Interest Rates not coming down anytime soon

According to Fed minutes, there is no interest in dropping interest rates.
They are signalling that inflation is the problem to be addressed, not a housing meltdown.

At the same time, in defense of the dollar, the Fed Chief Bernanke gave a speech declaring that China wouldn't dare dump their dollars.

Well, Ben, maybe not yet. But will they continue to accumulate our funny money? Don't be dsitracted by recent trade announcements and semi-protectionist moves by the US against China - those affect very little trade and are more for political show. Behind the scenes everyone knows that China and India are responsible for keeping inflation low in the US. The real discussions are about the dollar and keeping folks from buying the Euro which has a better return: up 10% vs the dollar over the past year and 5% YTD.

Dollar weakness is a mixed blessing. It is great for exports - US products look super cheap. But it boosts inflation by incresing the price of imports. Especially fuel.

The implications are
1. Overall economy 1 quarter away from technical recession: GDP and inflation almost equal each other at 2.3%
2. Some sectors already in recession: autos, residential construction, and home supplies are already in a recession. Banking is heading for a recession
3. Some sectors are booming: select materials, oil exploration, extraction & production, biotech, mobile phone services and semiconductor materials
4. Consumer spending in the US will be hit hard in 6 months as the bills come due