Dollar sinks to record low versus euro

[ze_dscherman]

NEW YORK (CNN/Money) - The dollar tumbled Tuesday as traders fretted over growing signs of U.S. protectionism and a waning appetite for U.S. assets among foreign investors.

In afternoon trading, the euro had strengthened to $1.194 against the dollar, its highest level ever. In early-morning trading, the euro was at $1.174. The dollar was fetching 108.05 yen, nearly a full yen weaker than its early- morning level of 109.08.

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SNIP (Giving two reasons, first one the fear of protectionism / trade war with China)

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Meanwhile, the Treasury Department released figures showing that foreign investment in U.S. stocks and Treasurys slowed sharply in September -- which pressures the dollar since there's less apparent demand for U.S. assets.

Breaking down the numbers, foreign investors sold $6.3 billion worth of U.S. equities compared with $11.5 billion worth of equity purchases in August. They bought just $5.5 billion worth of Treasurys -- down sharply from the $25.1 billion-worth they bought the month before. That decline was especially notable since the Japanese government reported that it bought $40 billion of the U.S. currency in September in its efforts to stem the yen's strength. Much of that money would have gone into Treasurys. The suggestion is that some other country or countries were big sellers.

http://money.cnn.com/2003/11/18/markets/dollar/index.htm

[Beetwasher]

1. Foreign Investors Are Pulling Out of the US At An Alarming Rate

US financial institutuions are no longer trusted. This is actually a HUGE story, but it doesn't get much attention.

[tom_paine]

2. No stories shall be spotlighted that are detrimental to the Empire

Scrolled once across the ticker..ok..if it will maintain the illusion of a Free Press.

Quickly run in a local newspaper...ditto.

In the back of the Style Section...ditto, but don't even think of moving it up to prominence or following up.

Imperial Amerikan financial inistitutions are as trusted as Imperial Amerikan Corporate TV Pravda.

[Mountainman]

5. We will have to pay higher and higher interest rates to service our debt

The share of the budget going to debt service will be going up and the amount for social programs will be going down. Just what the conservatives ordered.

[54anickel]

10. Starve the beast? n/t

[KayLaw]

17. Someone said that on CNN

He mentioned how low foreign investment has gotten when asked why both stocks and bonds are so low.

[HereSince1628]

3. Wasn't Puting saying their oil was going to go on the euro?

Though probably not enough to make that big a difference.

This might hurt the investor class, but over time doesn't this make American products more attractive against the Euro?

[nadinbrzezinski]

4. Actually it would

but the point is the US Dollar continues to sink

[htuttle]

6. Which American Products would that be?

There are very, very few products that are available overseas that are entirely made in the US.

Keep in mind that the dollar is not just dropping against the Euro. It's also dropping against the Yen, and even losing ground against the Loonie.

That means that for products whose final assembly is done in the US, but who's parts are fabricated overseas, they will have to increase in price (relative to the US), since they are paying more for their components.

If we were talking about America circa 1948, it might be good for manufacturing. But today, with globalized just-in-time supply systems, it is not good.

[Beetwasher]

7. We're Also on The Verge of A Trade War

With China AND Europe...The US, with the dollar as weak as it is would suffer immensely. The ONLY upside to a weak dollar is supposedly increased exports to other countries. A trade war would squash that benefit...Not to mention that there's already somewhat of a weak demand for US goods because of our bellicose foreign policy...Many countries and people are NOT buying American goods as a result...

[HereSince1628]

11. So on a global market the cost of the components would

be determined by how various currencies compare, but the cost of American labor would be relatively cheaper.

It might make importing parts costly, but with reported high productivity and relatively lower labor, doesn't that make whatever product it is more competitive for export?

I understand that products assembled from foreign components and sold here would be more costly... but then, if there existed an American company that is still making said components that would make the domestic components more attractive.

Regarding a possible product, I am not an economist. So I am certain to be hammered with a "gotcha" for whatever I propose, but commercial aircraft, if any US company is still in business, would be one example of production of the sort that would possibly be helped.

Also, I think ag products are the sort of thing that could be helped.

Go Wisconsin, sell more Colby. All the world loves a cheesehead :)

[htuttle]

12. Yup. Cheese will be our salvation

After all these years of enduring the slings and arrows of cheese haters, diet freaks and Illinoisans, Cheese will finally take it's rightful place as the centerpiece of our economy.

Hail Cheese!

Cheese for Industry!
Cheese for the dead!

[HereSince1628]

15. Although I don't know the industry, I suspect pharmaceuticals

could also benefit. A lot of the cost is tied up in development, which I believe is largly labor... and the Europeans certainly have pharmaceutical industries that compete with US products in the international market.

[reprobate]

18. Not commercial aircraft.

Boeing just announced that they are outsourcing manufacture of their aircraft wings to japan. They are also losing large sales to airbus.

Boeing seems set on being strictly a defense supplier.

[stopbush]

8. American products would be more attractive against the Euro

if bush hadn't started his trade war. Any savings Europeans would have seen in US goods will be cancelled by the retaliatory tariffs placed on them by the EU with the OK of the WTO.

In addition, products from abroad will cost Americans more. Considering we don't make any electronics here anymore, textiles are on the decline, foreign auto sales, etc, we're the ones who get screwed in the end.

It's all part of bush's plan to keep us entrapped in the USA. Who can aford to travel abroad with the lousy exchange rates?

[ignatius]

9. What product? Manufacturing is only 14% of the economy now.

We are a service economy.

On edit, my bad. Sorry htuttle, I should read the responses before I post.

[mumon]

13. What really peeves me about all this...

is the limited number of investments the average Joe can make in regards to these moves.

While you might still (haven't checked recently) been able to buy international bond funds, there are no "money market" funds denominated in foreign currencies available in America.

Why? The SEC prohibits it. Why? So Citibank, Bank of America, Chase, etc. can make oodles of money this way, but you can't.

[BeHereNow]

19. Chase Brokers-

Can help you put what money you have left into
other currencies, I highly recommend that you do.
Also, mining stocks are going through the ceiling.
Where gold goes, silver will follow...
I made 170.00 today on my silver mining stock.
Yippee!
BHN

[Turbineguy]

14. But..... this ruins the whole plan.....

We invaded Iraq because that idiot Saddam went to taking Euros for his oil. If the dollar goes down against the Euro we went in for nothing!

Now we can't steal the oil, because everybody is expecting us to....

Wait a minute..... Let's steal the oil anyway and price it in dollars.... sell bonds to foreign investors.....the same amount as the deficit....convert our holdings to Euros......collapse the dollar......monetize the debt.....default on the bonds......buy back the dollars......change term limits and get reselected for a third run as Pres.... Uh....let's change that to King Dick.

[iam]

16. No foreign investment in our notes

means no foreign suport of our gigantic debt. Well have to finance it ourselves by slashing programs, raising taxes or both.
Thanks dumbya. The shi**y years are just around the corner.