The Fed's half-point interest rate cut last week to 4.75 percent came in response to market turbulence in the U.S. and elsewhere in the fallout from a subprime mortgage crisis. Investors this week will be looking for signs that U.S. inflation is under control. The market is also hoping that readings this week on U.S. durable goods demand, the housing market and consumer spending power will show that the U.S. economy isn't heading for recession.

Many analysts see more U.S. rate cuts ahead -- which could further weaken the U.S. currency, as investments denominated in dollars become less attractive.

This is actually going to continue to worse. The housing market shows no signs of improvement, the subprime balloon has burst and is looking worse daily, and the upshot of the whole thing is, as W said a few months ago, more people than ever own their own homes, and more people than ever are having their mortgages on those homes foreclosed.

Couple this with the actual decline in real wages (previously noted here) and we're looking at a disastrous confluence.