The feds regard a Sushi Slump, a Japan-like recession, as the Greatest Of All Dangers. They want to avoid it in the worst possible way – by destroying the dollar .

Two major central bank decisions are scheduled to be released, and the results could have a large impact on the markets, particularly in FX.

In terms of real money – gold – oil is still cheap. Then again, in terms of real oil, gold is cheap . In terms of anything real, everything else is realistic. In terms of gold, the ordinary American house is cheaper today than it was five years ago. In terms of oil, the average stock is barely half what it was five years ago. In terms of soybeans, even health insurance is a bargain.

AUD/USD appears to be picking up pace to target Fibonacci resistance at 0.8900, and could rally to parity with the US dollar.

US economic data has not fared well as we enter 2008, as last week’s dismal non-farm payrolls reading of 18,000 and jump in the unemployment rate to a two-year high of 5.00 percent points toward a gloomy scenario.

It appears that the economy is headed towards the dreaded synthesis of inflation and deflation known as ‘stagflation.’ Gold is rising. Oil has already risen. Up, up, up and yet, the economy can barely get out of bed in the morning. Consumers are running out of money to spend. And financial assets are going down instead.

The number of Americans entering into contracts to buy previously owned homes during the month could prove to be more disappointing than expected, and prices of existing homes, which make up about 85 percent of the US housing market, likely have much further to fall.

This week John Mauldin looks at the housing market, the continued implosion of the credit markets, and the deteriorating employment picture, and highlights what he thinks will be the next looming problem in the growing credit crisis.

Bill Bonner follows the theme of the first week of the year, and offers his forecast for 2008, or as he calls them, the financial obituaries.

Lawrence G. McMillan reviews the options market in his weekly column for January 4.