the foreign exchange market. "The only argument for intervention now is psychological, as the euro approaches parity with the dollar," he said. Intervention to prop up a currency was usually ineffective unless higher interest rates were also used in support, Mr Persaud said. Intervention worked best when the currency market had over-extended itself against a currency, allowing the intervening authorities to punish short-term speculation. The Financial Times, May 31, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. 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