Their chips are all still made here, less than three miles from my home.
Posted on 11/22/2007 6:59:12 PM PST by PotatoHeadMick
Americans paused at Thanksgiving yesterday for the traditional annual audit of their blessings. If they'd been listening at all closely to the morose lucubrations of their opinion leaders, however, it would have been pretty slim pickings.
The pundits have finally run out of bad news to report from Iraq, where, unmolested by the morbid fascination of misery-seeking reporters, the locals actually seem to be belatedly enjoying the first fruits of their liberation. So attention has turned again, as it has tended to do from time to time these past 50 years, to the inevitable collapse of the American economy.
The declining dollar is for many an ominous indication that the long period of US economic supremacy is at an end. In the past month especially, a nation that usually remains in blissful ignorance of the daily fluctuations of the foreign exchange markets has been repeatedly reminded that the dollar now buys a fraction of what it used to — down 35 per cent against the pound in the past six years and 40 per cent against that fledgeling monetary superpower, the euro.
Much has been written about the eschatological symbolism of the dollar's fall and the financial problems that have accompanied it. The apparent consensus among commentators here in America and especially in Europe is that the US has become a kind of Third World country, awash in debt and sinking fast because of a collapsing housing market and a banking system in meltdown. And all this is supposed to reflect in turn a seismic shift in the balance of global economic power away from the US and towards Mighty Europe and Emerging Asia.
Let me take a moment in this season of cheer to raise a few objections. The first and most obvious point is that there are many reasons why currencies move against each other, often in quite dramatic fashion. Seismic, epochal, geopolitical shifts are not usually the best explanation.
Rather, more prosaic facts such as differentials in countries' short-term interest rates, the rebalancing of temporary financial and economic imbalances and sudden changes in demand for and prices of commodities such as oil produced by particular countries — all of these help explain the dollar's recent decline.
US interest rates are on a downward trend, while European rates are steady and might even rise. The US still has a vast trade deficit, which is being reduced by a continuing fall in the value of the dollar. Countries such as Canada, which has seen the largest increase in its currency against the dollar, have been beneficiaries of the steep increase in the energy products they export. Another factor behind the current movements is the sensible shift by the world's central banks to a more balanced portfolio of foreign exchange reserves.
For the historically short-sighted, let's remember we have been here before. Between 1985 and 1995, the dollar declined by 43 per cent against the world's big currencies — somewhat more than it has in the past six years. That period was also marked by dire proclamations of the end of US economic power. But it turned out that in those years the foundations were laid for the strongest period of US economic growth in the past 35 years.
If you're still sceptical, ask yourself this: is it probable that the shift in the relative value of the dollar and the euro represents a bet by the world's investors that Europe — strike-torn, productivity-challenged, demographically doomed Europe — is the world's economic future, rather than the US, or, let's say, China? All right, but this is different, say the Cassandras. The US has been living on borrowing for years now. The world has finally woken up to America's addiction to debt — all that growth has been bought on the never-never and now, at last, the bill has come due.
The first thing to be said is that the level of public sector borrowing in the US is very small. The fiscal deficit, at just over 1 per cent of national income, is smaller than in most major European countries. It's true that America faces a large long-term fiscal challenge from an ageing population. But it's a smaller challenge than that faced by most of Europe, Japan or even China.
So if government borrowing isn't the problem, it must be the private sector that's neck-deep in debt, right? The general view is that Americans have irresponsibly fattened themselves up on widescreen televisions and gas-guzzling four-wheel drives, all paid for with easy credit.
If you look at a simple measure such as the savings rate — the proportion of income that is saved rather than spent — Americans do look pretty spendthrift. It is close to zero in the US, compared with 10 per cent in Europe and much higher in Asia. But focusing on this one measure distorts the full picture of America's household balance sheets. The reality is this: why save when the value of the investments you own is increasing at rapid rates? The total value of mortgage and consumer debt is indeed up by a massive $5 trillion since 2001, according to the latest figures published by the Federal Reserve.
But consider the increases in the wealth of Americans during that period. The aggregate value of houses alone is up $8 trillion. The increase in the value of stocks held either directly or through pension funds and other investment instruments is higher by another $8 trillion. That's an increase in net wealth of American households of $11 trillion in less than six years. That's about $90,000 for every household in the country. As someone once said, 11 trillion dollars here and 11 trillion dollars there and pretty soon you're talking serious money.
All right, but isn't the US going into recession, you say? Maybe, but so what? The US is overdue a recession by the standards of the business cycle in the past 60 years. It's possible the housing market and related problems will tip America into another one. Provided the people responsible get policy right, it doesn't have to be a depression.
So the dollar is falling for good, sound reasons that do not require a millenarian view of the global economy. It is yet another thing Americans should be thankful for.
Hey, as long as my paycheck gets inflated too.
Also, as long as China is still wearing its shackles of communism, it will take considerably less economic force to yank it down than to yank the US down. China might have lots of coal (and so does the USA, by the way), but who’s going to altruistically mine it for their country’s benefit?
Almost all made-in-USA stuff is comprised largely of Chinese components. This is going to have to reverse or there will be shortages.
As long as you can keep earning money, great. Become disabled or try to retire, ‘sanother story.
Nothing to do with stocks but purely value of the Dollar as currency as a commodity.
the longated success of these idiots is not sticking their heads in their asses, it is trying to stick their head up anyones assess.
These are the most serious of godless faggots in our society.
As a commodity where? Location isn’t irrelevant to the value of a dollar.
Remember China does not think like us and can FORCE their people into things no US or Western government could get away with. Look at the strikes and difficulties in France because they want to remove some job security.
Imagine they were told (or we here in the USA were told) we were not allowed to buy gas or diesel for our cars. Or none was available except for the military or for truckers. Just as thoughts. Food would only be available if locally so.
Cannibals no, robbers and gunfighters by necessity - probably.
Most of us not in agriculture would not survive.
Their chips are all still made here, less than three miles from my home.
In this instance totally irrelevant as it is not an usual trading situation but a catastrophe worldwide. If dollars get dumped by any central bank to adjust their currency portfolios, or to hurt us even, it creates a domino effect that very quickly becomes unstoppable. Not enough money exists in the whole world to keep the Dollar afloat.
Similar to a bank in trouble with depositors crowding to get their money out of their accounts. Not enough liquidity would exist to stop the run.
A modicum of barter is already in place in Iranian oil transactions. And barter would once again - reverting to the dark ages - become the only “currency” and values would be very subjective and leveraged. There the final results would be area specific and item specific.
Think outside of the box NOT in current trading terms which would all go out of the window in a matter of seconds.
What a cheery Thanksgiving you must be having.
Blessed be the Lord, King of the Universe, Who holds us in the palm of His almighty hand.
Buy ATK....
Pointless bravado on the part of China. Without foreign markets, they ship nothing to no-one, and their factories go quiet.
Their bluff will be called ......................... FRegards
Most American exporting companies were exported to Red China, Mexico & India, while a few other exported themselves (including the US jobs) to North Vietnam... oppppss I mean Vietnam. :)
—I was in Europe (France and Italy) last week on business and I thank my Lord that I live in the US. Europeans are poor compared to us, period.—
You think? They dress better than us. They have far more social options than us. Go out and buy things like flowers and the like more than us. Their produce is generally better than what you find in the US. Just look at the variety of dining/shopping options in your average European city, even smaller ones.
I don’t know. I’ve become very skeptical of what is called wealth lately.
Their is a spiritual poverty that I find very lacking in Europe, but I’m not sure I’m in the camp that says that we have so much more and they so much less.
Thanksgiving is fine - specially since we are still here and in one piece.
The currency crash and what follows - if you read the article on the May 10th 2006 link on AntiMullah I posted, has been an ominous cloud ever since then and way beyond anything we humans can really do to prevent the slide down the slope - specially with the Islamic Jihadists helping push the world down it. And those able to help prevent it, suffering from denial.
God can do something but has his/her own view of matters which do not necessarily coincide with mine or of mankind.
We, the world, have pulled through so far and I hope will continue to do so. Does not mean we should put our head in the sand and pretend none of what I see is NOT happening.
Anyway, since it is virtually beyond the scope of mankind to do much about it unless common sense prevails to simplify the thought - in China, Iran, Europe and the White House, I simply wish you and the world at large a Happy Thanksgiving and lots of comfortable ones to come. And am not fretting over it. Just observing and analyzing.
Que sera, sera!
Everywhere communism has not been subsidized, it has resulted in a bust.
Why do you think they care?????
This is exactly where most Western minds disconnect from the reality we face - because they cannot or will not think like the Chinese do. In this sense they are almost from a different planet - as are the Iranian Hojatieh Mullahs.
Over here we simply fail to get our minds around how they think because it is so far and foreign from the way we do we fail to see clealry what we are watching.Nor understand it.
If they stop shipping anything to anyone outside their own country they can go into isolation and survive BECAUSE they can still push their people around. In the West we cannot so we would perish.
As I mentioned before the French temporarily have a partially disabled country because they want to permit overtime and cut down the annual vacations of their labor force. Imagine that they needed to do something really drastic to help the nation survive.
Islamic Iran currently welcomes total apocalypse and total destruction of the world so that a “better” Islamic version could come about.
The Chinese KNOW they can weather any storm - less painful for them than for anything but for sectors of agricultural third world countries, so do NOT fear a global crash. Nor care a hoot about the rest of us or of by then silly things like exports. We will be virtually “gone” as a factor and they will have the whole playing field to themselves. Except for the Hojatieh Mullahs and their ilk.
Still thinking inside the box, in platitudes, inside current parameters and political structures? None of these and nothing you use as a base will be in effect at the time we are discussing.
Other than the power of a still Communist ruthlesss DICTATORSHIP like China or Islamic Iran, forcing their people into accepting untenable living conditions. And letting them die in the tens of thousands if need be. Or millions in China.
Apart from an elite in both those countries and most third world ones the rest of the population is in survival mode on a daily basis even right now, so not much would change for them.
But it would for industrial, dvelopped countries we have in the West.
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