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Posted on 02/29/2008 6:59:04 AM PST by dennisw
Beaten down by fears of a U.S. recession, the dollar is falling with new speed -- creating severe challenges not just for the U.S., but also for sugar traders in Brazil, central bankers in the Persian Gulf and a host of others.
Thursday, the dollar sank to new record low against euro, deepening a six-year slide in which it has fallen more than 40% versus the European currency and more than 20% against a broader basket of currencies. In late trading in New York, one euro fetched about $1.52, just two days after it surged through the symbolically important level of $1.50.
The latest impetus: economic data in the past three days showing a softening U.S. labor market, deepening turmoil in housing, and growth in 2007 slowing to the worst pace in five years. Federal Reserve Chairman Bernanke put more pressure on the dollar during testimony before Congress yesterday, emphasizing gloomy prospects for the economy while pointing to the weak dollar as rare bright spot helping exports, jobs and trade deficit.
The greenback's biggest detractors -- a small but growing group -- say the currency is in danger of eventually losing its place as world's dominant currency. Jim Rogers, a well-known commodity investor and a former partner of famed currency trader George Soros, has a particularly bleak assessment: "The dollar is a terribly flawed currency and its days are numbered," he said in a recent interview. He cited the U.S.'s huge foreign-held debt as biggest cause.
Yet for all of the gloom, the world is unready to let go of America's unloved dollar. Akin to the way Microsoft's often-criticized Windows operating system remains indispensable to the majority of computer users, the dollar remains the common language of finance, the medium of exchange in everything from sugar to wheat to oil.
(Excerpt) Read more at online.wsj.com ...
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Ben Bernanke, please pick up the nearest white courtesy telephone. Uncle Miltie is calling from beyond the grave.
If you pay people to take loans (Fed Funds Rate < Inflation) then money proliferates rapidly reducing its value.
Inflation is too many dollars chasing too few goods.
BERNANKE: Grow a pair! We have a CREDIT crisis that needs to be quickly resolved, and free money delays the day of reckoning.
Maybe John McCain and Barack Hussein Obama can have a stern talk with George.
Oh, wait. They're beholden to HIM, not the other way around...
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A year or two from now all the talking heads will be asking “why didn’t we see it coming?”, but somebody better wake up to the fact that this economy is about to fold up. There is a probability that the Depression will look like good times.
The dollar used to be 82 cents to the euro - now it’s $1.52, and will get worse - much worse.
The housing market is in for a massive collapse, taking the banking system with it, as Fedman Bernake admits that soon banks will also be folding.
We have no manufacturing capacity - none! We shipped it all overseas, and it ain’t coming back.
We have massive foreign debt. China and the Gulf States, none of them friends own us.
The American workforce has up to 40 million (the real number, not the 12 million you hear) job competitors illegally imported to maximize profit for the rich while piling the attendant welfare costs onto the middle and lower class.
The school systems turn out functional illiterates guaranteeing that the old American spirit and ingenuity will not be available to bail us out.
We have a President who is not aware of the cost of a gallon of gas, and three candidates for his job who have no solutions other than importing more illegals, increasing more debt, and brainlessly urging “hope” and “change”.
Ronald Reagan, RIP, it’s no longer Morning in America.
Wait, I buy very, very little that is imported from Europe.
Hey, maybe this will be good for American manufacturing and exporting?
This is bad news in regards to our never ending need to refinance our national debt. It means that we have an even greater need to stop deficit spending.
However, it may also be of considerable benefit to our economy.
We’ve carried the world long enough. China refused to revalue. Now we let the free riders sink or swim. We’ll see how these socialist and communist countries create wealth without our currency subsidizing their markets.
The sky is falling. We’re all gonna die!
I agree 100%
Trace this mess back to love of debt and and all kinds of exotic flavors of leveraged financing, on the part of the American people
And love of debt by our Federal government. I have never ever seen George Bush comment on our trade deficit. Jimmy Rodgers here says this is a prime factor in our Dollar demise
“Maybe John McCain and Barack Hussein Obama can have a stern talk with George.”
John McCain said that he’d like to see interest rates at 0%. Not only is he not going to talk to someone, he wouldn’t even know how to begin to talk competently about the economy. The man is clueless. And so is the Republican voting block that elected him when they said they trusted him more on economic matters than someoone like Mitt Romney.
McCain is the single most economically inept presidential candidate I’ve seen. Sad state of affairs.
Well, for the record, I don’t trust Mitt Romney either. Not at all.
Odd timing for this since the news just came out this week that other nations are considering switching their international trade to dollars because the Euro is overpriced.
Is there a one-handed economist out there?
It’s hard for me to tell.
Is oil really going up in value? Or is it just that the dollar is dropping?
Is oil going up in yen, yuan, and euros?
That's the problem. There is no American manufacturing or exporting left. We don't make anything anymore - we shopped it out to China.
What is Europe going to buy from America with its euros? Illegal alien labor? Subprime mortgage paper? Ooops - they did - that's why they're in financial trouble too.
Sorry, but all the old hedges against a falling dollar - cheaper goods to export, inventory sell offs - don't exist anymore. You can't make it up with YouTube videos or Google shares, or illegal alien hotel workers, or American farm products (we sent that overseas, too!).
This is the real problem our nation faces. The American people have had a decade of betrayal from those that hold the power of the globe in their filthy hands. I am a greedy capatalist but I am still American and I know where the line in the sand is between greed and betrayal of my nation and countrymen. These guys have access to far better inside information and maecroeconomic models then I do so there is no excuse for their treason. The American people will shed these people and then the economy will recover. But don’t expect it to be tomorrow. I expect 2010-2011 as sustained economic recovery years and until then, a lot worse pain then what we are seeing today.
“The dollar used to be 82 cents to the euro - now it’s $1.52, and will get worse - much worse.”
Yes worse but what does ‘much worse’ really mean? If your in the U.S. inflation for energy and food will crush your disposable income budget but foreigners are now on a U.S. buying spree. Yes, exporters are really the only ones making out but this will change. Foreigners need our food supply and they are also feeling the pain for moving away from the U.S. financial system. The free market works but we must expunge the non-accountable people and system first and that takes some years.
‘The housing market is in for a massive collapse, taking the banking system with it, as Fedman Bernake admits that soon banks will also be folding.”
As it did during the S&L crisis of 1987 but this time it will be worse. However, half of America was responsible with their money and we are waiting for the bottom of the housing market to buy (I expect this to be end of 2009). I am probably not alone so yes, housing will correct a full 35% and how much has it corrected already? A mere 10% across the board?
“We have no manufacturing capacity - none! We shipped it all overseas, and it ain’t coming back.”
True and not true. Yes we shipped 3-4 million jobs in manufacturing overseas and the arrogant, self serving politicians and megacorporations made off with billions while the average Joe saw his real income dry up. However, the cost of overseas goods is rising rapidly meaning investors will once again be pouring money into manufacturing. It is is near bottom and I expect to see a resurgance in manufacturing in the beginning of 2009. Until then, we have plenty of nukes to keep America safe and plenty of food to keep every American alive to see better days.
“We have massive foreign debt. China and the Gulf States, none of them friends own us.”
Nations serve their own interests and the last two Administrations served their own ends to the detriment of the American people. Shame on them! But where do you think both groups of nations are pouring their money? Still in the U.S.!!! But no longer in our corrupt liquid banking system, it’s in hard assets. Did the Japanese own America in the late 80’s? No! They enriched us for 20 years while their own economy went into the tank in the 1990’s.
“The American workforce has up to 40 million (the real number, not the 12 million you hear) job competitors illegally imported to maximize profit for the rich while piling the attendant welfare costs onto the middle and lower class.”
I know, I hate this fact also. But Americans as a whole have not felt enough pain to deal the oligarchy occuring in American government. I don’t want to see this, but a tidal wave of pain is coming next year and this will spur the American public to vote for the next Reagonesque President and House. So flushing the system of turds will take 4-5 years :(
“The school systems turn out functional illiterates guaranteeing that the old American spirit and ingenuity will not be available to bail us out.”
This happened in the 60’s my friend and these college grads of that era were enabled in the last decade to turn America into a liberal nightmare for most Americans. The college grads of this era will turn America into a liberal nightmare in 2030. Such is the nature of human beings and their foolish views of utopian society while they ignore the human programming of survival of the fittest. Fear not, many, many good people still live in this country and we’ll push back the liberal tide and that is just beginning to happen.
“We have a President who is not aware of the cost of a gallon of gas, and three candidates for his job who have no solutions other than importing more illegals, increasing more debt, and brainlessly urging “hope” and “change”.”
Yes. Sad isn’t it? Again, 4-5 years to flush the turds out and me and my family are prepared to help other less responsible, but soon to be educated through pain to recover for better days.
“Ronald Reagan, RIP, it’s no longer Morning in America.”
AMEN! But a new dawn follows the black of night, does it not? It’s 1:00 AM and it sure looks dark...
Break out the polyester and the Pet Rocks, THE BERNS-ERA FED IS BACK!!!
I dunno, I think they’ll swim fine with the U.S. buying their modern military for them and creating a $200 B sovereign wealth fund. Who’s to blame for this attrocity to the American people is plain for me to see. Holding them accountable and punishing them is a different story (sigh).
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