US Dollar plunge could lead to full-blown financial crisis

The Straits Times ^ | 01.17.04 | William Choong

[Beck_isright]

"To have tax cut, one must have monies that mean control and cutting of spending. US not comprehend basic accounting...it have tax cut and increase spending, this is debt..like take large loan on credit card...even if balance not paid, interest is."

Now you're getting demanding, LOL. You're demanding that the U.S. actual hire people who took Econ 101!

[Jaysun]

The US$ to Euro has plunged from about $1.29US to $1.23US per one Euro within the last week. That's a 5% change in the direction of a stronger dollar. I trade currencies and I don't follow this guy.....

[Beck_isright]

"What Asians are really afraid of is that the devaluation that has already taken place will cause us to make more of our own goods, and put Americans back to work doing so."

How can we make our own goods when we are willing to sacrifice national sovereignty to allow those poor illegals to do all the work at substandard third world wages? I think you're pipe dreaming.

[Beck_isright]

"The US$ to Euro has plunged from about $1.29US to $1.23US per one Euro within the last week. That's a 5% change in the direction of a stronger dollar. I trade currencies and I don't follow this guy....."

I ignore one week and one month moves. If it stays under $1.25 per EU over 6 months, then we have a trend. One week reeks PPT, nothing more, nothing less.

[Praxeologue]

"The U.S. will grow its way out of its deficit."

The government deficit? Never

George Bush, Toledo, Ohio, April 24, 2003:

But I know we can grow out of the deficit with wise policy. And the best way to deal with the deficit is to address the two things that affect a deficit. First, increase revenues to the treasury through economic growth and vitality, and that's what we discussed here today. And second, make sure Congress does not overspend your money, make sure its focus is on the things that we need and doesn't spend beyond the things that we need. The best way to solve the deficit is to grow the revenues coming into the treasury through economic vitality and have fiscal sanity in Washington, D.C.

http://edition.cnn.com/2003/ALLPOLITICS/04/24/bush.transcript/

[Soren]

Do you think that was due to comments by the ECB, and if so, do you think the ECB has any bite behind its bark? What do you see for the USD going forward?

[Beck_isright]

"George Bush, Toledo, Ohio, April 24, 2003:"

He already has indicated he's willing to violate his oath of office by opening up our borders and not doing anything to secure them and you believe anything else he says? Please. Get real.

[Jaysun]

Do you think that was due to comments by the ECB, and if so, do you think the ECB has any bite behind its bark? What do you see for the USD going forward?

I don't doubt that the ECB comments played a significant part in the dollar's correction. One should also consider the strong foreign demand, metals are basically topped out, and American productivity and profits are great. I must warn you that I consider technical data more than fundamental data in making my predictions. I think that the EUR/USD will continue to fall (dollar will gain strength) at least until the meeting in Feb. I am presently shorting the Euro.

As it's often said, you should consider market opinions from me (or anyone else) in much the same way that you consider "assholes" in that everyone has one and everyone thinks that everyone else's stinks.

[imawit]

I am presently shorting the Euro.

Technically the right play at the moment. Let's see if this switch is a correction or just a hiatus. I would think that you at least do know what the fundamentals show. Short term trading does require strict adherence to TA and cannot be ignored. Do you have a long term oppinion ?

[arete]

Let's have another tax cut.

I agree. I also think that we ought to colonize the moon. I'm for backrupting the nation as soon as possible rather than this silly debasement of the currency game to delay the day of reckoning.

Richard W.

[A. Pole]

As French economist Jacques Rueff said: 'If I had an agreement with my tailor that whatever money I pay him returns to me the very same day as a loan, I would have no objection at all to ordering more suits from him.'

Especially when the price is lower than domestic producer costs. Free market/free suits bump.

[A. Pole]

The U.S. will grow its way out of its deficit.

Thank you for your assurance. I was worried for a moment.

[arete]

What Asians are really afraid of is that the devaluation that has already taken place will cause us to make more of our own goods, and put Americans back to work doing so.

Oh yeah, the Asians are afraid that we'll suddenly start creating jobs. Good one.

Richard W.

[A. Pole]

And don't give me that cliche that a broken clock is right twice a day. The clock is still broken.

And still right twice a day as opposed to some running clocks which are NEVER right.

[Jaysun]

Do you have a long term opinion?

How long term? I usually do not hold a position for longer than a week. Most of the time it's just a few days. I have set up my fundamentals for swing trades and day trades, so the longest I'd be comfortable to predict is for the next 2-3 weeks. I'd predict a continued gain in the dollar and would look for the EUR/USD to flatten out around 1.19 - 1.20 sometime within the next few weeks. Just my opinion.

[FITZ]

The U.S. will grow its way out of its deficit.

Grow by sending jobs out of the country?

[imawit]

ps: I looked at the USD only, couldn't find a symbol for the Euro. So let's assume they are 1:1. I see a reversal of the USD of just a little more than 3%. That's pretty small for a reversal for me (pretty dicey for me to make a reversal call) but then I don't play currencies.

Since you're now short the Euro, how much of a reversal magnitude did you use in reversing your position. And, obviously since this reversal magnitude is small compared to what I use for trading, is this small reversal magnitude typical with currency trading ?

[Redleg Duke]

Somebody ping Willie Green! He will have a whiteout!

[imawit]

Most of the time it's just a few days

Understood. Do you ever hold over a weekend ? This also explains that you would have to have a smaller reversal number than I use which is in the 5.5% neighborhood as the smallest threshold for reversal.

Are you playing actual cash or an index ? Not planning on trading myself but I wanted to get a feel for the dynamics.

Using your 1.19-1.20 for the Euro I get the USD under .84 best case. So I would guess that there is not an arithmetic direct relationship. Where does that place the USD in pure numbers.

[Screaming_Gerbil]

At what time will this price be paid by Joe six pack is what should be addressed...

When will that be???