The US is still the most reliable economy in the world.

That's what the exchange rates are telling us - the US $ is strengthening while the other currencies are weakening. This means that the rest of the world still has faith in the US economy.

Now today there was a piece of news that housing sales were up for September by 2.7%. Thursday we will see more data. But I think the this increase is going to be temporary. Banks are still not lending, consumer demand is going down - credit is difficult to get in these tough times and the bailout package is likely to be inadequate.

But US treasury bills are still risk free - the bills are backed by the government and the US government is not likley to go bankrupt. And hence investors dont mind buying them. Wondrous how the greenback is still strong even though the economy is showing signs of major weakness.