Flight from U.S. dollar gathers strength

[Jcrowley]

Source: Financial Post

Flight from U.S. dollar gathers strength
Europe new magnet for higher investor returns
Jacqueline Thorpe, Financial Post, with files from Reuters
Published: Thursday, April 19, 2007

The assault against the U.S. dollar intensifed yesterday as the greenback slumped to historic lows against currencies as diverse as the U.K. pound and the Polish zloty amid growing conviction among investors higher returns lie beyond U.S. borders.

While many analysts say the greenback will continue to fall against many currencies, a question mark remains over what it will do against the Canadian dollar. The loonie joined in the greenback assault yesterday, rising US0.19? to a five-month high of US88.66?.

"An IMF forecast that was released last week showed for the first time in 37 years you will get 5% global growth and the U.S. accounting for less than 10% of that growth -- half its normal share of global GDP," said Stefane Marion, assistant chief economist at National Bank in Montreal. "You've never seen the global economy growing at 5% with the U.S. growing ... only 2.2%."

Foreign currency traders have been downgrading the U.S. dollar, as the belief is the outlook for corporate profits is higher in the eurozone.View Larger Image View Larger Image
Foreign currency traders have been downgrading the U.S. dollar, as the belief is the outlook for corporate profits is higher in the eurozone.

http://www.canada.com/nationalpost/financialpost/story.html?id=5b15bbcb-5ebc-4420-8fbd-569c323c6c3d&k=71244

No link yet.

[melody]

1. George did his job n/t

[Turbineguy]

43. "worst president ever"

is a relative thing. For those who wish the destruction of the US, he's pretty good.

[melody]

45. Exactly

He has been an exemplary destruction force for the late, great USA.

[indepat]

2. Years of nutty and insane 'puke fiscal and tax policies bearing certain fruit

[Rage for Order]

24. A weak dollar isn't all bad though

It makes US-made products cheaper in foreign markets, which will increase exports. And the flip side is that it makes imports more expenseive, which will naturally reduce imported products. If we could convince China to allow their currency to float instead of keeping it pegged to the dollar you'd see some really interesting results. It should also be a boon for tourism since people who have British pounds will find that their money will go twice as far over here than in Britain.

[cosmicdot]

29. increase exports of what?

what imports can we do without?

boon to tourism? where to go for vacation ... Bu$h America under surveillance or south of Spain?

things are not like they used to be

[xchrom]

37. since reagan -- when has that ever happened? -- the trade deficit

has not appreciably closed in the contemporary era.

they keep telling us how that will be good for u.s. products -- but the deficit only budges but so much -- always keeping the economic pressure on certain economic groups in the u.s.

now we even send technical jobs to india -- so when does this magical payoff come?

[pampango]

39. The last I checked the US is still the second largest exporter in

the world, after Germany, so we must be exporting something, e.g. agricultural products, movies, Boeing aircraft.

[DBoon]

41. I think we still make personal firearms in this country

we could export some more guns

[Art_from_Ark]

31. Most major exporting/importing companies, at least here in Japan,

set their own exchange rates for a certain term, often a contract year, so that they don't have to worry about day-to-day fluctuations in official exchange rates. So you won't see US products in Japan (what few there are) suddenly going down because of a slightly cheaper US dollar.

You are repeating the same argument Ronald Reagan used to get the yen revalued from 260 per dollar to 160 per dollar back in 1985. It didn't do much to help sell US products in Japan, although it did encourage Japanese tourists to visit the US, and there was a lot of Japanese buying of US properties for some time afterward. But the US has even less to sell to the world now than it did then, and many products today that Americans love are only made overseas, so basically with a weaker dollar you're going to have a higher trade deficit, the same as what happened during Reagan's term.

[Trajan]

34. US Made products ?

Much of what used to be 'US Made' is now produced OUTSIDE of the US .....

Sheeesh ....... What kind of weak apologism is this ? .... Offshoring has been the 'rage' for over a decade now .....

[w4rma]

46. Just means the Saudis can buy more American real-estate. (nt)

[skooooo]

3. so does this mean recession??

[Lasher]

7. Some have been predicting a recession for months

The collapse of the housing bubble coupled with the subprime mortgage disaster are other concerns.

[gravity]

14. People been predicting a recession for years

There is always someone insisting that we are on a verge of a collapse

[Lasher]

15. That is a fair asessment

But in this case I think the nay sayers are probably right. Demand side economic principles have been so ignored in recent years many people are unaware that the phrase exists.

[Yavin4]

25. I Would Argue That We Are In A Real Recession Already

Granted, I do not have any real economic figures to back me up, but I do know that we are being held together because foreign governments keep loaning us money.

[daleo]

27. I don't know if you could trust Bush's economic numbers anyway

The Bush admission has lied about everything else.

[Jcrowley]

30. Lies and deceptions with the money supply

http://www.safehaven.com/showarticle.cfm?id=4331&pv=1

[daleo]

28. I don't know if you could trust Bush's economic numbers anyway

The Bush admission has lied about everything else.

[pampango]

42. I have always heard that economist successfully predicted

12 of the last 3 recessions, so I don't think DU'ers do a worse job than the professional economists. Warnings of impending doom can come from many sources. Some times they are even right. ;)

[Anarcho-Socialist]

40. Not at present

The US economy needs to stop growing, and/or to shrink for it to be classed as a recession. However for many it does "feel like a recession." Much of the US economic growth in recent years has been due to the growth of economic activity and liquidity in the wealthiest sectors of society, whilst labour costs are kept down in the wider labour market. Basically working people are feeling a squeeze whilst profits for the wealthy are forthcoming. This process has been helped by the way the Bush Administration restructured the burden of taxation to favour the very wealthy.

The United States will come into great economic difficulty unless the budget is kept under control over a sustained period. The Federal Government is having to borrow money from abroad and as such the market is setting the value of the dollar at a low level because of the increased demand by the US for foreign capital, and also the lack of demand for US dollars by foreign investors. The Federal Government could choose to borrow from the dollar-area but this would cause interest rates to rise as the business sector would have to compete with the Federal Government for access to credit (in dollar-denominated currency), which would lead the Federal Reserve to hike interest rates to curb monetary demand in the domestic private sector and/or private equity firms being able to charge higher interest rates due to increased demand for capital.

If the Democratic Congress and from 2009 a Democratic Presidency was able to balance the budget over several years, this would bring improvement in the US' economic position. The pressure on interest rates would be lessened. The demand for foreign capital by the Federal Government would drop which would mean the Dollar would recover somewhat. However a lot of damage has been done. There will be continuous transfers of capital overseas due to the servicing of the interest on the US National Debt which will keep the Dollar from returning to a stronger position for sometime. Despite the bleak outlook the Democratic Party can help matters by restructuring the tax system to increase real incomes for the working and middle classes; and the foundation of an affordable (preferably free) healthcare system would also affect a rise in living standards.

[sakabatou]

4. Dubya's doing a heckavah job.

[barb162]

20. He and several presidents before him

Keep sending all US jobs to Asia and elsewhere and tell the people here how great NAFTA, etc.,will be.

[brentspeak]

5. Two+plus decades of offshoring the country's manufacturing base

and concentrating the wealth in only a few hands has destroyed our economy.

[Warpy]

9. All that's left is the crash

Will we be as lucky this time?

The same solution won't work. We can't borrow our way out of it to put people back to work. We'll have to tax our way out of it and that means a lot of people will be suckers for the GOP line again down the road.

[Possumpoint]

16. You Wish It Was That Easy

Congress authorized the increase of the debt ceiling to 9 trillion dollars so they could continue the tradition of deficit spending. That would leave each of us owing about $30,000.00 However, that's not all.

Comptroller General David Walker, (chief auditor of the United States) says that the unfunded (deficit) liabilities now exceed $50 trillion. Adding in that leaves every man, woman, and child owing about $194,000.00. To pay that off without interest would take each of us paying $2695.00 per year for our entire life on top of what it already takes to run the government.

Read an interesting theory that the government's continued issuing fiat money that is borrowed has the net effect of depressing the value of any existing money and or assets we have. The government run by both parties is playing funny with the reporting systems used in the past to hide what is happening from both the citizens and those countries that still buy our Treasury bonds.

You know, depressions run an 80 year cycle in this country. It may take one to clean this mess up. 1929 + 80 = 2009

[roamer65]

17. This depression will be an inflationary one.

Much like 1920's Germany. it's gonna be a rough ride. Buy gold!

[Art_from_Ark]

33. American depressions run in 80-year cycles? Since when?

First depression: 1837
Next big depression: 1873-79
Followed by the Depression of 1893
Then a minor depression in 1907
Then the big one that started in 1929

[pokercat999]

36. Just googled this up.

There are six depressions in American history that are thought to be the worst since detailed records of economic data started to be kept (around 1867), 1873-79, 1893-97 (actually two contractions separated by an incomplete expansion), 1907-08, 1920-21, 1929-33, and 1937-38. Although depressions vary on length and severity, the similarities are so profound that Nobel Laureate Robert Lucas has stated, "business cycles are all alike." Since it's been about 60 years since we've had a depression, one might think that the economy is being managed better than it used to be. It's not clear why the economy is being managed better. The Federal Reserve Board was created in 1913 and yet half of the worst depressions happened after its creation. A better candidate might be the adoption of Keynesian management techniques, which were not fully implemented until after the last severe contraction in 1937. But there are some indicators that that is not responsible either. Detailed studies have been done to compare post-war business cycles with prior ones. At least one indicates that there was no improvement.

http://www.amatecon.com/gd/gdoverview.html

don't know if it's correct but it's boring fur sur.....looks like...:shrug:

[barb162]

21. Exactly! And don't forget the idea of lowering taxes when there

are gigantic deficits every year.

[supernova]

6. Weee, here comes inflation!

The good news is we'll get more British tourists.

[Rosa Luxemburg]

11. I'll think I'll build a hotel in Orlando!

[reprobate]

32. Great idea. But we have far too many here already. Plus the crime and

murder rate have never been this high. And don't think the Brits don't know it.

[Lasher]

12. How right you are.

We have maxed out the national credit cards so that the Walton family can have a few dozen more Neuschwanstein castles.

Their work is not yet done. There's still a few people left who have slaved and done without all their lives so that their retirement would not be in abject poverty. But inflation should take care of that little problem quite nicely and ensure the only people to have anything to leave to their heirs are the ones who live in those castles. Elimination of that pesky inheritance tax just heps ensure those dynasties are properly perpetuated.

[DemoTex]

23. And when payment on the Bu$h War Debt comes due: STAGFLATION.

Just in time for the next president, who, like Carter, will be a hostage to war debt.

[sendero]

8. The rest of the world.....

.... is catching on, even as Wall Street (and most of the folks throwing their cash at it) hasn't.

A lower dollar is not all bad though.

[NewHampshireDem]

10. Please, stop the bleeding

I'm going to live in NZ within the next year ... my nest egg keeps getting lighter, lighter, and lighter. Against the NZD, the USD has gone from a high of $1.80410 to a near 5 year low of 1.34190. It's killing me!

[Lydia Leftcoast]

44. And I'm under a double whammy

I get paid largely in yen, which have mysteriously stayed cheap in comparison to the dollar, but I'm going to be attending a conference in England, where the dollar has sunk into the subbasement, in June.

:-(

[medeak]

13. well....gold is going up. n/t

[David Zephyr]

18. Dollar Sinks + US Imports Everything Now = Standard of Living Downgrades

That's the formula for our standard of living.

Wait until the Chinese float their currency and their goods are sold at higher prices to U.S. Consumers.

Wait until all petrol is traded in Euros. If you think gasoline is expensive now, just grab your ankles, friends.

Bottom line: A markedly reduced standard of living for a full generation to come.

[barb162]

22. It will be longer than a generation

China will eat our lunch

[Amonester]

19. "The Failed Corporate Record of George W. Bush"

Why we are NOT surprised...

Link: http://alaric3rh.home.sprynet.com/science/bceo.html
~snip~
"Several researchers have investigated the business history of the Bush family. The facts that they have uncovered are not very pretty. The business record of George W. Bush holds some revealing insights to how his presidency has operated, and helps to explain why the country has fallen so deeply in debt and has so many other problems.

As explained by Kevin Phillips in his book, American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush, George W. Bush's businesses fail but he makes millions. Among Mr. Bush's business ventures:"

...

"As he did to his unsuccessful businesses, George W. Bush is doing to the country -- leading it down a path of failure:

* huge federal deficits
* mismanagement
* deception
* cronyism."

Cont'd: http://alaric3rh.home.sprynet.com/science/bceo.html


How such a miserable failure at everything ever came to be President of the United States is beyond comprehension... :crazy:

:wtf:

[tabasco]

26. Large numbers of gullible people.

A serious problem for any society.

[thinkbridge]

35. Greed Oil Poker wins!

Finally, karma caught up with 'em. The old GOP strategy: make lotsa war, screw the economy - just doesn't work. 8 years & all Clinton's successes are virtually dismantled...

[CGowen]

38. The IMF wants it that way

http://www.dailytimes.com.pk/default.asp?page=2007%5C03%5C25%5Cstory_25-3-2007_pg5_33

‘IMF to urge depreciation in dollar’

BERLIN: The International Monetary Fund will say further depreciation by the U.S. 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 U.S. 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 East should all appreciate, the draft WEO said.

The WEO, which is due to be published in mid-April, will add that there is no great need for further interest rate increases by the European Central Bank, according to the paper.

Thanks to solid growth in the 13-nation euro zone, the ECB would not create problems by raising its main lending rate to about 4.0 percent from 3.75 percent at present, the IMF said. reuters