US Dollar plunge could lead to full-blown financial crisis

The Straits Times ^ | 01.17.04 | William Choong

[Jaysun]

What's the problem dr? You came here and posted something totally unrelated to the thread. I posted something that was also unrelated in response and that resulted in your charge that I'm a "weirdo". Now, I've got a thick hide and that doesn't bother me in the least. I admit that I posted idiotic gibberish. However, there's no reason to be rude - we're on the same team.

[B4Ranch]

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

That's what our President is trying to do!

The rest of the world will not chip in to help pay for the $5 billion space initiative, to recover the $1.5 Billion for the promotion of marriage, or pay for the unfunded prescription drug plans in the Medicare program, the TSA's crazy costs, the agriculture Bill, the Dept. of Homeland Security stumbling, the steel tariffs, they aren't going to help promote the proposal to cut U.S. manufacturers taxes nor the horrendously costly "temporary worker" idea.

[Orangedog]

Then you should know by now not to be hosing atound on the net two hours after the wife gives birth ;)

Too bad this isn't your first. I like scaring the Hell out of the newcomers.

[the invisib1e hand]

US Dollar plunge could lead to full-blown financial crisis

we could pull this title apart one phrase at a time. start with 'plunge.'

your assignment is to find a historical chart of the US Dollar index, and locate where the $ has 'plunged' in the past, to establish the economic context. Then, notice how the sky failed to fall and the world failed to end in those periods.

Point to ponder: has the $ ever been lower viz a vis a basket of foreign currencies? Do economic phenomena ever take place in a static world, or do conditions change and affect conditions, thereby altering premises in the process? Have world's currencies been inflated as well, so that sheer dollar amount of US debt may be deceiving regarding it's magnitude relative to foreign economies? Has the wealth of the US increased substantially such that a debt/equity ratio in current dollars might not be as staggering as the absolute $ amount of the debt suggests? Are people unaccustomed and therefore afraid of ten digit amounts, since only a generation ago those numbers were far rarer?

[Jaysun]

thankya thankya. I can't remember where I saw this, but it had my drug induced wife laughing so hard this morning that the nurse asked me to leave for a bit. I was simply trying to fill the air and relax her. I said, "Melanie, we're going to have identical twins. How are we going to know that we're not just feeding the same one over and over? I guess we'll have to put an "X" with a magic marker on one of their heads."

[B4Ranch]

"They're just the doom and gloomers."

So far the trend has been DOWN. A one week change also occurred in November. Then down and down we went.

[hedgetrimmer]

FYI

IMF funding, though unique in several ways, has shared the same experience as a number of other foreign policy issues brought before the U.S. Congress. It was affected by trends that have been evolving over recent years.

First, the consideration of almost all foreign policy issues in the Congress has become increasingly diffused. The sense of urgency and international tension produced by the Cold War has diminished, and time and effort spent on resolving domestic, rather than foreign policy, problems is seen as more rewarding. The foreign affairs authorizing committees have continued to lose stature and influence. Old coalitions of internationalists have broken up, and leadership on foreign affairs issues, whether for or against, is not coming from the traditional sources. In the case of the IMF, a wide range of committees became involved—the Banking Committees, the House International Relations and Senate Foreign Relations Committees, the Agriculture Committees, the Appropriations Committees, the Budget Committees, the Joint Economic Committee, and even the House Rules Committee. In the end, the elected leadership in both chambers played a decisive role.

A second development is that the political parties have become increasingly divided on foreign policy. In the debate over the IMF, the distance between the Milton Friedman free-market Republicans and the business-oriented internationalist Republicans was as wide as the gap between Republicans and Democrats. Party fragmentation, although not always along the same fault lines, can be seen on such issues as China, fast-track trade authority, United Nations funding, and the foreign affairs budget.

In addition to party fragmentation, and actually intensifying it, are the effects of redistricting and low voter turnout, which have given greater voice to single-issue proponents. Redistricting in the states along party lines has meant that the chief political threat to many House members comes from within the party, making special issues—such as abortion on the Republican side and labor standards on the Democratic side—dominating concerns. Low voter turnout—only 37 percent in the 1998 elections, the lowest since 1942—exacerbates the trend.

Divided government—with the Democrats controlling the executive branch and Republicans in the majority in both the House and the Senate—complicates the picture still further. The U.S. Treasury Department took the lead in arguing the IMF's case on Capitol Hill, but, inevitably, resentments that spilled over from previous battles and mutual distrust, especially on the House side, affected the reception the Democratic administration received in the Republican Congress.

http://www.imf.org/external/pubs/ft/fandd/2000/09/locke.htm

[Jaysun]

Then you should know by now not to be hosing atound on the net two hours after the wife gives birth ;)

Not to worry. I'm not "allowed" back until we're telephoned. Besides, I'm in charge of chauffeuring my Great Grandfather to the hospital.

[WilliamofCarmichael]

Close to 200,000 state-owned enterprises, which are less efficient at producing exports than private firms, would suffer, leading to heavy job losses.

According to "Bank of China to receive 20 billion state bailout," by Tian Ying, Bloomberg, Friday, December 26, 2003, Published in IHT,

http://www.iht.com/articles/122732.html

the chicoms' "banks" have some $400 billion of bad loans created by five decades of lending to unprofitable government companies. I think the banks' total worth is 1.7 trillion.

Also, I believe there is already a "floating population" of some 100 million unemployed plus the official unemployed (15 percent?).

"Anyone seem my copy of Marx and Lenin, comrade?"

We got no worries. We got tens of millions of cheap labor folks coming here and they ain't gonna need that damn coyote no more.

[hedgetrimmer]

IMF Says Rise in US Debts Is Threat to World's Economy
By Elizabeth Becker and Edmund L. Andrews
New York Times
January 8, 2004


With its rising budget deficit and ballooning trade imbalance, the United States is running up a foreign debt of such record-breaking proportions that it threatens the financial stability of the global economy, according to a report released Wednesday by the International Monetary Fund. Prepared by a team of I.M.F. economists, the report sounded a loud alarm about the shaky fiscal foundation of the United States, questioning the wisdom of the Bush administration's tax cuts and warning that large budget deficits pose "significant risks" not just for the United States but for the rest of the world.

The report warns that the United States' net financial obligations to the rest of the world could be equal to 40 percent of its total economy within a few years — "an unprecedented level of external debt for a large industrial country," according to the fund, that could play havoc with the value of the dollar and international exchange rates. The danger, according to the report, is that the United States' voracious appetite for borrowing could push up global interest rates and thus slow global investment and economic growth. "Higher borrowing costs abroad would mean that the adverse effects of U.S. fiscal deficits would spill over into global investment and output," the report said.


http://www.globalpolicy.org/socecon/crisis/2004/0108imfwarnsus.htm

[B4Ranch]

LOL Have fun with them, DADDY.

[imawit]

Last question for today. Where can I find a chart that shows intraday USD and is open when forex is open, meaning not closed after 8-5 nor on weekends. I went to oando but they don't have charts or could I have missed them while crawling all over their site.

[txhurl]

Also make sure the slower-running one doesn't get spanked for every transgression. It happens.

[djreece]

Congratulations! And thank you for all the great information you provided on this thread.

[Orangedog]

Well, since your a veteran I guess I can pass on my usual advice: "Lead them to believe that you know everything from an early age, because by the time they are 12 they will all of a sudden know everything and no one will be able to tell them any different until they grow up and realize how little they really know."

[dr_who_2]

I'd rather discuss the subject of the thread.

[expatguy]

The disaster is coming sooner than you think and that is perhaps why you see more frequent reports on this.

I live in Malaysia and have intimate knowledge of what the Asian banks are discussing.

[templar]

The Congress will have no other choice but to repudiate the debt.

Well now, I suppose that could be ineresting.

[arete]

So you don't believe the major Asian economies are actively participating in America's de-industrialization to their own benefit?

Of course I do, but I also believe that they are in the drivers seat and they know it. I don't think that they the least worried.

Richard W.