A week after the US election result, and the market reaction to George Bush's victory is schizophrenic. Wall Street traders have been popping champagne corks while donning tin hats. American shares have rocketed as the dollar plunges.
The Dow Jones Industrial Average, a measure of the US equity market, is up by 400 points to more than 10,400. The already enfeebled greenback has slipped by a further 2 per cent.
There is a kind of logic here. Bush's promised mix of continued tax cuts and light business regulation is seen as good for corporate profits, and was lapped up by the share market. But the world's currency traders are more concerned about America's yawning twin deficits - on trade and in government spending - and the Bush administration's reluctance to curb either.
The dollar's decline is likely to be the more enduring of the two trends. Some traders in London are seriously talking about the prospect of a $2 pound (the current rate is about $1.86). That is good news for Brits planning Florida holidays and for businesses importing raw materials priced in dollars; it's not such good news for British businesses trying to export to the US, or firms that rely on a good flow of free-spending American tourists.
But, in truth, sterling is a bit of a sideshow in the international currency markets. The bigger issue is the dollar/euro exchange rate. The dollar, which has lost 30 per cent of its value against the euro in three years, is seen as heading further south. The now buoyant euro buys $1.29. Gavin Friend, an analyst at Commerzbank, is forecasting $1.38 by the end of next year and further dollar weakness in 2006.
It is all very different from 2001, when the unloved euro sank to less than 90 US cents - to the delight of some euro-hostile commentators.
With America sucking in a monthly $50bn more in imports than it exports, something at some stage has to give. The government's budget deficit, at about $30bn a month, is more manageable, but just adds to the impression overseas that Uncle Sam is living beyond his means.
What is not known is how far and how fast Bush and his advisers - and America's main trading partners - are prepared to see the dollar slide. Exchange rates are normally seen as a nation's ultimate virility symbol. But these are not normal times. Bush, as he expresses his power on the streets of Fallujah, perhaps reckons he can afford to relax the country's strong dollar policy.
Publicly, policy hasn't shifted. But currency traders can sense the administration's heart may no longer be in a strong dollar. They are pushing at an open door. Hedge funds, pension funds and corporations are starting to pull money out. Selling US dollars to buy Canadian dollars, Aussie dollars, even Kiwi dollars, is the favourite punt of the moment. The greenback is slipping.
So far, central bankers outside America have tolerated the currency's slide, although it hurts their exporters. But the further the dollar slides, the greater the pressure on the European Central Bank and the Bank of Japan to push for co-ordinated intervention. Every tiny slip in the dollar makes economic growth outside the US that bit harder to achieve.
The soaring oil price has until now been seen as the main bogey for the world's economic policy-makers. Suddenly, managing the dollar's decline looks to be the bigger difficulty.
Tony Blair says he wants a pensions system that "has the basic state pension at its core". Gordon Brown - at the CBI conference in Birmingham on 9 November - explicitly ruled out restoring the link with average earnings.
The basic state pension, currently £79.60, continues to wither. It is now just 15 per cent of average earnings, compared with 23 per cent when Margaret Thatcher severed the link in 1980. How much lower does it have to go before it ceases to qualify as "core"?
Means-testing is complicated, degrading and a huge disincentive to save. Everyone, from charities concerned with the elderly to the Tories, the Liberal Democrats and the savings industry, wants the Chancellor
to ease off on the means-testing and boost the basic pension. But when he pledged in Birmingham to resist demands to restore the link, "from wherever they come", I suspect he had someone altogether closer on the front bench in mind.
Patrick Hosking is investment editor of the Times