Ever since March 2009, the relationship between the dollar and U.S. equities has behaved like similar ends of a magnet. When equities rose, the dollar fell and vice versa. Analysts blamed the role of the government’s lenient credit policy for this inconsistency.

Now, other factors have come into play. The dollar and equities seem to be reacting similarly to national and global economic events. On the national scene, there are signs that employment is stable, trending upwards and definitely has the attention of the Obama Administration.

After a surprisingly strong 10-year syndicated bond sale raised 5 billion euros on Thursday,Greece staved off pending financial doom and built a strong case for the success of its fiscal moves. The sale was three times oversubscribed and, at a hefty 6.4%, provided a return twice as large as offered by Berlin.

The quality of the investor was also impressive. Long-term investments such as pension funds, commercial banks and insurance companies replaced shorter-term hedge fund speculation. 90 percent of the investments came from outside Greece.

On Wednesday, Greek Prime Minister George Papandreou announced sweeping changes designed to trim $6.5 billion or approximately 2 percent of the country’s debt ratio to GDP. The Prime Minister hopes the changes will convince euro zone nations that his government is serious about tackling the massive debt, thus paving the way for assistance from the EU.

The spending cuts were not well received by the country’s biggest public sector union, which immediately called for a one-day strike on March 16^th. In the meantime, 500 disenchanted pensioners marched on the finance ministry in Athens.

The 16-nation euro zone is grappling with the fiscal crisis in Greece. The country’s deep debt level has weighed heavily on both the euro and the British pound.

The stakes are high and may well get higher.  According to an article in the Financial Times authored by billionaire investor George Soros, Greece is just one of several European economies in dire straits. The combined fiscal unrest in Spain, Italy, Portugal and Ireland will far outdistance the relatively minor problem in Greece.

Secretary of State Hillary Clinton was called before a joint Senate and House Budget Oversight Committee to explain the Department of State’s whopping $52.8 billion budget request for 2011. In response, Clinton drew upon her experience as a former member of the Senate who served on the budget committee 10 years ago when the country had a balanced budget and was paying down the country’s debt.

Clinton took direct aim at former Federal Reserve Chairman Alan Greenspan who she said came before the committee during the Bush years and introduced the loose spending and tax cut formula that is at the root of the federal deficit.

President Obama crossed Pennsylvania Avenue on Thursday to meet with Republican and Democratic members of Congress at a televised meeting in the Blair House. The purpose of the seven-hour meeting was to demonstrate a new willingness to work together to solve the country’s many problems, including health care.

The Obama health care legislation now faces its sternest test as Republicans clearly intend to hold their ground. The minority party contends health care reform is necessary but that an entirely new plan is necessary.

In his second day of appearances, Fed Chairman Bernanke maintained the central bank’s position that interest rates will remain low. This news was received with enthusiasm as the markets roared back from early day triple digit losses to settle down 73 points.

Bernanke formally announced that both the SEC and the Federal Reserve were launching investigations into the role of Goldman Sachs and other Wall Street financial institutions in introducing the government of Greece into the risky derivatives activity that is now plaguing the nation.

Fears that Greece’s debt-ridden economy is just the tip of the iceberg continue to pressure the Euro and send ripples of stress throughout the 16-nation Euro zone and global markets. Greece’s GDP fell 3.6 percent in 2009 and is the country is mired in its worst recession in 50 years.

In the wake of 19% unemployment, a devastated housing market, overwhelming debt and an almost unimaginable budget deficit, the Greek economy has spiraled out of control. To further complicate matters, a massive labor strike has added fuel to the fire. Many euro zone nations insist that the government stabilize the environment before assistance is offered.

U.S. equity markets closed flat on Monday in the lightest trading day of the year. About 7 billion shares were traded, well below the daily average of 9.65 billion. Along with the central bank’s discount rate hike, several other credit-tightening measures, announced last week, have raised investor concerns about the Federal Reserve’s intentions. However, overnight news that the Senate cooperated in passing a jobs creation bill stirred overnight market activity.

Dennis Calijas of Lind-Waldock in Chicago summed up investor mindset: “People are still trying to figure out what the intentions of Bernanke are, moving forward.” The concern emphasizes how reliant the American economic environment has become on Washington. The Fed’s looser monetary policy brought about significant gains in equity markets in 2009, but indications are a belt tightening is at hand.

In his report last week, Federal Reserve Chairman Ben Bernanke signaled upcoming interest rate hikes. However, national and international markets appeared caught off guard with the Federal Reserve’s announcement of a discount rate increase of 0.25% to 0.5%. The announcement was followed by swift shifts in global currency, commodity and equity markets.

The dollar was lifted as U.S. Treasury bond prices slipped and equity markets shrunk upon the central bank’s release. Members of the Federal Reserve rallied to support the move and to assure financial markets that the rate hike did not represent a change in Bernanke’s previously stated monetary policy.