Dollar could hit new lows after G7 - U.S. analysts

[Say_What]

A couple more articles about as the dollar declines...

<clips>

NEW YORK, Jan 22 (Reuters) - The Group of Seven finance ministers, meeting in Florida in early February, are likely to echo the call for flexible exchange rates they made at their last meeting in Dubai last year, leaving the U.S. dollar to slide to new lows, U.S. analysts said.

"What do you get when you have seven politicians in a room? You get a statement that means nothing to almost everybody but something to each of the individual politicians," said Lara Rhame, senior economist at Brown Brothers Harriman & Co. in New York.

"Each will walk away claiming a policy victory. But I don't expect the statement to give us a clear direction."

The U.S. dollar has slid more than 40 percent against the euro in the past two years, hitting a life-time low earlier this month of $1.2898, and has slid about 20 percent against the Japanese yen to a low this month of 108.23 yen.

http://www.forbes.com/markets/newswire/2004/01/22/rtr1223011.html

---

<clips>
Economists at Davos see dollar's weakness as danger for European growth

DAVOS, Switzerland : Leading economists voiced concern over the fall of the US dollar and its impact on growth in Europe as money issues come to the fore on the second day of the World Economic Forum.

With the eurozone's nascent economic recovery depending mostly on the area's exports, economists warned the euro's strength -- the flipside of the weak dollar -- was a particular danger for Europe, where growth is already lagging behind the United States and Japan.

Martin Baily, the former chief economist under US President Bill Clinton, said he was "fairly optimistic on European recovery" but warned that the dollar's fall against the euro could still have a way to go.

Baily, who is now a member the Washington-based Institute for International Economics, warned that the dollar could keep sliding against the European currency, saying a "euro at 1.40 to 1.50 (dollars) is not impossible."

<http://www.channelnewsasia.com/stories/afp_world_business/view/67556/1/.html>

[Just Me]

1. I just cannot make any sense out of this,...

[EstimatedProphet]

3. Low dollar values=higher overseas sales

This takes up some of the slack from lost domestic jobs and unemployment holding down consumer product sales.
No jobs in the US? Simple, sell the stuff that labor would have bought overseas! Who needs domestic workers anyway?

[uhhuh]

5. I think it's like this

The weak dollar makes things that we export cheaper and more attractive. The fact that the dollar is weak also makes the cost of our debt less, since we pay in dollars.
The downside is that things that we need to buy from elsewhere cost more, and things we produce and sell, even here will cost more because the dollar is worth less.
Foriegn investors are less likely to invest here because the value of return on investment is lower. Gas prices, which are priced in dollars, and other commodities that are imported will rise because of the dollar's weakness.
Other countries who trade with us are worried because they will not be able to sell us as much stuff without lowering their prices. We also cannot buy as much stuff from them because it has become more expensive. This may lead to industry slowdowns in countries that trade with us and cause job losses and other problems.
I think that's what they are worried about.

[fearnobush]

12. The Bush Admin claims to support a strong dollar policy but....

they have crafted a slippery decline of the dollar for mainly 2 reasons. 1, The fall in dollar value will enable U.S. exports to become cheaper. thus boosting output in an attempt to stem the bleeding of our last few manufacturing jobs. It will also boost the level of U.S. exports thus causing a temporary dip in the trade deficit. Temporary because once the value drops to a certain level, critical mass so to speak, will occur, resulting in foregien and domestic investors pulling their money out of U.S. markets and putting it where overseas currencies are strong. Ultimately, this will really piss off wall street. This is why you hear street people get impatient over the Fed not increasing interest rates. > 2, A Week dollar enables low interest rates, which enable more spending in a sluggish economy (Our current housing boom), and in terms of jobs, it is usually a good way to jump start job markets. But now that we are in the new era of WTA free-trade, NAFTA etc. Cheap labor has become more available and more attractive then in any other time. So, our low interest rates can no longer be used as a jump start means due to the sure profits of overseas labor. Result, a long protracted jobless recovery. Those who have money get more, those who don't get less, even lesser than usual due to the weakened dollar in deflation mode. As the dollar declines, money becomes more worthless (De inflation) This is why you see oil at $35 a barrel, House prices shooting threw the roofs but buyers buying due to the attraction of low rates. Basically, this can only last as a temporary economic boost until it falls apart. Disinflation: What Japan's funk was, lasted over ten years. The Bushies secretly hope a week dollar will provide temporary economic growth that will last long enough until the election. They also know it will fall apart sometime in 2005. Many economists predict this. So basically, yes this is politicking for election gains, but it may not last long enough for Bush since signs of the temp boost are already beginning to show, i.e. high gas prices and an ever increasing jobless class of people who are not being counted in employment figures. 2.5 million still out of work, but also 150,000 each month added to figure pop. increases. Due the math, it's really something like 2.5 to 5 million out of work. Plus to note, world wide unemployment figures hit record levels in 2003, 186 million plus an other 400 million who have subsistence jobs, or Walmart type $5 bucks an hour jobs. Scary thing is that we no longer have any real boom sectors to replace the old job business growth paradigm. Biotech and healthcare are not it. These jobs are also flowing overseas. Scary times indeed when you see threw the Bushit.

[Name removed]

2. Deleted message

Message removed by moderator. Click here to review the message board rules.

[lostnfound]

4. I'd love to know what this is doing for businesses making money in Iraq.

Like Halliburton?

How they get paid, when they get paid, where their costs are..

[religiousleft]

6. Hedge Funds

and accommodations in the tax code for international business operations allow large corporations to denominate many of their financial operations in various currencies, or to hedge their holdings in currencies by buying and selling futures on those currencies when contracts are negotiated. In short, the bigger they are the less they will be effected.

[alfredo]

7. Could the Bush Junta be trying to wreck the European economy?

This is not much different than using the arms race to wreck the Russian economy.

[AndyTiedye]

8. If The Dollar Falls Enough, Offshoring Won't Pay

[bemildred]

10. More like playing chicken.

Prop us up or we will take you down with us ...

[tritsofme]

9. This is surprising,

I had been expecting G7 to attempt to put a floor under the dollar next month.

[aneerkoinos]

11. Perhaps

or quite likely the other six are going to tell US to raise interests, or...

Or what? Well the foreign central banks got a mighty grip on US cajones, they, especially East Asia, finance the ballooning US debt, and if they threaten to stop buying US bonds...

Raising interests will probably kill appearance of the US economic growth, but that will be OK as it will also very likely make Bush unelectable.

[tritsofme]

13. Like someone noted above,

its like a game of chicken.

We need them to finance our trade deficit, and its in their best interest to keep the dollar from getting any weaker so their exports can stay competitive globally, and especially in the US market.

[dbt]

14. Somehow, a weak dollar MUST benefit the BFEE.

The whole raison d'etre of this maladministration is to put more and more wealth into the claws of fewer and fewer people.

If someone can tell me how how a weak dollar accomplishes this, drinks are on me!

:smoke:
dbt

[R Hickey]

15. When the dollar falls, the stock market shoots up.

When the stock market shoots up, Bush takes credit, and gains votes for it.

We are having inflation in this country. Look at the price of gold, silver and all the foreign currencies. Healthcare shows inflation, while Wal-Mart-style consumer goods have not yet been affected.

The stock market share prices are inflating, which is pleasing people with 401-k's. But what the public is missing is that the stock market's growth is being artifically propelled higher almost entirely by the dollar's shrinkage.

Since everyone's 401-k growth is simply inflation, that explains why there is no job growth. The recovery is an illusion, but one that Bush hopes will keep him in the White House.

[Say_What]

16. Euro appreciation alarm is on

<clips>

A major appreciation of the Euro in world money markets could harm the European economy debilitating the still tepid domestic demand and endangering fiscal policy, according to the Organization for Cooperation and Economic Development, OCDE.

Jean Philippe Cotis, head of the OCDE Economy Department addressing the World Economic Forum in Davos, Switzerland, warned that a further 10% appreciation of the Euro “is enough to finish with all current achievements”.

However he was quick to point out that he didn’t favour “excessive money market intervention” or “free floating”.

Mr. Cotis illustrated his point saying that Europe was flying with an only engine and if forced into “turbulence areas” the other engine could suffer and expose the whole continent to serious instability.

Mr. Cotis recalled that Germany’s economy still has to take off which conditions the rest of the continent.

http://www.falkland-malvinas.com/Detalle.asp?NUM=3163