Assuming that most of this windfall for producers will initially be saved, there also is an implicit demand for U.S. securities.

If the euro does tumble again -- and we think it will -- we must expect the ECB to orchestrate another round of currency intervention.

With less credit available, less growth is possible. So we are looking at a bad situation here that we fear can only get worse.

The growing perception is that Japan is falling back into a dark hole of recession again.

We do not see any fundamentals strong enough to keep it up there --unless there is a lot of intervention with other governments joining in. We expect the move will fail.

Rising energy prices will further subtract from already-falling real income growth in Japan. In our view, a one or two percentage point subtraction from the growth rate of consumer demand at the margin will prove catastrophic to all hopes of substantial economic expansion.