As countries to to force down their currencies with quantitative easing or intervention on foreign exchange markets– or even inflation busting rate increases—I am reminded of how futile it can be. Here are extracts from a poem by Eugene Field I learned as a kid:
The gingham dog went “Bow-wow-wow!” And the calico cat replied “Mee-ow!”
The air was littered, an hour or so, With bits of gingham and calico…
But the gingham dog and the calico cat Wallowed this way and tumbled that,
Employing every tooth and claw In the awfulest way you ever saw…
Next morning, where the two had sat They found no trace of dog or cat;
And some folks think unto this day That burglars stole that pair away!
But the truth about that cat and pup Is this: they ate each other up!
Now what do you really think of that!
Last night I trekked to a party for Dow Jones Indexes in the World Financial Center, west of the site of the 9/11 atrocity. This part of Wall Street is jerry built, with temporary paths, pedestrian bridges, and lots of stairs snaking along the building site for the new Liberty Tower and the Hudson Tube. The index group, whose most famous product is the DJ Industrial Average, is now 90% owned by the CME, operator of commodity trading floors including the NY Mercantile Exchange, and only 10% retianed by Rupert Murdoch’s Dow Jones.
John Prestbo, the head of DJI, told me that they have launched two new indexes, for the depreciation of the dollar against other major currencies, and for the rate of inflation (calculated differently than the US Dept of Commerce’s CPI.)
It will be interesting to see if the CME or the Merc can get permits to offer futures, swaps, or exchange-traded funds based on these new indexes. In the past over oil price indexes, US regulators have tried to shoot the messenger rather than letting derivatives be traded.
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