A weak dollar is to be expected in this environment but there is a difference between a weak dollar and a crashing dollar. Part of the market shock today was in both the continuing fast decline in the dollar and in China's comments suggesting that the low dollar will impact their investments. A crash in the dollar is what great investors like Jim Rogers (see Channeling Jim Rogers at http://www.Barrelomoney.com) and Marc Faber (see Marc Faber Channel at http://www.Barreloworld.com) have been concerned about. A weak dollar can help the export sector of the economy but a crashing dollar would both destroy purchasing power and create inflation pressure. The good news today in productivity and also in wages wasn't enough to balance out the fears of the dollar situation and the continuing woes in subprime and housing. Yet even Jim Rogers thinks the dollar is due for a bounce at some point. The fact that investors keep jumping back too early into financial and housing stocks probably isn't helping the market as the continuing bad news in those sectors keeps dragging the whole market down. Exporters are indeed helped by a weak dollar and also could gain from steady interest rates. Many defensive stocks could prosper in this situation as the economy slows, rates stay low and they reap profits from sales abroad. The market today was looking at the worst case scenario however.

Unfortunately, the dollar is not done dumping yet. Why? Because the government is hiding the true state of the economy. While they have been successful in doing this for a while, eventually, investors are discovering the real truth. Here is the real truth.

M3, the most complete measure of the money supply, is no longer reported leaving out components that show monetary growth of a staggering 14% per year. Next, GDP is not accurately reported leaving out components that drag down the number to an actual -2% growth. The inflation statistic is also fudged masking the true rate of 10%. Finally, unemployment is falsified, ignoring the heavily unemployed inner-city and discouraged workers by simply not including households those areas in any of the surveys and 'redefining' unemployment. The real unemployment figure is 12.5%.

Many commentators talk about the new competitiveness of American goods. What American goods? Most of our manufacturing is gone. This is ignorant feel good talk. We need to first speak the truth to understand our problems. Then we can work to fix them. Blind folded we cannot tell if we are moving forward fast or or falling toward the ground.

Our economy is on the skids and the government is intentionally misleading the people and the markets, a short term solution with disastrous results. BOHICA