Mick Weinstein The Week's Best Stock Blogs

When the euro was first launched as an accounting currency in 1999, it was on par with the U.S. dollar. Right now, however, your buck can be exchanged for just 0.64 euro. Ouch.

Dollar Foolish

The dollar's precipitous fall was the focus of many market bloggers this week -- here's some of the best commentary:

• Forex analyst Kathy Lien asks if currency intervention from the central banks to prop up the dollar is likely -- or even worthwhile -- and provides five reasons why she believes the greenback will fall even further.

• Macroeconomist Menzie Chin notes President Bush's statement this week that he's in favor of a strong dollar, and believes the commander-in-chief has the right approach to supporting the U.S. currency in the long run. But Eben Esterhuizen asks, "What happens when the Fed's monetary policy fails to work?"

Gold Continues to Shine

Gold reached new highs on the dollar's weakness, rising above $1000 an ounce on Wednesday.

• Bespoke Investment Group charts how the dollar/gold ratio has recently "gone parabolic."

• Amid this ongoing dollar/gold dynamic, Tim Iacono questions the mainstream media's odd yet persistent skepticism on gold as an investment, while Charles Kirk warns that the bull market in gold is hitting his "junk mail indicator," suggesting that the "easy money has already been made."

Fed Action: Divine Intervention?

On Tuesday morning, the Federal Reserve moved to enhance liquidity in fixed-income markets by announcing it would expand its term securities lending facility to $200 billion, and accept mortgage-backed bonds as collateral from financial institutions for up to a month.

• The move was initially seen by the markets as a type of "divine intervention," according to Financial Times' excellent Alphaville blog, as stocks rocketed for the day but trading patterns quickly returned to what has become normal. "The underlying issue is one of solvency rather than liquidity," Alphaville remarked. "Neither the Fed nor anyone else will enter from stage left to sort out this problem. Tragically, the solution will involve some pain."

• Yves Smith says the move is "as close as one can get without an act of Congress to affirming the implicit federal guarantee of Freddie Mac and Fannie Mae debt," but warns, "We haven't even seen the worst of the housing crisis, yet the Fed has already used a great deal of its firepower."

• "The Fed action came at a time when the markets were ripe for an oversold bounce," says Barry Ritholtz. While it may help financial institutions, Ritholtz believes it won't do anything for the housing market or the "inverted pyramid" of derivatives that sits atop housing. "No recession at any cost seems to be the Fed's philosophy in light of the latest massive cash infusion to banks." Steve Waldman says the real test of this, like similar Fed interventions in this area, will come 28 days later.

• Markham Lee thinks the move "seemed like a sneaky way to allow the brokerage firms to borrow from the Fed," showing that "the Fed is willing to do almost anything to bail out the financial sector." Lee's wondering what the Fed will do next, "instead of letting the free markets do their job. I think Tuesday could be the first step down a slippery slope to a sort of ‘de-facto socialism' for the financial markets, the consequences of which will be quite dire."

• Felix Salmon imagines Fed chief Ben Bernanke as a type of action hero: "Every time the credit markets seize up and threaten to bring down the U.S. financial system, he pulls out a new weapon." Salmon's somewhat more optimistic, though, because while the Fed won't be able to prevent a recession, they "might at least be enough to keep the markets functioning relatively smoothly on the way down."

• David Merkel believes there's less to the Fed action than meets the eye. "The Fed in this case is being ‘too clever' and needs to do a permanent injection of liquidity. If they don't want to do that, well, let's move back to the gold standard, and privatize monetary policy."

The Downfall of Client 9

Finally, given Wall Street's overdose of schadenfreude this week, I'd be remiss if we failed to highlight a few responses to the Elliot Spitzer scandal:

• Vahan Janjigian: "It is a little gratifying to see this 'holier than thou' crusader get caught in his own ethical lapse. Spitzer made a career of ruining the reputations of numerous businessmen; not by convicting any of them of doing anything criminal, but by threatening to indict their companies if they didn't resign."

• Felix Salmon sees it somewhat differently: "Wall Street hated Spitzer, with a vehemence rarely seen in an industry famed for its clubbable bankers... Spitzer went after Wall Street's big-shots not because he was a saint on a moral mission, but because he was a power-hungry alpha male with (as we now know) the kind of weaknesses which usually bedevil such men. On the other hand, someone needed to remind Wall Street that it could not shaft its clients with impunity while raking in billion-dollar profits. The bully has been brought to his knees, but the banks he bullied are still at least a little bit cowed, and on balance that's probably no bad thing."

• Finally, venture capitalist Fred Wilson takes a philosophical approach: "This story is a tragedy of Shakespearian proportions. How does a man with so much going for him do something so stupid and self-destructive? Why do people self destruct and what can we learn from it?"