NOW, BUSH IS GOING TO WAR AGAIN, AGAINST THE EURO

New York Post ^ | 5/25/03 | TERRY KEENAN

[kattracks]

May 25, 2003 -- FRENCH President Jacques Chirac is preparing to host President George W. Bush and the other G8 leaders in Evian, France next weekend and it appears he has more on the agenda than a sampling of the region's spring water and a trip around Lake Geneva.

[ALS]

beauCOUP

[patriciaruth]

Ping.

[jla]

the French leader is "preparing to embarrass" the U.S. President...

What's funny is I betcha the idiot is actually rehearsing his little act daily with one of his Aide de Socialiste.

[AntiGuv]

Has anyone considered the possibility that the euro is strengthening simply because it currently offers better yields than does the dollar? If the EU genuinely wanted to change that dynamic, would not the ECB cutting interest rates (something Bush has no control over) seem like the reasonable course of action? Short of that, would it not make some sense for the ECB to intervene directly in the currency markets, similar to that undertaken by the Bank of Japan?

I'm just curious why this meme of orchestrated dollar weakening has become such a mantra of late when the preponderance of the facts do not appear to support the hypothesis...

[Buckeroo]

Silly article. All kinds and errors and omissions that YOU quietly dismiss.

[Zipporah]

Chirac has chosen to stress themes such as AIDS and climate change

Is this man totally out of touch? Chirac ~Aller la livre le sel.

[meenie]

The cheap dollar versus the euro is supposed to be a victory for Bush? Bush has nothing to do with it, other than promoting trade agreements that further weaken America's trade position. Giving the store away and sending millions of jobs overseas by politicians of both parties is the cause of our economic malaise. The weak dollar is the result of our enormous trade deficits. How this can be a victory for anybody other than our competitors overseas takes a real stretch of the imagination.

[The Wizard]

you don't seem to understand, as neither did I, that a waek dollar promotes our goods and services abroad and lowers our balance of trade

[Matchett-PI]

In light of the article you posted, you and some others may find this of interest:

June 2000:

» Back to Newsletters

» Strong Dollar. Weak Dollar. There Are Many Sides To This Coin.
» What Do They Mean When They Say...? Value Investing
» Make Your E-world Even Easier
» An Ounce Of Prevention
» Going Global With Investments

"Strong" or "weak" are the terms used most often to describe the relative purchasing power that one currency - in our case, the dollar - has with another.

To Top

 

Strong Dollar. Weak Dollar.
There Are Many Sides to This Coin.

The dollar rises and falls in value relative to other currencies, just as all global currencies rise and fall relative to each other. "Strong" or "weak" are the terms used most often to describe the relative purchasing power that one currency - in our case, the dollar - has with another. Suppose, for example, dinner out in London costs 40 pounds. ff the dollar is worth 2 pounds, your dinner will cost $20; if the dollar falls (weakens) to 1.50 pounds, that same dinner will cost $26.67. Now say your next night out is in Germany and dinner is 40 marks, but the dollar is relatively weaker against the mark than the pound-it's worth 1 mark-so your meal will be $40.

Though it might appear from the above example that a strong dollar is always good and a weak one bad, the world refuses to be that simple. While a strong currency is often seen as a reflection of the strength of a country's economy there's both good and bad news about a strong dollar (a weak one too) depending on what your particular interests are.  And in an increasingly interdependent global economy, your interests might be served by either -- often in subtle ways.  Here is a much-simplified illustration of what you might expect to see as the dollar strengthens or weakens against one or more foreign currencies:

As the Dollar Strengthens	What Happens to:	As the Dollar Weakens
Dollar buys more foreign products and services.	Import Prices -               +	Dollar buys less foreign products and services.
Lower import costs can help keep domestic prices and inflation down.	Domestic Prices & US inflation -               +	Domestic producers may increase prices as import prices rise, so inflation may increase.
U.S. exports are less competitive compared to foreign products.	Export Prices +               -	Earnings potential of U.S. exporters may strengthen as exports become more competitive.
Foreign capital will be attracted to potential gains from both asset and currency values.	Foreign investment in U.S. +               -	Higher interest rates may be required to attract foreign investment, pushing other interest rates up.
Investment gains may be reduced when converted back into dollars.	Returns on investments in foreign companies  -               +	Investments in countries with rising currencies can be worth more when converted into dollars.
+ = will tend to be higher, - = will tend to be lower

Global Family Ties

What might a stronger or weaker dollar mean to a so-called average American family? (Hint: There are probably more global connections than you might expect.) Consider that Mr. Global might be employed by a firm that manufactures products for both domestic consumption and export, while Mrs. Global works for a technology-oriented company that imports raw materials and is looking to attract new investment. They like to travel and have developed a taste for fine French wine. They want to put their two children through college and want to retire before age 65.

A stronger dollar may favor Mrs. G's company, the couple's leisure pursuits, and their desire for low consumer interest rates and low inflation as their retirement savings grow. A weaker dollar is more likely to be good news for the export component of Mr. G's company and may help the returns on the part of their portfolio allocated to international investments; rising interest rates might be okay with them as they get closer to tuition payments and want to move some money into shorter-term investments like Treasury securities.

Currency movements are complex and are just one part of the even more complex world of international economics. It should be remembered, for example, that a strong or weak dollar is rarely an across-the-globe scenario; the dollar may be strong against some currencies, weak against others. And general rules of thumb, like exporters benefiting from a weaker dollar, can be undone quickly by a specific country's economic policies (e.g., imposing trade barriers).

To Top

 

What Do They Mean When They Say...?

...Value Investing [SNIP]

HERE

[kitkat]

BOOKMARKED, and thanks.

[Matchett-PI]

You're welcome!

[CROSSHIGHWAYMAN]

Chirac has chosen to stress themes such as AIDS and climate change

America is leading the world in the AIDS fight.

Here in Connecticut we would like the winter to end and favor a warmer climate.
Throughout the eastern US, flood has replaced drought and the sun is a distant memory.

[meenie]

You're into a chicken or egg theory of which came first. The weak dollar makes our products more competitive overseas. It also makes our imports more costly. Making imports more costly can cause the trade deficit to increase. The only salvation is if our exports increase faster than our imports decrease.

Unfortunately, we do not have a good record in this department. The equilibrium will become even when our costs of labor and regulations become even with our trading partners and their costs of transportation to our shores. I don't know that the public will accept this without considerable turmoil and upheaval. The American worker has a good way down before his standard of living becomes similar to the Chinese coolie.

[Mister Baredog]

"He doesn't want the summit to become a victory lap for theAmerican President," noted one observer, referring to Chirac.

PETTY PETTY PETTY JACQUES, go to your room.

Rather than focus on the economy and the fight against global terrorism, as the White House would prefer

I'm pretty sure the subject of terrorism will come up. In fact it could even happen, even in France, duh, Chirac's a MORON.

Chirac has chosen to stress themes such as AIDS and climate change.

Maybe they'll match our $15 billion contribution on AIDS, he's right about the "climate change", it's gotten much "colder". LOL!

WEASELS!

[Moonman62]

you don't seem to understand, as neither did I, that a waek dollar promotes our goods and services abroad and lowers our balance of trade

It hasn't worked yet. Our exports are declining. If a strong Euro weakens the weasel economies, what are they going to use to buy more exports from us? Historically, all sorts of bad things can result from using a weak currency to boost an economy.

[wimpycat]

PETTY PETTY PETTY JACQUES, go to your room.

PETIT PETIT PETIT JACQUES, go to your room.

[Mister Baredog]

you don't seem to understand, as neither did I, that a weak dollar promotes our goods and services abroad and lowers our balance of trade

BINGO- you are correct, not only that but it helps keep JOBS here as well because it gets more expensive to export the work, simple.

[Mike Darancette]

If the EU genuinely wanted to change that dynamic, would not the ECB cutting interest rates (something Bush has no control over) seem like the reasonable course of action?

The problem is if the EU acts one way some members are hurt and if it acts another other members are hurt. So, the EU may want to change the dynamic but are paralyzed by endless committees and provincial needs. A strong Euro vs the Dollar makes it unattractive for some countries to convert to the Euro.

For all of their puffed up posturing the EU will still have to beg the "Big Dog" economy (USA) for relief.