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Edited on Wed Sep-17-08 09:14 AM by OmahaBlueDog
When you keep printing money (essentially what the Treasury is doing) to pay for these bailouts, the wars, and the government pork d'jour, the dollar weakens in value.
The downside to that: gas and diesel prices will continue to rise, as will imported goods. Whenever gas and diesel rise, everything in the food chain rises. Inflation will become a problem. To curb inflation, the Fed will have to raise interest rates. This will further hamper the housing market and slow business growth.
The upside to that: US assets and exports become more attractive to overseas buyers. The US becomes more attractive as a tourist destination. This means that states like Florida and California should prosper,and may be helpedout of their long housing crisis as devalued property will look attractive to foreign investors. Certain industries (heavy equipment, aircraft) should benefit from the weak dollar and remain strong. Other US businesses and assets will become attractive take over targets.
I think the biggest near term impacts in one month will be:
a) what will the stock market look like? A down September almost always spells doom for the party in the WH. b) Ike: how bad is the damage, really? $8B sounds low based on what I've seen so far on TV. How much does this impact life in one o America's biggest cities? c) gas: if regular unleaded keeps falling, that's good for the GOP. If it starts ticking up as cold weather sets in, consumer misery will become more evident.
What the election will miss -- I predict this will be a horrid Xmas for retailers.
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