more bad news for the dollar

[Zeebadee]

Quote by: Sasha Finally if your worried about China Buying your debt, well why did you get the debt in the first place, and if its such a security risk, dont sell it to them.

How do you think we are able to spend more money than we have? The deficits are being covered mainly by the treasury notes we sell to other countries, promising to pay them back plus interest. Interest payments are the third largest expense in the federal budget. Basically, there are three ways to get a handle on our national debt - sell treasury notes (thus pushing the debt onto future generations), print more money to pay our bills with (inflationary), or get the federal government to stop spending more money than it takes in.

Which do you think politicians pandering for votes will choose?

[bishop]

heh, they're definitely choosing the first two out of three.

just take a gander at the billions we're pissing down the drain, financing our credit card bills:

http://www.publicdebt.treas.gov/opd/opdint.htm

what is that? just a tad over $300 billion per year? plus, check out how the nation's net worth has deteriorated under bush almighty's watch. he effectively eliminated virtually all of the macroeconomic gains we earned under clinton.

http://www.uwsa.com/2003htmlthrow.html

[dirishb]

In the first place......The "Dollar" will not be phased "Out"..........If-when the "Dollar" falls........so does the World economy. Eventually this will happen. Of course a "World Monetary Device" will replace it......
Everything will be done in units...or whatever "THEY" call it. Dont Believe Me?? http://geocities.com/dirishb/linksinc
See Link#2 dirishb

[bishop]

your link's broken.

[bishop]

to those who think that a falling dollar is a good thing...

the dow just had its biggest 1-day drop in 21 months. to focus specifically on the dollar, and leaving out other sub-topics:

http://money.cnn.com/2005/02/22/mark...york/index.htm

The major gauges fell last week on worries about inflation -- after comments from Fed Chairman Alan Greenspan -- and some profit-taking after the market's recent run up. U.S. financial markets were closed Monday for President's Day. "The economy remains in a growth pattern, and normally the market would be responding favorably," said Michael Carty, principal at New Millennium Advisors. "But people are worried about inflation, the rise in energy prices and the weak dollar." Inflation watchers get two key pieces of information Wednesday: the consumer prices index (CPI) for January and the Federal Reserve minutes from the last monetary policy-setting meeting.

just some extra info for those who don't closely follow currency markets.. the dollar has appreciated about 3-4% this year (since january 1), and has resembled somewhat of a bull market. for the preceding 4 years, however, the bears had continuously short-sold the dollar. following greenspan's testimony last week, people began to short the dollar yet again. why? inflation! i mentioned this before, but it bears repeating - japan has entered into its 4th recession since 1991, and the yen is somehow gaining on the dollar. if that doesn't tell you what deep shit we're in, nothing will.


as an aside - i'm feeling pretty good about my market timing. i yanked myself out of all u.s. indices monday last week (that's when the trade was settled, i placed the order the preceding week).. managed to take all the gains, and the market looks like it's going down for the immediate future. if i was a gambling man, i'd short-sell.

[fushigi]

Quote by: bishop i mentioned this before, but it bears repeating - japan has entered into its 4th recession since 1991, and the yen is somehow gaining on the dollar.

You're telling me! And it's all to the good, since I'm paid in yen. My projected income for this year grew 4.5% on the weakness of the dollar alone. What I'm wondering is, with the dollar so weak, why aren't exports going through the roof? With the Chinese yuan pegged to the dollar, theirs rose 25% last year.

[bishop]

What I'm wondering is, with the dollar so weak, why aren't exports going through the roof?

you mean, why aren't our exports going through the roof? actually, our exports are showing considerable growth. last year, we saw growth in exports with china to the tune of 23-26%. the only problem for us was that chinese imports grew at 29%. and a lot of chinese manufacturing growth is being enabled from the machinery they're buying from japan.

http://www.washingtonpost.com/wp-dyn...2005Jan26.html

we still export a hell of a lot of stuff.. i think we're in the top 3 exporting nations, and we only lost the #1 spot several years ago. our problem is because of our love of credit and debt, we can't possibly export enough to cover our balance of payments.

your country seems like it should be in good shape for the short-term.. the boj's purchased a shit ton (over $1 trillion in one year alone) in dollar-denominated assets, and it's been selling them to provide liquidity for your businesses. plus, they've teamed up with the ECB to try to prevent further depreciation in the dollar - but market forces are clearly working against that scheme. it seems to me that their ability to intervene is diminishing, so in the long-run the dollar can't be bolstered as much by foreign banks.

good article here: http://www.economist.com/agenda/disp...ory_id=2552573

[Zeebadee]

" The dollar also weighed on markets as the greenback suffered its biggest intraday fall against the euro since August. South Korea's central bank said on Monday it planned to diversify its reserves, the world's fourth largest, into a greater variety of currencies.

The move by South Korea fueled speculation that other central banks would follow suit. Fears of a weaker dollar diminishes foreign investors' appetite for U.S. assets. "

http://story.news.yahoo.com/news?tmp...kets_stocks_dc

Look for an end to low interest rates if this keeps up. And higher interest rates are going to make Bush's claims of economic recovery much harder to accomplish. I agree with Bishop, I am almost entirely out of the market now.

[Rainbow]

Quote by: bishop you're getting further and further away from the topic, again. can you give a solution that will cause the dollar to appreciate?

#1
No, I uphold my point that markets are the places to fill merachandise, goods, services, ect. with.
#2
I have none. There are plenty of economists out there, who present many solutions while most of them do not match criteria either.
The problem seems to be : lack of new technologies needed to create and/or manufacture new goods, merchandise, services, jobs, ect. A parallel to James Watt's invention with a steam machine.

[bishop]

heh.. thanks rainbow.. just keep posting that hot air that has nothing to do with the topic at-hand - which is THE DOLLAR in case you forgot. :)

[Rainbow]

Maybe U.S. wants its currency to be "less-valueable" for some period of time purposely, in order to get it back at lower rates (later) and strenghten U.S. dollar, in reality ?

[bishop]

a weaker dollar results in higher inflation and/or high interest rates, neither of which is desirable. the weaker dollar has resulted in reduced global demand for dollars, which also helps to push inflation and interest rates higher.. if that's the standard for good, i'd hate to see what the bad standard would be.. but since it doesn't matter, and may even be good in the long-run, why don't we just rack up another $400+ billion deficit this year? heh, my bad, we're going to...

[castille]

You stupid Americans, I'm going to work for the French now! Viva la France and all that crap.

[Sean]

Castille, you have been here long enough to know that the above post adds nothing to the discussion. Do not respond to my warning in this post.

[PatrickHenry]

http://www.nytimes.com/2005/03/04/op...tml?oref=login
or truthout: http://www.truthout.org/docs_2005/030405K.shtml
Krugman says Greenspan is a shill:

Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously? When Mr. Greenspan made his contorted argument for tax cuts back in 2001, his reputation made it hard for many observers to admit the obvious: he was mainly looking for some way to do the Bush administration a political favor. But there's no reason to be taken in by his equally weak, contorted argument against reversing those cuts today. To put Mr. Greenspan's game of fiscal three-card monte in perspective, remember that the push for Social Security privatization is only part of the right's strategy for dismantling the New Deal and the Great Society. The other big piece of that strategy is the use of tax cuts to "starve the beast." <snip> And the consequence of the failure of the starve-the-beast theory is a looming fiscal crisis - Mr. Greenspan isn't wrong about that. The middle class won't give up programs that are essential to its financial security; the right won't give up tax cuts that it sold on false pretenses. The only question now is when foreign investors, who have financed our deficits so far, will decide to pull the plug.

Better to get our budget balanced, but barring that an appropriate strategy for US citizens is to get their investments out of US$ denominated assets.

[Chris]

Damn the USD is hurting more and more.

Was curious to see how much $600 was worth in GBP.

£312.01

Damn, I remember when the GBP was something like $1.60 now its $1.92!

[Nono]

Nice for us foreign importers of Liquid Smoke, though. :)

[bishop]

Better to get our budget balanced, but barring that an appropriate strategy for US citizens is to get their investments out of US$ denominated assets.

krugman is making a living being a pundit these days - no different than hannity, coulter, etc... every time greenspan talks, he argues for a balanced budget. last time he spoke, he said we ought to reinstitute the paygo rule..

from what i've been seeing, krugman is quite the asshat. he seems to be more concerned about taking selective statements from greenspan and bashing him with them. just like any other pundit would do.

[PatrickHenry]

Quote by: bishop krugman is quite the asshat.

In your dislike for Krugman, bishop, you have misconstrued his entire argument. He was saying it has been a conservative program for quite a while now to wreck the social safety net. One way to do so is by running up the budget deficit so that no money is available any more. Then the net must be slashed in order to rebalance.

Greenspan, in his view is playing along, contending for safety net reductions while defending the tax cuts.

IMO, the cut in taxes are inappropriate if the net effect is to underfund what citizens have already paid for: Social Security and Medicare.

[bishop]

i realize that, but it is krugman who is misconstruing arguments.. greenspan supports s.s. privatization and the tax cuts, no denying that.. on s.s., he has stressed that it be done as gradually as possible so to avoid having to incur new short-term debt to the tune of $2 trillion. he also supports balancing the budget, which is possible even with the tax cuts.

what's particularly interesting is how many people think that there's a relationship between bush's tax cuts and the entitlement programs - which derive their operating funds from payroll taxes which weren't affected by bush's tax cuts.


interesting article here about the dollar being affected by our twin deficits: http://money.cnn.com/2005/03/11/comm...bone/index.htm