Fallout from the falling dollar

http://www.csmonitor.com/2006/0505/p01s02-usec.html


As foreign buyers shun the currency, it could be harder to finance the US trade deficit.

By Ron Scherer | Staff writer of The Christian Science Monitor

NEW YORK – For two weeks, the dollar has been hammered as foreign buyers shun the US currency.

As a result, the Canadian "loonie" is at its highest point in 30 years. The British pound is at its uppermost level since last September. Even the closely managed yen is at a six-month peak.


If the dollar were to continue falling, it could have wide ramifications:

• It could imperil the economy next year because Fed Chairman Ben Bernanke might have to defend the currency with higher interest rates.

• A lower-valued dollar makes imports more expensive, possibly ratcheting up the inflation rate. But it could also stimulate US exports, thus providing more jobs.

• This summer, Americans traveling abroad will feel as if everything is expensive. However, foreigners coming to America will feel as if the country is one giant Wal-Mart....

deficit. Yes, there would have been an increase in the deficit due to the 2 Bush wars, but it wouldn't have been drastic enough to alarm currency traders and drop the dollar's worth worldwide.

It's the tax cuts, and the tax cuts are pure GOP, not just Bush.

(Maybe not Daschle, but some of the cats in his herd, anyway.)

Serious question.

Just make sure you get the actual metal and not "futures" or "certificates."

deficit spending by Bush.

Remember, DHS now has the "right" to snatch it out of a safe deposit vault in anything they call a national emergency. Unless you're going to put in a backyard koi pond and bury the shiny rocks underneath it and not plan to touch them unless there's a REAL national emergency, it's probably not a great idea.

Gold is a hedge against inflation. However, all metals prices are escalating, and even aluminum alloy is up a whopping 50% over last year.

I'm keeping the shiny rocks I inherited from my parents in the form of a few pieces of jewelry and a case of sterling flatware. I've considered mining stocks as well as gold futures, but both are a little too chancy.

However, if I lived in the kind of place that had a wall safe, I might consider some shiny rocks to put into it.

"This summer, Americans traveling abroad will feel as if everything is expensive. However, foreigners coming to America will feel as if the country is one giant Wal-Mart...."

This would be true in a pre-9/11 United States but with no-fly-lists, a strong anti-bush feeling around the world, the declaration from the bush admin that they don't have to inform a foreign citizen's embassy before arresting them and sending them to another country for torture (The Arar case) I have to wonder if it will be a tourist mecca as this point seems to thing it would be.

So the shit is even deeper than it seems at first glance.

:patriot:

One of the things I have noticed while watching the market, the dollar, etc, is the very narrow analysis used when discussing the upsides and downsides of the falling dollar and it's effect on the economy.

One of the upsides often mentioned is that US products will be more attractive therefore reducing the trade deficit and increasing jobs. This, too, would have been true in 'bygone days' when the US had a strong manufacturing base made in America and worked by Americans. That is not the case today, by and large, manufacturing is much less an American enterprise than a global one with the jobs having been outsourced to other countries and, in many cases, the factories themselves. The trade deficit may well be reduced but only because Americans will not be able to afford the higher prices imports will demand and not because there will be American products to replace the imports. This is my take on it anyway.

Living next door to the US and having an integrated economy, I have been watching this very closely and have been increasingly concerned at how fast things are happening.

I think you could time the decline of the American "civilization" from the moment the Reagan era Congress gave corporations permission to take their manufacturing outside the borders of the US and find the cheapest labor supply they could. That was the razor they handed us to slice our own throats.

the ability of US corporations to avoid paying US taxes through safe havens like the Bahamas, etc, has created a very bad situation. Add to that the move by even one oil producing country demanding payment in euros instead of US dollars and it can get pretty scary, imo.

I don't have any answers but I sure don't like the questions that keep popping up in my head!