me thinks the currency market has seen enough failed interventions that it shrugs off any intervention and may view it as a sign of weakness.  me also thinks that until foreigners quit plowing all their money into the US the dollar should remain fairly strong.  however, if all the hedge funds are short which i assume they would be, the turnaround will be very quick.

 -----Original Message-----
From: 	"Eva Pao" <epao@mba2002.hbs.edu>@ENRON [mailto:IMCEANOTES-+22Eva+20Pao+22+20+3Cepao+40mba2002+2Ehbs+2Eedu+3E+40ENRON@ENRON.com] 
Sent:	Thursday, July 26, 2001 11:49 AM
To:	Arnold, John
Subject:	thanks, but

i took macroecon also.  i'm not a proponent of open market interventions.  i
am merely saying that its on the ecb radar screen and that measures will be
taken to remedy a weak euro.  further, everything is psychological, a
signalling effect to move the market up is fine by me.  i think overall YOU
have been extremely ineffective (just kidding, pooks).


-----Original Message-----
From: Arnold, John [mailto:John.Arnold@enron.com]
Sent: Thursday, July 26, 2001 9:23 AM
To: epao@mba2002.hbs.edu
Subject: RE: okay here's what i got on the euro...


I'm big seller of interventions.  they tend not to work.  if the gas
market wants to go lower, enron coming out and buying 10,000 contracts
is not going to stop the market from going down.  maybe in the short
term, but that's it.  same with currencies.  ECB can come out and
transfer some of its foreign reserves from dollars to Euros, but they
are limited by their currency reserves unless they want to act in the
futures market at which point they have to exit that position at some
point.  i think it is more psychological than anything.  i think overall
market interventions have been extremely ineffective.

>  -----Original Message-----
> From: 	"Eva Pao" <epao@mba2002.hbs.edu>@ENRON
> [mailto:IMCEANOTES-+22Eva+20Pao+22+20+3Cepao+40mba2002+2Ehbs+2Eedu+3E+
> 40ENRON@ENRON.com]
> Sent:	Wednesday, July 25, 2001 10:51 PM
> To:	John Arnold
> Subject:	okay here's what i got on the euro...
>
> Here is a bio on my Business, Gov't & Int'l Economy prof.  He gave a
> presentation on the stuff he did for the European Central Bank the
> other
> day.  He reviewed why historically everyone looks to germany (i.e.
> Bubba) as
> a proxy for determining monetary policy in Europe.  Moreover, he
> explained
> why exchange rates were the focal point in determining monetary policy
> in
> Germany.  With the new ECB, the bank heads are explicitly trying to
> remove
> public focus on exchange rates.  However, this effort may have led to
> the
> belief by the financial community that the ECB does not care about/
> will not
> defend the euro.  He then stated that this is not true.  So, I'm
> thinking
> that downside is limited.  The performance of the euro has not gone
> unnoticed, especially given the critical EU goal of 2% inflation p.a.
>
> ep
>
> Bio:
> Huw Pill is an Assistant Professor of Business Administration at the
> Graduate School of Business Administration, Harvard University, where
> he
> teaches the first year required MBA course Business, Government and
> the
> International Economy.
> Having attended University College, he received an undergraduate
> degree in
> Politics, Philosophy and Economics from the University of Oxford in
> 1989. He
> received his doctorate from the Department of Economics at Stanford
> University in June 1995.
> From July 1998 until January 2001, Professor Pill was on leave from
> Harvard
> working at the European Central Bank in Frankfurt, where he was Head
> of the
> Strategic Policy Issues in the Bank's Directorate Monetary Policy.
> Prior to
> his appointment to the Harvard faculty in July 1995, Professor Pill
> worked
> in London as an economist in the Monetary and Exchange Rate Policy
> Group of
> the Bank of England's Economics Division (1990-92). He has also worked
> at
> the International Monetary Fund in Washington, DC (1994, 1995).
>
> Professor Pill's current research has two dimensions. On the one hand,
> he is
> investigating the formulation and conduct of monetary policy in
> advanced
> economies, with a focus on the implementation of the single monetary
> policy
> in the euro area. On the other hand, he is studying the role of
> financial
> liberalization and innovation on macroeconomic fluctuations. The
> latter
> project focuses on the interaction between international capital
> flows,
> exchange rate management, structural economic reforms (especially in
> the
> financial sector) and macroeconomic performance in a variety of
> countries,
> including the United Kingdom, Indonesia and Mexico. The results of
> this
> research have been published in various professional journals and
> edited
> volumes.
>


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