Some folks want to complain that Bush has done a bad job with our economy.
Perhaps they should check the rest of the world. Last week France broke the
double digit unemployment rate. This week Germany does even worse. Note,
especially, the second paragraph and the last section on the US economy.

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Euro Declines as German Unemployment Rises to a Postwar Record

March 1 (Bloomberg) -- The euro fell the most in a week against the dollar as
German unemployment rose to a postwar high and on speculation U.S. manufacturing
accelerated in February.

``The U.S. definitely has the upper hand in the whole economic backdrop,'' said
Rizwan Din, a currency strategist at Barclays Capital in London. He expects the
euro will fall in three months to the lowest against the dollar since October.

The European currency also dropped for a second day against the yen after a
government report showed Japanese household spending rose the most in nine
months in January, adding to evidence a recession is ending. The euro is down
2.7 percent against the dollar and 0.9 percent against the yen this year in part
on speculation the region's expansion will falter.

Against the dollar, the euro dropped to $1.3194 at 9:25 a.m. in London, from
$1.3227 late yesterday in New York, according to electronic currency-trading
system EBS. Din forecasts it will fall to $1.26 in three months. The euro also
fell to 137.92 yen, from 138.35. The yen was at 104.52 per dollar, from 104.62.

The U.S. Institute for Supply Management's manufacturing index probably rose to
57, according to the median of 56 forecasts in a Bloomberg survey. Signs of a
pickup in growth and inflation helped send U.S. 10-year Treasury note yields to
their highest in 13 weeks today, widening the gap with Europe.

The euro stayed lower after an industry survey showed euro- region manufacturing
stalled last month. An index compiled by NTC Research Ltd. for Reuters Group Plc
was unchanged at 51.9. Readings above 50 indicate growth.

`Double Whammy'

``There's rising downside risk for the euro,'' said Robert Rennie, a currency
strategist in Sydney at Westpac Banking Corp. It may fall to $1.28 by
quarter-end, he said. ``We're getting good, solid growth in the U.S. and we're
not getting it from Europe.''

European Central Bank policy makers have kept their benchmark interest rate at 2
percent since June 2003, and may again leave it at a six-decade low at the March
3 policy meeting, according to the median forecast. The Federal Reserve has
lifted its target rate six times, to 2.5 percent, since June.

The contrasting outlook in Europe and the U.S. ``is a double whammy for the
euro,'' said Callum Henderson, global head of currency strategy at Standard
Chartered Plc in Singapore. The euro may fall to $1.3050 this week and as low as
120 yen in the next 12 months, Henderson said.

Germany's unemployment rolls increased by 161,000 to the highest since World War
II and the adjusted jobless rate rose to 11.7 percent, a seven year-high.
Germany's jobless rate, measured by International Labor Organization standards,
rose to 9.3 percent in January from 9.2 percent in December, a separate
government report showed today.

`Europe Is Weak'

``The economic outlook in Europe is weak,'' said Jake Moore, a currency
strategist in Tokyo at Barclays Capital Inc. ``The bias is for the euro to
weaken against the yen'' because of evidence of a Japanese economic recovery, he
said. Japan's currency may rise to 136 per euro in the next few weeks, he said.

Japanese household spending rose 8.2 percent from December, the government said
today. A separate government report showed today the economy added 470,000 jobs,
helping the unemployment rate hold at a six-year low of 4.5 percent. Reports
yesterday showed Japan's industrial production rose 2.1 percent and retail sales
gained the most in more than six years in January.

Japan's currency is still down more than 2.5 percent against the dollar since
reaching a five-year high of 101.69 on Jan. 17. A government report on Feb. 15
showed the third straight quarterly contraction in the final three months of
2004, sending the economy into its fourth recession since 1991.

U.S. Job Growth

Demand for the dollar may gain in advance of the March 4 U.S. employment report,
said Jeremy Stretch, senior currency strategist at Rabobank Groep in London. The
median forecast among economists polled by Bloomberg is for job growth to
accelerate to 225,000 in February from 146,000 in January.

``We would be looking for the dollar to rally in the near term,'' said Stretch.
``Provided we get those payroll numbers coming in in-line with consensus, or
above, the U.S. dollar is going to stage some gains.''

U.S. 10-year Treasury yields today rose as high as 4.39 percent, the highest
since Dec. 3. The gap, or spread, with German 10-year bunds widened to 63 basis
points today, compared with 56 basis points at the end of last week. A basis
point is 0.01 percentage point.

Treasury yields increased after a government report yesterday showed the measure
of inflation used by the Fed in its semi-annual forecasts accelerated to the
fastest in more than two years. Prices of goods and services bought by consumers
rose 0.2 percent in January from the previous month.
*************************************


John H

"All decisions are the result of binary thinking."