Looks like the dollar is worth 116 Yen now. 2 years ago the dollar was worth 102 Yen. I guess the trade deficit is to blame? LOL!
Posted on 11/29/2006 8:46:56 AM PST by GodGunsGuts
Looks like the dollar is worth 116 Yen now. 2 years ago the dollar was worth 102 Yen. I guess the trade deficit is to blame? LOL!
Also makes their cost of doing business higher.
de Villepian is barking about the Euro's strength against the USD and JPY because Airbus sales are in USD, but the costs are in EUR, so they get hit on both sides. Hedging costs will increase as the USD weakens.
Since Airbus is really Europe's poster child for EU business, maybe some exchange rate controls are not far off the horizon if the USD remains weak.
It has backed off a little today. Bulk gasoline is up a little but nothing is going over the cliff right now.
Who do you think pushed to loosen up lending guidelines to allow high-risk people to have credit cards? Before this insanity got started in the 80's the US personal bankruptcy rate was a fraction of what it has been in recent years. College kids get credit cards now when in my parents time only well-off people had credit cards and then the balances HAD to be paid off every month. There was no such thing as revolving debt. The bankers did, indeed, create this mess and they've been reaping amazing profits by giving credit to irresponsible people.
Before you say that it is the responsibility of the borrower to behave themselves I'll remind you that it is the fiduciary duty of the bank to be responsible with my deposits and to not lend them out to high-risk borrowers with low credit scores.
So, as I said, the bankers created this mess, now let them pay the piper.
If the deficit was bad, would our unemployment rate be 4.4%? If a trade surplus was good, would Japan have had 15 years of recession and deflation after 1989? Would Germany's unemployment rate be 10.3%?
http://rawstory.com/news/2006/German_unemployment_tipped_to_fall_11292006.html
Did the trade deficit not increase in 2001, and again in 2002, and again in 2003 and looks to break a new record in 2006, which will be broken in 2007?
Forget Europe...Canda has gotten 30% more expensive in the past 3 years. Their dollar is almost on par with ours.
The Euro was worth $1.20 when it was created. The Euro is now worth $1.3155. Looks like the Euro is almost 10% stronger.
Did the trade deficit not increase in 2001, and again in 2002, and again in 2003 and looks to break a new record in 2006, which will be broken in 2007?
I thought the deficit increased every year? If you blame the deficit for a weak dollar, how do you explain 2005, when the dollar was stronger?
Europe is not as much of a concern to our trade imbalance as no one European country outside of the UK holds much of our debt. The two (trade & debt) are interlinked and China (while holding less of our debt than Japan does) poses more of a concern because unlike any other country in the world they have the trifecta of larger dollar holdings than the US government, they have the second largest accumulation of our debt, and they have a pure trade imbalance unlike Japan that returns a fair amount of their trade back to the US in the form of payroll and purchases.
True, gold is a good hedge investment. But don't forget to invest in some shooting iron, as well!
Personal responsibility.
Source?
they have the second largest accumulation of our debt,
Japan holds more than $2 trillion in US debt? Source?
You mean, someone like YOU?
"The systematic collapse of the dollar continues."
"Systematic" implies that either (1)an organized effort or (2)a natural phenomenom is at work.
"Collapse" implies heading to zero, as opposed to a "decline", or a "reduction".
The situation with the dollar vs the Euro is to some extent part of a misguided organized effort (in European and Middle East circles), and also part of a natural phenomenom that arises from the imbalance of our exports vs our imports.
Inflation is nearly nill in most of western Europe, as is the growth of GDP, yet the Euro central bankers keep Euro interest rates high, attracting foreigners to keep reserves in Euros. Middle East oil barrons are supporting the "nationalistic" push in Europe for the Euro to be so "valuable", by putting more of their oil revenues into Euros. By beefing up the Euro vs the dollar, they can claim that oil prices (based on dollars) are now low and therefore due for another increase (creating inflation through world oil prices reacting to an inflated Euro). Yet, the game they are all playing is only hurting the Euro denominated economies, because the higher Euro is pricing their exports out of world markets, which is in part why France and Germany have such sluggish economies (10% + unemployment). Eventually, the Middle East oil and money speculators will lose as well, because their activities are helping to inflate the Euro and eventually their reserves will fall when the Euro comes back to earth.
The other part is that our imports exceed our exports by far too much, which builds up excess dollars in other countries foreign reserves. The lower dollar is the natural economic corrective for this condition; imports to us will become more expensive, so, in a short time, our imports will go down. At the same time our domestic manufacturers will be helped by having less competition from foreign goods in our domestic market and because their goods become more price-attractive in foreign markets. As our trade balance corrects, so will foreign banks need for more dollars, for the increased US exports the lower dollar helped produce. Before too long, the dollar will begin to rise in value again.
But there is no "collapse" in the offing; just economic cliches for ignorant public consumption.
Yes, read my post in this thread right before this one.
Just because he called for an 80% devaluation of the dollar, that doesn't mean he wants the dollar to be devalued.
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