Is the writing on the wall for the U.S. dollar?

Researchers at one big fund manager say it is, but the markets haven't read along just yet.

Since the start of March, Bridgewater Associates, a manager of more than $100 billion of institutional and hedge fund money based in Westport, Connecticut, has been issuing warnings in its daily reports. One on March 11, titled "The Breakdown of the Dollar System," said, "As we often say, we've seen this movie many times, and we know the ending."

There is indeed a volatile blend of risks surrounding the dollar.

President George W. Bush's new budget proposal would substantially expand the government's debt burden in the next decade, potentially raising doubts about the desirability of its IOUs. Some Asian central banks have declared that they will diversify their reserves away from dollar-denominated assets. If China decouples the yuan from the dollar, it will not need as many dollar-denominated assets to keep its currency from gaining value, nor will its competitors for export markets. In recent times, long-term interest rates have stayed stubbornly low, making it difficult for American companies to attract new investment from abroad.

These ingredients may just be waiting for the right catalyst. If enough people start thinking like those at Bridgewater Associates, the dollar will lose value rapidly. There is no point in buying dollars today, after all, if everyone thinks that they will be worth less in the near future. Fundamental economic factors need not worsen any further; in currency crises, perception very quickly becomes reality.

More: http://www.iht.com/articles/2005/03/27/business/dollar.html

Wait for GM to go under, that may be the crisis

Or there are many other potencial catalists, but word on the street is... yes

I wish I had the money to buy gold bullion hahahahahahahahahahaha

for a while. Anyone who doesn't have a cushion between what they're taking in and what they spend on absolute necessities (meaning food, shelter and ordinary medical care) is going to be very badly hurt. People who are mortgaged to the hilt and paying off huge credit card debt will be the first to go under.

My best advice to everybody else is learn to cook. Food is going to become very expensive very shortly, due to increased shipping costs. Clothing will follow soon, except for that made in China, which has pegged its currency to the buck to facilitate the looting of America's industrial base. Consumer elctronics will be slammed, as will durable goods like major appliances, cars, and furniture.

Some of us will come through this with our homes intact, and we'll have to care for the people who are getting hurt the best we can. My granny always had a big pot of stew on the stove during the Depression. If my grandfather wasn't around, hungry people got fed without having to weed the petunias.

The US still controls around half the world's wealth. The dollar can take more punishment than people give it credit for.

But we do need to do something because it IS losing value, and that is NOT a good thing.

Russia dumped $'s and, as pointed out before me, GM is about to cut loose 100K workers. The Bush Economic Miracle has come home! Can I get an "Amen"?!?!?!

as the DOL's unstated but permitted illegal immigration (by abuse of the H1B and L1 visa programs) is now being recognized as harming the US economy. Blowviators like Jagdish Bhagwati (author of "The Case for Globalization") are now being exposed since globalization is just code for outsourcing jobs from the US so that CEOs and Wall Street profiteers can make a killing by killing Main Street.

At least temporarily manufacturing jobs here in the US will have a brief respite. Service jobs that used to go to those entering the job market are going to still be shipped out. The trend is clear since 2000 with the study by Northeastern University that shows that over half of new US labor force jobs are going to immigrants

'New study reveals that the nation’s foreign-born make up more than half of the labor force growth between 2000 and 2003'

http://www.nupr.neu.edu/01-04/immigration_jan.html

Even more, with around 10 million illegal immigrants in the US (no one is really sure but this estimate will eventually be right by next year) the Republican/Chamber of Commerce/businessmen will have padded the 'surprise' to their fellow citizens since these illegals, who should be paying into the Social Security and Medicare systems, will suddenly end up trying to collect under their phony SS#s. This will be the Rubicon moment, since they should have been paid a living wage in the first place...or the businesses fined for hiring illegals knowingly. Either way, Democrats need to wake up to this problem.

" Europe is in the process of trying to pass a new constitution, and it is going to be a delicate business. Le Figaro reported that, for the first time, more than half of French surveyed were against the new constitution, and the opposition asked Chirac to put his own political weight behind its passage.

Why should this be of interest to the US, and even more so to the opposition to Bush? Because Europe and the Bush are on a collision course, over a deep issue: what kind of world we will live in. It is a global game of chicken over wages and prices.

What is this division? George Bush and Alan Greenspan are pushing a world where materials prices are higher, wages are lower, and the profits of large corporations are higher. They are doing this by running very high budget deficits, having very low interest rates, and using China as a vast engine of deflation to keep wages, and thus consumer inflation in line. This leads to what Professor David Hackett Fischer called a "money drought" in his book The Great Wave. We can see the results: oil has gone from a rock bottom $11 a barrel, to hovering over $55 dollars a barrel. Real wages in the US have barely moved, and yet Wall Street banks are showing record profits. Bush wants everywhere to look just like here: high profits, low wages, and a rush for mining and drilling.


....


It is a global game of chicken, and it is the working people of the world who are going to get plucked should reason not prevail. And reason could, still, prevail. The amount of growth in our "black gold" world economy is based on two factors: how much more oil we can extract, and how much more we can make with that oil. These two numbers together are the pie to be split. Currently, the United States, by having an inflationary monetary policy, can force more of that growth to go here rather than elsewhere. Not because the US is doing better, but because oil is priced in dollars and protected by US carriers. A new Bretton-Woods system could divide this global growth equitably, rather than by Federal Reserve fiat. There would be
restructuring: more use of technology, changes in land use, changes in government regulations, but the stress would be distributed around the globe, forcing all of the developed and developing nations to make painful choices.

But right now the house of Saud and the house of Bush see no reason to do this, and they have enough allies in countries eager to keep resource extraction economies to try to force the issue. However, increasingly, the rest of the developed world is turning against this system. And that means, as markets are wont to do, there will be a correction, and it will be short, sharp, sudden and surprising. The question is: will Europe run out of political capital before Bush runs out of capital to borrow against."

Full story at
http://www.truthout.org/docs_2005/032705Y.shtml#

...thought that Americans are relatively undertaxed and they see that the gov't has room to tax the hell out of people in order to pay off the debt.

(As a matter of apportionment, there's a pretty big burden on the middle class and people who work for a living, but between a tiered cap gains/dividend income tax, some kind of reduction of the mortgage interest deduction, and a few other taxes, the US could definitely meet a lot of its debt obligation. But if money stopped changing hands (throughh wages, buying and selling of assets, etc.) the only tax that could save the dollar would be the wealth tax, which we don't have.

Did anybody here think that good things were going to happen to the economy?