There's an article at Chuck Butler's website that might help you . . . I think it was written on Friday. Follow this link: http://www.dailyreckoning.com/Writer...

Scroll down the page to where it says the following:

And now…today's Pfennig!

Wooden Arrows?

Good day… And a Happy Friday to one and all! A Fantastic Friday, I hope! As the blind man said, as he spit into the wind… It's all coming back to me now. And so it was yesterday morning after I had hit the send button for the Pfennig, a trader friend called to give me some insight, and… After talking to him, it all came back to me.

What the heck is he talking about now? I hear you asking… Well, recall how I - and probably all of you too - have been scratching my head and wondering just how in the world the dollar could be rallying in the face of all that's going on, and the bad data to boot. Well, here it is folks, sit back and take a sip of coffee.

One of the things we've learned this week is that the European banks are not getting to go Ollie, Ollie Oxen Free, on the holding of toxic waste debt… And since they are U.S. issued mortgage bonds, the trader that called tells me that they need to have capital reserved in U.S. dollars. Well, usually, these banks use LIBOR for this funding… But with the credit crunch going on all over, LIBOR rates have gone through the roof. So… Looking for alternative means of raising capital, the European banks have turned to the euro/dollar swap market… Selling their euro reserves and buying dollars.

SLAP! I could have had a V-8! Now why didn't I think of that? Anyway… This is what's going on. One would logically think that when LIBOR gets back to normal, these euro/dollar swaps would be reversed. Now… The next question is… What will it take to get the LIBOR rates to normalize? Well, that would be an unlocking of the credit crunch. And according to our Fed Chairman, U.S. Treasury Secretary and President, the way to unlock the credit crunch is to pass the bailout package! Dang it! I knew it would all get back to that darn bailout package!

Speaking of which, the House is expected to vote on it today . . . . .

One of the things we've learned this week is that the European banks are not getting to go Ollie, Ollie Oxen Free, on the holding of toxic waste debt… And since they are U.S. issued mortgage bonds, the trader that called tells me that they need to have capital reserved in U.S. dollars. Well, usually, these banks use LIBOR for this funding… But with the credit crunch going on all over, LIBOR rates have gone through the roof. So… Looking for alternative means of raising capital, the European banks have turned to the euro/dollar swap market… Selling their euro reserves and buying dollars.

SLAP! I could have had a V-8! Now why didn't I think of that? Anyway… This is what's going on. One would logically think that when LIBOR gets back to normal, these euro/dollar swaps would be reversed. Now… The next question is… What will it take to get the LIBOR rates to normalize? Well, that would be an unlocking of the credit crunch. And according to our Fed Chairman, U.S. Treasury Secretary and President, the way to unlock the credit crunch is to pass the bailout package! Dang it! I knew it would all get back to that darn bailout package!

Speaking of which, the House is expected to vote on it today . . . . . .