Gisele Bundchen abandons the dollar. Who's next?

I wonder: How hard are Euros to counterfeit?

I agree with you Justin. The dollar's weakness against the Euro is cyclical. In 2001, you could have bought a Euro for 84 cents. Today, the same Euro costs $1.45 or so. The key difference in the dollar's strength is interest rates. When the Federal Reserve raises rates, the dollar strengthen. After 2001, the Fed cut rates and the dollar fell. It stabilized in 2004 when the Fed raised rates and began to fall again recently when the Fed began dropping rates again.

Well, my takeaway from this is somewhat different: within the small excerpt you posted, the BBC made both a grammatical error ("she demanded that the brand owner...paid her in euros") and a spelling error ("Gabanna" instead of "Gabbana").

The Beeb is over.

it may well be cyclical, but its not economic cycles that investors are looking at, but political ones.

After the Fed's drop in interest rates last week, its glaringly obvious that Bernanke is simply a partisan hack who will use the Fed to advance GOP prospects in the 2008 elections.

Bernanke will continue to drop rates at the slightest hint of a recession occuring before next November in much the same way that Greenspan dropped rates in a desperate futile attempt to prevent a recession for Bush in 2001.

With a hack like Bernanke running the Fed, its obvious that no effort to strengthen the dollar is happening anytime soon -- and that after the election, the US will doubtless descend into a recessionary economy.

Paul's description is pictureseque, but not off target. Combine the "Accounting Identity" trumpeted by Martin Feldstein in his description of late-Reagan-Era currency depreciation and the trend in relative growth rates between the EU and EE.UU. and 1986-88 Redux should not be a surprise.