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Some See Rise Ahead for the US Dollar. Could the Slide be Over?
New York Times ^ | 05/18/2011 | Landon Thomas

Posted on 05/18/2011 7:32:10 AM PDT by SeekAndFind

Could the long dollar slide be over?

For the better part of the past decade, and particularly in the last few months, the American dollar has been the 98-pound weakling of the foreign exchange world. It has lost value against almost every other global currency — not just the euro, pound and yen but even the Romanian new leu and the Latvian lats.

Driven largely by the Federal Reserve’s policy of printing dollars to help spur a healthy economic recovery that remains stubbornly elusive, the dollar, weighed against a basket of other currencies, hit a 40-year low this month.

But betting against the dollar may no longer be such a safe play — not necessarily because of any sudden macroeconomic shifts but because of a sense that the long dollar sell-off may have finally gone too far.

Since May 4, the dollar is up 4 percent against the euro and 2 percent against the pound, while rallying against the Romanian and Latvian currencies as well.

The dollar’s bounce, though too brief to be called a trend, has not been driven by any noticeable improvement in America’s economic fundamentals. Indeed, the faint but real risk that Congress will fail to reach agreement on raising the legal ceiling on government borrowing only underscores the still parlous state of the American economy.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: currency; devaluation; dolalr; usdollar

1 posted on 05/18/2011 7:32:12 AM PDT by SeekAndFind
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To: SeekAndFind

Not if Turbotaxcheat Timmy gets his way.


2 posted on 05/18/2011 7:33:51 AM PDT by Perdogg (0bama got 0sama?? Really, was 0sama on the golf course?)
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To: SeekAndFind

I really don’t understand this strong dollar thing.

Sure would not mind if we actually took real action to strengthen our currency long-term. That would involve a real trade policy, tariffs and bringing back manufacturing.

Since nothing is being done about any of that, what possible reason is there for our dollar to strengthen fundamentally?

Even one.

Everything we are doing, is wrong.


3 posted on 05/18/2011 7:37:55 AM PDT by Cringing Negativism Network (Palin / Hunter 2012)
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To: SeekAndFind
Two and a half wars in progress
Imperial presence worldwide (foreign bases)
Debt limit is BREACHED.
Off balance US debt is upwards of 200 trillion.
US government stealing from federal pension funds to fund government operations.
ZERO backing for the US Dollar.
QE-Infinity looming on the horizon

NONE of these things have been fixed or even addressed and they are expecting the dollar to INCREASE in value?

The US dollar is DOOMED.

4 posted on 05/18/2011 7:38:28 AM PDT by Centurion2000 (On a long enough timeline the inflation rate for all fiat currencies approaches infinity.)
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To: Centurion2000

And I forgot to mention:

44 MILLION on foodstamps


5 posted on 05/18/2011 7:39:06 AM PDT by Centurion2000 (On a long enough timeline the inflation rate for all fiat currencies approaches infinity.)
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To: SeekAndFind

Brings to mind a painting I saw one time of the Titanic - the one where the bow is under water, and the fantail has risen way up in the air....


6 posted on 05/18/2011 7:41:22 AM PDT by Uncle Ike (Rope is cheap, and there are lots of trees...)
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To: Cringing Negativism Network
Since nothing is being done about any of that, what possible reason is there for our dollar to strengthen fundamentally?

There are three big currencies, four at most.

1. The Yen - Printing money even faster due to Fugushima, and they are in their second lost decade.
2. The Euro has soverign debt crisis and is unravelling.
3. Chinese Yaun, massive inflation as it tries to keep up with QE Bernanke.
4. The dollar, and we all know its problems.

I see four terminal cancer patients but the dollar might outlive the other three by a few weeks.

7 posted on 05/18/2011 7:45:05 AM PDT by NeoCaveman
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To: Cringing Negativism Network

There was an article on here yesterday detailing how companies are bring manufacturing BACK to the United States. It was good reading.

This is bound to happen. Just the way oil and other commodities over-reached so has the hedging against the dollar. It will break and when it does oil will fall through the floor.

Bring it on.


8 posted on 05/18/2011 7:45:25 AM PDT by Peter from Rutland
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To: SeekAndFind
Could the long dollar slide be over?

Could the Euro be counterfeited faster that the Dollar?

Seems unlikely to me. We need to find $1.5 Trillion in the next year or so. If The Fed isn't the source of most of that I don't know who is.

Do the Europeans need that much?

9 posted on 05/18/2011 7:47:18 AM PDT by InterceptPoint (w)
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To: NeoCaveman

>> I see four terminal cancer patients but the dollar might outlive the other three by a few weeks.

Yeah, you hit the nail right on the thumb there. :-)

It’s not that the dollar is strong, it’s that the rest-of-world currencies are really, really sick, too.

I’m STILL trying to wrap my head around the implications of the whole WORLD explicitly or implicitly defaulting on their massive sovereign debt, more or less at the same time.


10 posted on 05/18/2011 7:49:55 AM PDT by Nervous Tick (Trust in God, but row away from the rocks!)
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To: Nervous Tick
I’m STILL trying to wrap my head around the implications of the whole WORLD explicitly or implicitly defaulting on their massive sovereign debt, more or less at the same time.

I've wondered the same thing. If everyone is a debtor who is the creditor? If every (major) nation is in debt, to whom do they owe?

11 posted on 05/18/2011 7:52:42 AM PDT by NeoCaveman
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To: NeoCaveman

The denial is strong.

Think.


12 posted on 05/18/2011 7:56:21 AM PDT by Cringing Negativism Network (Palin / Hunter 2012)
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To: SeekAndFind
That graph looks like it is testing a resistance level. We are in a trading range and I wouldn't go into that market one way or another until it either breaks out over 90 or smashes through 70 on the way down. If the GOP holds the line on more debt it will run up fast. If the GOP caves in to Obama we are going full Zimbabwe.
13 posted on 05/18/2011 8:01:07 AM PDT by GonzoGOP (There are millions of paranoid people in the world and they are all out to get me.)
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To: SeekAndFind

If true, start dumping Gold.


14 posted on 05/18/2011 8:02:04 AM PDT by Old Retired Army Guy
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To: Cringing Negativism Network

This is classic liberal dribble, displaying for all the world to see the unmitigated bias of the NYT. The piece begins with the question “is the slide over?” - basically stating that the reporter is clueless; so when it turns out that he is wrong in the future, no one can hold him accountable.

Next provides some fact showing how the dollar has been falling even among third world money.

He explains why the dollar is falling and then explains why the Feds started printing money. He states that the economy is still struggling, but does not denounce the actions as an abject failure (which would have happened if the demonic-rats were not in charge.

He admits that there is no logical reason to back the dollars surge, but it is good news so he will report it. He may have asked an economist for the reason and did not like the answer so he left it a mystery.

Of course the reason is the Feds stated that they would stop printing money in June. This would lead to higher interest rates in the USA which would make US bonds more attractive. World financial markets look forward and the dollar has increased in anticipation of higher interest rates.

A surge in the dollar is expected in the short run.
What is not mentioned is the current interest paid on US debt chews up 16% of the budget. As interest rates rise the portion of the budget supporting interest payments will rise accordingly. Since the current long term bond rate is about have of its historic average, it would not be a surprise to see the rate double. As the rate moves up and larger portions of the budget are used to service it; great pressure will be put on the Feds to start printing money again. If they do inflation will sky rocket. If they do not government spending will see unprecedented cuts and we are likely to see Greece style protests.

But the NYT reports blue skies.
Is it any wonder why almost every economic development is “Unexpected” or as in this case inexplicable.


15 posted on 05/18/2011 8:17:46 AM PDT by CoastWatcher
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To: Old Retired Army Guy

Would a stronger dollar, in comparison to the other currencies, slow down Asian and European buying of gold and silver? I doubt it.


16 posted on 05/18/2011 8:18:58 AM PDT by NeoCaveman
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To: Nervous Tick

I look at from the angle of; Which currency would you want as a reserve currency? Looking at the other three, I’ll take the US Dollar, thank you.


17 posted on 05/18/2011 8:20:26 AM PDT by B4Ranch (Allowing Islam into America is akin to injecting yourself with AIDS to prove how tolerant you are..)
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To: SeekAndFind
IMO FWIW the dollar is not "strengthening" so much as it is becoming momentarily "less weak". It is the least critically ill patient at the moment in a whole ward full of critically ill currency patients. As soon as the markets start their next plunge downward in the second half of this year (IMO), as a result of the Fed announcing their "intent" to stop QE2, it will quickly become evident that the markets have been propped up and raised to their current level primarily by the Fed's QE.

As the markets slide, pressure will increase on the Fed until they are more or less forced to start QE3, at which time it will finally dawn on some of the big market players that the dollar is undeniably doomed to become worthless because the Fed has made it clear that they will print more money to keep the vicious circe going until no one will accept a dollar as payment anymore in their attempt to keep all the economic balls juggling up in the air.

The Fed's actions remind me of the guy on the Ed Sullivan Show that use to twirl a dozen plates at one time up on individual tall slender poles. Sometimes some of the plates would twirl so slowly you'd wait for the crash, but the guy would always jump from another plate to that plate to twirl it faster to keep it going. One of these days the Fed is going to have too many slow twirling plates at one time and when one falls, I fear the others will soon follow as the Fed fails to keep them all twirling on the poles.

18 posted on 05/18/2011 8:44:49 AM PDT by OB1kNOb (The stench of dependency is a sickening smell. Strive to become an asset, not a liability.)
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To: SeekAndFind

The NY Times, doing what it can to help Ubama.
Thank goodness it’s no longer 2003 when we had “the worst economy since the Great Depression”.


19 posted on 05/18/2011 8:48:28 AM PDT by Lancey Howard
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To: CoastWatcher

Excellent post.


20 posted on 05/18/2011 8:50:26 AM PDT by Lancey Howard
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To: SeekAndFind

Boy, has everybody got this one wrong. What’s happened to the dollar the last few weeks is directly related to Silver’s new margin requirements.


21 posted on 05/18/2011 8:57:21 AM PDT by chopperman
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To: Cringing Negativism Network

Could you give me a clue?


22 posted on 05/18/2011 8:59:03 AM PDT by NeoCaveman
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To: SeekAndFind

NY Times, doing it’s damndest to make us believe the recession is over and Obama has a handle on things.


23 posted on 05/18/2011 9:01:01 AM PDT by hattend (Obama is better than OJ... He found a killer while on the golf course.)
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To: SeekAndFind
But betting against the dollar may no longer be such a safe play — not necessarily because of any sudden macroeconomic shifts but because of a sense that the long dollar sell-off may have finally gone too far.

Uh Huh. Right.

I'm no financial analyst, nor even an economist, but I'm not betting on not betting. Commodities markets have been changed, by changing the Margin rules for oil and silver, to name two, but this doesn't mean the dollar is stronger, just that those commodities markets are on a different playing field.

It will take a little time for that to sort out

In the meantime, the world's leading currencies are racing for the bottom, with smoke rolling off the printing presses. That does not bolster any confidence in the future value of those slips of paper or inconvenienced electrons.

In the end, the things which will be the hallmarks of currency value will not be other currencies at all, but the very real items which form the sustenance of continuing civilization: food, shelter (or the components thereof), clothing, and energy. Hand in hand with that will be the ability to defend that from those who would sieze it.

Where that leaves a nation which has consistently weakened its position in mining and manufacturing in the guise of saving the planet remains to be seen.

24 posted on 05/18/2011 9:14:18 AM PDT by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing.)
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To: CoastWatcher

“A surge in the dollar is expected in the short run.
What is not mentioned is the current interest paid on US debt chews up 16% of the budget. As interest rates rise the portion of the budget supporting interest payments will rise accordingly. Since the current long term bond rate is about have of its historic average, it would not be a surprise to see the rate double. As the rate moves up and larger portions of the budget are used to service it; great pressure will be put on the Feds to start printing money again. If they do inflation will sky rocket. If they do not government spending will see unprecedented cuts and we are likely to see Greece style protests”

QE3 will sail as the bags of puke in Congress and Boy Blunder have no guts to do whats right for the country.


25 posted on 05/18/2011 9:37:45 AM PDT by sarge83
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