Dollar Falls to New Low Vs Euro

[Ms. Clio]

NEW YORK (Reuters) - The dollar fell to new lows against the euro on Monday, part of broad losses the U.S. currency suffered as traders gunned down technical targets amid thin market conditions.

Many traders and investors were on extended vacations after the Christmas holiday keeping volume relatively low and causing small orders to have exaggerated effects on prices.

(snip)

Larry Brickman, currency strategist at Bank of America in New York, said there was no fresh economic reason for the euro's move and agreed that thin conditions helped magnify the market's deeper trend.

"It's more of the same, more dollar weakness and a continuation of the same theme going into the new year," Brickman said. "We don't think the ECB is going to come in," he said, referring to potential intervention from the European Central Bank to stem the euro's rise.

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=2&u=/nm/20041227/bs_nm/markets_forex_dc

[Paleocon]

1. Is this good or bad???

Or do we have to wait for Lord Greenspan to tell us???

Is there anything that he can do to affect this at all anymore???

Are foreigners starting to realize that the emperor has NO CLOTHES???

[Prodemsouth]

2. They have known it for a long time now- unlike many idiots here in the

states. Crash in 05-you heard it here. monkey skates as usual - fat head Greenspan will say it is not his or Monkey's fault.

[Paleocon]

9. I bought gold....

Not much, but as much as I could afford...

Someday we will be forced to return to the "real money"...

I don't argue with any of your points at all.

[Prodemsouth]

16. I made a joke about buying gold to my Repug co-workers when Bush

was selected by the court in 2000- I was joking at the time.

[Paleocon]

17. That would have been one of the best investments you could have made...

If you come up with any more "jokes" like that please, I'd like to be the first to hear them.... LOL...

[mitchtv]

25. I know it is late, but Partner and I just bought gold,too

It has manypotential uses. Hedge against all thode uninsured mutuals ' hedge against inflation,maybe it will buy us out of a faithbased, gays only, camp, and across the border someday

[Just Me]

26. What is so inherently valuable about "gold"?

What?

What?

What?

"Gold" doesn't "feed/clothe/shelter".

It's an object that has no worth, whatsoever, except what weirdo capitalists attach to it. Gold is NOTHING,...a rock,...a material "thingy".

[RUMMYisFROSTED]

27. From the Gold Institute:

Gold is also used in a wide range of important commercial and industrial uses, and its unique combination of properties makes it vital to some of our most advanced technologies.
http://www.goldinstitute.org/


Fwiw :shrug:

[Art_from_Ark]

28. Gold is NOT a rock

Gold is a METAL-- just like those disks in your pocket you call coins. Only, gold is thousands of times rarer than the cheap metal used to stamp out those coin disks, and has been valued as money for thousands of years. No other medium of exchange even comes close.

And for that matter, what qualifies PAPER as money? It's JUST paper, it doesn't feed, clothe, or shelter, either. Just a cheap "material thingy" with numbers on it.

[Paleocon]

31. Thanks for explaining that...

I've been accused of being a "gold bug" so I was about to jump off the deep end! LOL!!!

Gold is the currency of last resort, when all the paper money stops having value we will all be forced back to gold. Gold is rare, like Art said and is being used faster than it is being mined, whereas paper is plentiful and new money can be printed faster then we can use it. That's the reason we have inflation and why when we were on a true gold standard inflation didn't exist.

[Art_from_Ark]

35. Interesting that the US was on a true gold standard for only 34 years,

from 1900 to 1934, when the recall order was issued for gold coins. However, some attempts were made to abolish the gold standard during World War I, when most European countries abandoned it (this explains in part why American gold coinage was mostly sporadic after 1915). Before 1900, there had been a de facto gold standard to some extent or another since 1873.

You are right in that there was relatively little inflation during the gold standard days. Unfortunately, strict adherance to the gold standard also meant that the money supply might not be able to keep up with the population.

[Demeter]

3. Look at it this way...

When the weight of the dollar bills exceeds that of the toilet paper you are trying to buy...it's time to use the dollar directly, instead of valuable bath tissue!

[Paleocon]

10. Don't squeeze the greenbacks...

If only they were more absorbent...

[Dirk39]

4. Bad

Hello from Germany,

I guess, when the asian banks will stop buying Dollars, there will be a kind of collaps. And this could happen, when the advantages of the cheaper dollar - the better export markets for China and Japan - will be lower than the disadvantages: they get less and less for their federal reserves, the more "Greenbacks" they buy.
If the USA wouldn't be the USA with it's military force and power, it would have collapsed for long.
Dirk

[Paleocon]

11. Hello Germany!!!

Good to hear from you...

When do you think the Chinese and Japanese will realize that all the dollars they are holding are becoming more and more worthless with every passing day?

[Art_from_Ark]

22. If I might comment here

Japan-- that is, the Japanese government-- is not about to dump its large holdings of US Treasuries. That would be counterproductive to its goal of balancing the exchange rate needs of exporters with those of importers.

From a historical perspective, this is nowhere near the strongest the yen has been vis-à-vis the dollar, which was 78 yen/dollar about 10 years ago. That rate caused severe problems for exporters, so the Japanese government does not want a repeat of that. At the same time, the threshold of pain is being approached for small- and mid-sized Japanese exporters, so the Japanese government will probably intervene if the yen rate rises above some pre-determined level. Once that level is reached, the Japanese government will likely load up on interest-bearing Treasuries at a cheap principal. Interest rates are ZERO in Japan, so 4%+ is an attractive rate for a 30-year investment.

But the Japanese government doesn’t just “sit” on these bonds—it loans them out to banks, which in turn sell them to investors who are paid, say, 2% interest (with 25% of that being sent back to the national government). Once again, the 2% rate is 2% more than what a regular bank account would be pulling in. As an added incentive, some banks are offering to pay back the full principle if a US-dollar CD is worth less in yen terms at maturity than it was when purchased (the banks then sell it back to the Japanese government at no loss). So, the investor gets a little interest, mostly for little risk; the banks get a risk-free commission; and the Japanese government makes a little interest on its massive currency reserves. At the same time, some sort of balance, or at least less volatility, is achieved in the currency exchange market.

Thus, it would make little sense for the Japanese government to suddenly decide “To heck with it” and start dumping Treasuries against its perceived best interest.

[Paleocon]

30. But at some point doesn't it become a losing proposition???

How far does the dollar have to fall? Or can we continue like this forever? (I honestly don't know.)

[Art_from_Ark]

33. It would take quite a bit for it to become a losing proposition, at least

from the Japanese perspective. Remember, the yen at one time (albeit VERY briefly) was at 78 per dollar, and for several months it was 80-100 yen/dollar, and Japan survived that (although a lot of small- and mid-sized exporters were crippled), so Japan has experience dealing with this kind of situation. The Japanese people, as a whole, are also some of the most economically adaptable in the world; they have not only a collective a "grin and bear it" attitude that gives them the ability to roll with the economic punches, but they also can look for solutions without letting hard-core ideology get in their way. Also, like most East Asians, they tend to take a long-term outlook, which would extend beyond 4 more years of chimp-onomics. Finally, 30% of Japan's exports are destined for the American market, so it is not in its interest to see an excessively weak dollar.

[bin.dare]

8. China Expands. Europe Rises. And the United States . . .

By FRED KAPLAN
Published: December 26, 2004

http://www.nytimes.com/2004/12/26/weekinreview/26kapl.html?ex=1261803600&en=a06690fdf89ff4eb&ei=5090&partner=rssuserland

"Yet the signposts, at the end of this year, are ominous. As an economic power, the United States no longer sets the rules, much less rule the game. As a military power, it vastly outguns the rest of the world, but has a harder time translating armed might into influence."

...

(it's a good read)

[Paleocon]

13. We can't even pacify Iraq....

Some military power we got...

Truthfully though, it would take a ridiculous amount of power to control a native population that didn't want to be controlled... (And who could blame them?)

[bin.dare]

18. you voice the wisdom of the ages ...

... the history of anti-colonialism is writ BIG (even in america) for all to see, and yet the fuckwits in the WH are as dumb as ...

(quick i need a simile)

dumb as ...

[Paleocon]

19. Nope.... That's another one of my RW talking points...

That I was accused of posting in another thread...

Got ya!

:silly:

[Just Me]

23. It's your "vocabularly" that gets you in trouble *smile*.

For example,...the word "pacify".

"Pacifying" a people with weapons of destruction is just,...inside-out semantics.

Don't misunderstand honest interpretations of your "language" too personally. We are all working towards polishing our ability to communicate succinctly.

[Paleocon]

29. Yes, I think you are right...

:)

[donheld]

5. How long can this last

I'm sure the world is getting fed up.

[Just Me]

6. New lows, historic lows, record lows,...

,...low, low, low the dollar goes.

I wonder if the neoCONimperialists are intentionally trying to bring on a depression. I wonder.

[mcscajun]

7. It's a bit of bizzare, don't you think?

Yes, the dollar is important. Yes, economic news is important.

Thinking along the lines of "Dog Bites Man" vs. "Man Bites Dog" newsworthiness test: How many days in a row does "Dollar hits new low against Euro" pass the test before it becomes just routine news? That's when we'll really have to worry!

[uncle ray]

12. it's already just routine news.

nobody outside political junkiedom is paying a damn bit of attention it seems. i wish i could just go back to that level of ignorance.

[Paleocon]

14. Me too Uncle Ray....

I wish I could just go back to that level of ignorance too....

It's a damn heavy weight to bear when everyone around you is so footloose and fancy free isn't it???

[CountAllVotes]

15. international stocks and bonds

I have international stocks/bonds in my "portfolio" if that is what you want to call it (small believe me) and a few precious metal investments. Today everything was on the plus side I noticed. But that was today. ?

The falling dollar is a sign to stay away from the American stock market to me. It seems there is little to be made and far more to lose and right now, the American markets seem far more volatile than the international markets do. If the Euro climbs to over $1.40 America is in big trouble. :(


:kick:

[ally_sc]

20. agreed nfm

[bin.dare]

21. I like your $1.40 mark ...

... because some good friends of mine were saying just recently that when the euro hits the $1.33333 mark all hell will break loose. I will re-assure them there is still time before hell.

(gentle fun, ok?)

[R Hickey]

32. The dollar's falling will cause US stocks to RISE!!!

If the dollar falls by fifty percent, then most stocks will double. This is because the stocks are then counted in SMALLER dollars.

Example one: If the dollar falls to the value of last year's dime, the stock market will go up ten-fold, just to balance itself out.

Example two: If the dollar falls to the value of last year's penny, the stock market will increase one hundred fold, just to balance itself out.

Example three: If the price of a roll of toilet paper costs ten cents this year, but next year one roll costs one dollar, then the dollar ain't worth shit, is it?

So if you hold a good gold mining stock, or natural resources, like oil, you might want to buy more of it on margin.

I heard somewhere that the Bush family owns a lot of gold mining stocks.

[mbperrin]

34. Dollar fall will actually cause stocks to fall.

US citizens holding stocks in dollar denominations won't notice any difference in absolute value. Those holding from other countries will notice that value is falling relative to their own currencies and local stocks, so they will sell. As more foreigners sell, stock prices will fall. This is why Bushco wants to rob social security - to prop up the soon to be in the 7000's (or lower) market!

Here, I'll make it official - without robbing social security, the DOW at 7,000 by next December 1.

[Chicago Democrat]

37. No way.. DOW at 15,000 by Dec 2005

Gold at $ 550
Euro at 1.55
GBP at $2.00

[fob]

38. Bookmarking to check who is right come next december

mbperrin - Dow at 7000

chicago dem - Dow at 15000

[VegasWolf]

39. Dow at 15, I'll take that action! My guess is more around 8.5. n/t

[Chicago Democrat]

36. Correct, that is unless the US economy tanks, which I think is unlikely

So far the US economy has been kept going by Asian lenders willing to fund our deficits by buying T Bills.

Since stocks represents ownership in companies, equities represent a hedge against dollar devaluation, all other things being equal. But what happens if the Asians start selling their T Bill holdings? First of all that is unlikely, since a selloff of dollars would be shooting themselves in the foot. Causing an even greater dollar value decline. Also hurting the US hurts China, since we buy so much from them.
Lastly, I think it is more likely for China to start buying up US businesses and real estate, since that is not so easily 'devalued'.

[StupidFOX]

24. Bill Clinton's fault!!!! (jk)

He eats babies, you know ;)