Growing Fears That Today's Currrency Wars May Lead To A Lehman-Style Crisis

Riot police stand outside the European Central Bank's headquarters in Frankfurt. REUTERS/Kai Pfaffenbach

Liam Halligan, The Telegraph: Global currency wars are threatening a Lehman-style crisis

Global currency markets made front-page headlines last week as the euro plunged towards parity with a surging dollar and the pound similarly soared against the single currency.

But why is the dollar so buoyant and the euro spiralling downward? And should you lock in the strong pound by buying your summer holiday money now?

You may, quite reasonably, think that economic fundamentals, such as GDP growth and cross-border trade flows, still drive exchange rates.

WNU Editor: In my life I have learned one golden rule when it comes to government manipulation of the economy .... in the end free markets will rule. Today's global currency wars are just the latest manifestation of government control and manipulation of markets .... that in the end will also fail.The question is when .... and I expect it will happen when we least expect it.

The World's Currency Wars Are Spreading

Bloomberg: Central Banks Now Open 24/7 Fighting Currency Wars and Deflation

Central banks are now open all hours.

Just as they worked weekends through the financial crisis, policy makers are again signaling they can strike at any time for the good of their economies.

Spooked by the threat of deflation, Sweden’s Riksbank became the latest to put investors on alert when it said on Thursday that it’s “prepared to do more at short notice” after cutting its main interest rate below zero and unexpectedly saying it will buy government bonds.

More News On The World's Currency War

Sweden cuts rates below zero as global currency wars spread -- The Telegraph
Central Bankers Ramp Up Currency Wars -- WSJ
Currency war: Who will be the casualties? -- CNBC
The Currency Wars Look Real, and the Prospects Could Be Grim -- WSJ
America's Losing the Currency War -- Leonid Bershidsky, Bloomberg
Deflation, Interest Rates and Currency Wars -- Market Oracle
One-Two-Three-Four, Who Declares a Currency War? -- Fischer Investments
Switzerland Rejoins Currency Wars -- Bloomberg
The Currency Wars’ “Pearl Harbor” -- Daily Reckoning
Currency Wars Have a Nuclear Option -- Mark Gilbert, Bloomberg

WNU Editor: Shades of the 1930s?

Here Comes The Currency Wars

Edward Harrison, Foreign Policy: What the Wild Swiss Franc Appreciation Really Means

Currency wars are coming. Will the U.S. Federal Reserve’s interest rate moves make it worse?

WNU Editor: A sobering analysis on how key nations .... by politically manipulating the value of their currencies.... are creating an economic/monetary environment that will not be sustainable in the foreseeable future.  Read it all.