Free Republic

<p>Congressman Paul Ryan, one of the least insane men in Washington, has a ten-year plan.</p> <p>President Obama, one of the most insane spenders in Washington, has a twelve-year plan.</p> <p>After hearing the president’s plan, Standard & Poor’s downgraded the U.S. sovereign-debt outlook to “negative.” Ah, the fine art of understatement. In 1940, after the fall of France and the evacuation from Dunkirk, presumably they downgraded Britain’s outlook to “spot of bother.”</p>

Sporadically heard "exit strategy" scenaria there may be. They even include voices in favour of rises in interest rates from both sides of the Atlantic. The "consensus", however, remains intense that urgent big government spending is still needed, mainly in the U.S. and to a lesser extent in Europe, in order to confront the leading culprit of today's woes: namely, the purely behavioural phenomenon of diminishing confidence and growing uncertainty worldwide. Even looking back at the great and the good of this world, also known as the G20, or a kind of stumbling prototype for world governance, they certainly emerge...

The markets are in turmoil because of worry about the so-called PIIGS (Portugal, Ireland, Italy, Greece, and Spain) debts. In Fiscal Crises: The Next Shoe, I opined that Greece is just the canary in the coal mine and that when we look homeward, we have our own huge debt issues, which aren't significantly different from those of the PIIGS countries. I believe that the only reason the European contagion hasn't yet spread to America is because of the dollar’s status as the world’s reserve currency. That era is coming to an end, and it would behoove America to get its...

In a recent American Thinker article, "The Dollar's Inevitable Demise," author Vasko Kohlmayer compares the federal debt to the American economy, or GDP. Mr. Kohlmayer begins his article by correctly pegging GDP at "roughly $14 trillion." Then he trots out the "total public debt," which he puts at "nearly $13 trillion." That would mean the federal debt is currently equal to more than 92.8 percent of GDP. But one must understand that the "total public debt" figure cited consists of two parts: hard debt and soft debt. The hard debt is the real debt. And the soft debt consists...

Chinese officials and private investors around the world have been worrying aloud about whether their dollar investments are safe. Since the Chinese government holds a large part of its $2 trillion of foreign exchange in dollars, they have good reason to focus on the future value of the greenback. And investors with smaller dollar holdings, who can shift to other currencies much more easily than the Chinese, are right to ask themselves whether they should be diversifying into non-dollar assets – or even shunning the dollar completely. The fear about the dollar’s future is driven by several different but related...

WORRIES about the dollar’s dominance of the global monetary system are not new. But debate about replacing the beleaguered dollar, whose trade-weighted value has dropped by 11.5% since its peak in March 2009, has resurfaced in the wake of a global financial and economic crisis that began in America. China and Russia, which have huge reserves that are mainly dollar denominated, have talked about shifting away from the greenback. India changed the composition of its reserves by buying 200 tonnes of gold from the IMF. None of this threatens the dominance of the dollar yet, particularly as a dramatic shift...

The U.S. dollar has so far had an orderly depreciation, Federal Reserve Bank of Dallas President Richard Fisher said on Tuesday. "Thus far the dollar has not been in a disorderly depreciation," Fisher told reporters, when asked about the carry trade. In a speech earlier, Fisher warned that the Federal Open Market Committee would craft an appropriate response if the carry trade proved disruptive to currencies and securities. He said he was aware of risks the FOMC ran of fuelling the trade by stating the Fed would hold its funds rate at exceptionally low levels for an extended period.

IN ONE sense, a weak dollar is good news for the world. Behind the global economy’s current revival is a returning appetite for risky investments, such as equities and corporate bonds. At their most panicky investors shunned all but the safest and most liquid assets: American Treasuries were a favoured comfort blanket. That demand for safe assets prompted a rally in the dollar in the months after the collapse of Lehman Brothers last September. Now that stockmarkets and economies have bounced back, dollar weakness has returned, causing a headache for countries with floating exchange rates (see chart). That has prompted...

"A strong dollar is in America’s best interest," the Bush and Obama administrations have repeatedly assured us. And yet for most of this decade the dollar has been sliding. Now, the greenback again is one of the world’s currency weaklings. But global financial markets, and governments, seem to be taking it in stride. The dollar has taken a renewed pounding over the last two weeks, driving the DXY index -- which measures the buck’s value against six other major currencies -- to nearly a one-year low. The euro has been the big winner as the U.S. currency has lost ground....

The International Monetary Fund will say further depreciation by the US dollar is needed to help correct global imbalances in its latest World Economic Outlook (WEO), Germany's Sueddeutsche Zeitung said on Saturday. Quoting from a draft of the WEO, the paper said the Washington-based fund argued "extraordinarily aggressively" for a correction in exchange rates, above all so as to reduce the massive US current account deficit. The dollar, which slid to a 2-year low against the euro last week, should continue to depreciate in the mid-term, while the yen, the Chinese yuan and currencies of oil-exporting countries in the Middle...

Dec. 11, 2006 Greenspan sees a sinking dollar Bloomberg News Former Federal Reserve Chairman Alan Greenspan said the dollar will probably keep falling because it's unlikely that international fund managers will continue to increase their allocations to the U.S. currency. Russia and other oil-producing currencies are shifting their assets out of dollars toward the euro and yen, a Bank for International Settlements quarterly report showed Monday. Greenspan said the dollar, heading for its fourth annual decline in the past five years, will probably keep falling until the U.S. current-account deficit diminishes. "It's imprudent to hold everything in one currency," Greenspan...

Greenspan says expects more dollar weakness December 11, 2006 Former U.S. Federal Reserve Chairman Alan Greenspan said on Monday he expected the dollar to stay weak for the next few years and will continue to drift down, weighed by the U.S. balance of payments deficit. "I expect that the dollar will continue to drift downwards until there will be a change in the U.S. balance of payments," Greenspan told a business conference here via video-link from the United States. "There has been some evidence that OPEC nations are beginning to switch their reserves out of dollars and into euro and...

China Raises Red Flag On Dollar Parmy Olson 11.24.06 Americans may be spending their dollars with merry abandon as the Christmas shopping season begins this Black Friday, and that might be a good short-term strategy: the greenback slid on the foreign exchange markets after a Chinese central banker expressed fears about depreciation of the U.S. currency. “The exchange rate of the U.S. dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for East Asian reserve assets," wrote Wu Xiaoling, deputy governor of the People’s Bank of China, in an academic paper. Wu is ranked by...

A Glimpse Ahead Timothy Snodgrass The Impossible Will Come Alive In 2005 01/28/05 In January of 2004, as we began to intercede for the New Year the Holy Spirit gave us the prophetic slogan, "The Seas will Roar in 2004". This year we were given a new slogan, "The Impossible will come Alive in 2005". As the veil of darkness begins to come down over nations and regions, along with great shakings will come great breakthroughs; signs, wonders, healings and a spectacular release of miracles in impossible circumstances. This year, although we are ultimately poised to gain much ground, there...

Central banks are shifting reserves away from the US and towards the eurozone in a move that looks set to deepen the Bush administration's difficulties in financing its ballooning current account deficit. In actions likely to undermine the dollar's value on currency markets, 70 per cent of central bank reserve managers said they had increased their exposure to the euro over the past two years. The majority thought eurozone money and debt markets were as attractive a destination for investment as the US. The findings emerge from a survey of central bank reserve managers published today and conducted between September...

Key members of the Federal Reserve Board and a cadre of Wall Street economists have become fixated on the current account deficit as a worrying symptom of economic distress and a sign of impending crisis. This has led a host of Reserve Bank presidents and Fed governors to imply that the dollar should fall in order to rectify imbalances before a crisis becomes inevitable. Since the theory of imbalances holds that a crisis eventually will ensue, destructive policy actions that surely would trigger a crisis are being advanced as “solutions” to a non-problem. Steep tax increases to augment “savings,” a...

<p>NEW YORK (CNN/Money) - The buzz on Wall Street is that, thanks to generous corporate tax incentives, boatloads of cash are scudding toward technology firms in 2004. But here's a case where tech may not be the biggest winner.</p> <p>Back in May, in its effort to juice an economy that was still shedding jobs, Congress upped the first-year depreciation allowance businesses can write off on new capital investments to 50 percent from the 30 percent allowance enacted following Sept. 11. But this "bonus depreciation," as it is called, sunsets at the end of the year.</p>

LONDON (Reuters) - The dollar hit 11-year lows against the pound and eyed record lows against the euro on Friday, as looming U.S. trade data focused attention on the United States' wide current account deficit. Worries the world's largest economy will find it increasingly hard to attract funds to finance its deficit have knocked the dollar to record lows against the euro and three-year lows against the yen this week. The yen found additional support on Friday from news of an unexpectedly strong reading in the Bank of Japan's influential quarterly ``tankan'' corporate sentiment survey, although wariness of yen-selling intervention...

AFP - The depreciation of the US dollar is eating up the gains made by OPEC members from high oil prices and has become a main factor in the decision making process of the cartel ahead of its next meeting. "Current prices are right, the dollar is weakening, its purchasing power is quite weak," Saudi Arabian Oil Minister Ali Al-Nuaimi said on his arrival in Vienna which hosts the headquarters of the 11-member Organisation of Petroleum Exporting Countries. "We want to keep the prices where they are ... within the purchasing power of old good dollar," he added. OPEC's president...

America can no longer propel the global economy. Unless other countries take over, argues Zanny Minton Beddoes, the economic outlook is grim and globalisation is at risk THE evidence is still tentative, but America's economy seems to be gaining momentum. Consumers have stepped up their spending; the housing market is still sizzling; even manufacturing is perking up. For months, Wall Street's number-crunchers have predicted that America's real GDP growth will reach more than 4% in the second half of this year. That figure now looks more like a forecast and less like wishful thinking. As the signs of an upturn...

It is a mystery why the Bush administration continues to press for full elimination of taxes on dividends when it has been clear for weeks that this is untenable, given the limited amount of revenue available under the congressional budget resolution, says Bruce Bartlett. By continuing to press for its plan -- no matter how stupidly it is implemented, perhaps with long phase-ins and a sunset provision -- it reduces the chances of enacting good supply-side tax measures such as those proposed by Ways and Means Committee Chairman Bill Thomas (R-Calif.). The Thomas plan calls for: o Cutting the tax...

After researching the demise of tech bubble... I have come to the conclusion that we will not see any significant resurgance in the IT industry for at least another 2 years. Threw the late 90's, most companies obviously spent a signifacnt amount of money upgrading and implementing software and infrastructure. But that was then and this is now and it's new projects that drive most of our careers, and right now were worried about the installation and implementation of new equipment. The fact of the matter is, money is going to determine when a company is going to purchase new...