What do we think Ben Bernanke is going to say today and how closely will the markets be listening?
Firstly, all the market is going to listen very carefully. And secondly, we have to compare what Bernanke is going to say, when compared to the interest rate statement which was delivered last Wednesday. Now as you know, the interest rate statement was putting Fed reserve at a neutral interest rate stance. And I guess that after the statement had been released, there have been a lot of negative news－not so much on economic front but it had been on the financial sector. So he is going to be asked why, eh, why people participating in that joint committee. What the Fed believes, so is going on in the financial sector. And he has to give the answer, I guess that all of all, the statement today is going to be more dovish than the interest rate statement and that is going to be the key for the foreign exchange market. So I assume the US dollar as more weakness ahead.
What I was going to ask you is there anything he can say or indeed do that can stop the slide on the job?
Well, we have to figure out where the problem is. We have, so far, a US-centered problem which has to do with a housing market, has to do with related financial sector, so mortgage market and so forth. And that means the United States do need higher net export as a buffer to support the economic growth, to make sure that that economy is not slipping in to a recession.
What about the oil prices? We are seeing record highs once again today really going to be touching, I would expect, a hundred dollars a barrel some time soon? How worrying is that?
Well, so far oil prices did not play in a lot simply because oil prices are still lower in real terms than that we were in the 80. So if you do the inflation adjustments, then there, the price of oil in the 80’s was higher than the current oil price. That’s smooth change when we are saying oil prices moving above 105. The second point is that we are using less oil relative to GDP, and relative to disposable income. But of course, the pace of the increase is a matter of concern. It is working inflationary. It does paralyze central banks to some extent. And therefore, it is a point of worry. And I’m a bit surprised that the equity markets are holding up so well. We have to consider what are the economic consequences of that. And obviously it does not look too good if you have a forecast rise of about 6 months or a year.