Despite what Bush says, the dollar is intentionally weak right now.

This will, the longer it stays weak, strenghthen out exports and close the trade deficit. A weak dollar means good things for domestic producers. Yet liberals are bitching.

It means more jobs here. It means more exports.

Actually, this weak dollar worries me. To me, it represents that the world is losing faith in the US economy and the US government that is growing a large deficit. I don't think the dollar is weak intentionally....

Nah, it doesn't bother me too much. A weak dollar means the return of the American worker. If it drops much more, we should see some industry returning to America.

Many other currencies are tied to the dollar, so it doesn't have that much effect in some countries.

P.S. - It will provide even more incentive for domestic drilling, and will spur even greater research into alternative fuels and deisel technology.

Originally posted by Karankawa
Actually, this weak dollar worries me. To me, it represents that the world is losing faith in the US economy and the US government that is growing a large deficit. I don't think the dollar is weak intentionally....


It could be intentional.....personally i think Greenspan and the US Treasury have abandoned the "strong dollar" policy for some kind of an "I don't know what" policy. With policy makers like Stephen Friedman exiting the Bush Administration, it is difficult to know what is going on. but i do know that by all indications, we're in the early stages of a multi-year bear market just like back in the 80's when Ronald Reagan of "Reaganomics" fame was king. if you recall this was a similar crisis...the wealth of every American was cut in half...just check your portfolio now.

With interest rates near a 40 year low and the dollar falling, you know already your bank is paying you nothing for your money sitting in there.

Investments? Some people who think paying $50 for a barrell of oil is too much, just think if the Saudis wanted payment in Euros instead of dollars.

Right now the Euro is 1.32 US. Central banks which hold reserves are really sweating. For example, Japan who just came out of a recession, holds almost 830 billion of foreign currency reserves. a 20% drop in the dollar value would reduce the value of this asset by 164 billion.

What banker would want to report that to his shareholders?

Nice post Rolander

I would add that Saint Ronnie also gave us the largest tax hike in history which certainly didn't help anyone's personal wealth.

Interesting point -- if you bought a EURO contract about a year or 2 ago, let's say $300,000 -- you could cash out today for ~ $450,000 for a profit of $150,000 minus a small amount of juice.

Some people actually did and others missed the boat.

Dop

The oil companies use foreign currency hedges.

if you bought a EURO contract about a year or 2 ago, let's say $300,000 -- you could cash out today for ~ $450,000 for a profit of $150,000 minus a small amount of juice.

Some people actually did and others missed the boat.

You can play that game with every commodity, stock, etc that exists. Being a Monday morning quarterback is worthless.

Right, our dollar is failing, let's say it was intentional! The value of our dollar is based out of trust, not how much gold we have. So, we're pissing off investors, screwing up the economy, angering other countries and dropping the dollar... intentionally? I don't follow your logic...

Which investors are pissed? Certianly not ones who invested in oil companies. Not the ones who invested in foreign currency markets. Not the ones who invested in US companies, who will feel increased demand.

Which investors are pissed, Blib?

Which investors are pissed? The ones who invest in our dollar. That's the only way it's value can drop.

LOL, so you're upset that foreigners lost money?

LMFAO!!!

It's rare that you can make a 40-45% profit in the currencies market on a sure bet like this one ... last time I recall it happening was the mid-late 80's when the yen dived from 205 to 100 and then back up.

Dop

Originally posted by TheGreat Gatsby
LOL, so you're upset that foreigners lost money?

LMFAO!!!

Yeah, well they're only going to put up with that so long before they stop bothering to invest in the dollar.

They're using the dollars they've horded to buy stuff here. Americans take dollars. They're going to spend it here. Already, they're buying real estate with their dollars. They'll buy products as well. Where do you think they're going to send their dollars when they're through holding them?

P.S. - I know it's a hard concept to swallow, and people have bashed Bush so much that it's hard to see any good in a weak dollar. I promise you, this was and is needed. Foreigners trapped with US dollars aren't going to burn them. They will spend them before they lose more value. They'll buy products, goods, and services here.

You're right -- it's a hard concept to swallow -- very hard.

Dop

But two posters already posted their knee jerk reaction to it, and were wrong.


Please tell me how this hurts Americans. There are ways that a weak dollar hurts, don't get me wrong.

Canada is also worried about the Weak Dollar :eek:




Paul Martin Says Worried by Huge U.S. Deficits

Tue Dec 14, 6:21 PM ET World - Canada



OTTAWA (Reuters) - Canadian Prime Minister Paul Martin said on Tuesday he was concerned by the "huge level of deficits" in the United States, which buys more than 80 percent of all Canada's exports.


Martin, asked by CBC television whether he was worried by the effects of the strengthening Canadian dollar, said he was always concerned about the economic conditions in Canada's major trading partners.


"Obviously I'm concerned about the huge level of deficits in the United States. We're now very heavily dependent upon growth in China -- is that going to continue?" he said.


Figures released on Tuesday showed that Canada's trade surplus fell to a year low of C$4.35 billion ($3.5 billion) in October as exports shrank due to the stronger Canadian dollar.


Martin said that to cushion possible future blows, it was important for Canada to ensure education standards were as high as possible and to invest in research and development.


He said his approach would ensure that when the economy had "ups and downs ... the downs are not going to affect us as much, and we'll take much greater advantage of the ups".


He added: "That's what we have to do. That's my whole economic vision. That's why I want to get debt down, that's why ultimately I want to get taxes down, that's why I want to invest in education."


($1=$1.24 Canadian)

Nobody feels the weight of the falling dollar more than Americans living in Europe. What used to be expensive is now very expensive.

The US military, responding to complaints from troops stationed in Europe, has had to increase living allowances.

Good point Rolander ...

Dop

I heard on the news today that President Bush says he is committed to a strong dollar policy. I wonder what concrete steps he will take to implement it. One of the factors leading to a weak dollar is the deficit spending we are doing. Perhaps he will come up with a plan to balance the budget.

Originally posted by Imagineer
Perhaps he will come up with a plan to balance the budget.

Yeah, like that's going to happen.

GOOD NEWS FOR THE SMALL INVESTOR. Don't forget you can now throw in a $55 billion dollar trade deficit along with the budget deficit and weaking dollar.

Bush wants to cut taxes....how many times have we heard him say this, "it's your money." Moreso than cutting taxes, Bush is on a rampage as we watch him daily trying to cut medicare and social security. This has become his "priority". Why? because all these deficits he has run up make it impossible to pay for these programs for Americans! His intent is to rid American society of the middle class and make the poor even poorer. Now, this is just great for our democracy, isn't it?

Americans are spending money they haven't got. the money Americans borrow they spend on goods made in foreign countries. Then, the foreign economies run a surplus*. (*Please note: a "surplus" is something George W. Bush inherited when he took office in 2000.)

the bigger the U.S. deficit gets, the more money foreigners have to buy U.S. treasury bonds and the greater the pressure becomes on bond prices. U.S. treasure bonds have already lost 40% of their value since Bush moved into the Whitehouse and it looks like they are likely to fall a great deal more.

In a recent speech in Berlin, Allen Greenspan referred to the U.S. Account deficit saying "foreign investors" would eventually "reach a limit" in their desire to finance the deficit and "diversify into other currencies" or demand "higher U.S. interest rates."

Now, as i said we all have heard how Bush wants to cut taxes, but if U.S. interest rates on bonds go up. guess who will be paying the difference !

Bush is on a rampage as we watch him daily trying to cut medicare and social security.

One can only wish....

Bush's weak dollar policy is risky and can backfire:

It makes US assets, specifically US companies, cheap to buy for foreign companies. After dollar stabilizes at weaker levels vs. Euro I would expect European companies to come shopping for bargains: banks, media companies, pharmaceuticals, etc. This is the equivalent of giving away the crown jewels and totally irresponsible. After all, Clinton managed to create strong growth 20 million jobs with a muscle dollar. Weak dollar policy should not be necessary if all the expansionary tax cuts did their job as promised.

Oil is priced in dollars but if OPEC senses it can maximize profits by pricing it, say, in a basket of currencies, they will gladly do so. If weaker dollar causes price of gasoline to go up then Georgie will rethink that plan very quickly.

Real problem is level of Chinese currency and that is pegged to USD for now.

Originally posted by Rolader
GOOD NEWS FOR THE SMALL INVESTOR. Don't forget you can now throw in a $55 billion dollar trade deficit along with the budget deficit and weaking dollar.

Bush wants to cut taxes....how many times have we heard him say this, "it's your money." Moreso than cutting taxes, Bush is on a rampage as we watch him daily trying to cut medicare and social security. This has become his "priority". Why? because all these deficits he has run up make it impossible to pay for these programs for Americans! His intent is to rid American society of the middle class and make the poor even poorer. Now, this is just great for our democracy, isn't it?

Americans are spending money they haven't got. the money Americans borrow they spend on goods made in foreign countries. Then, the foreign economies run a surplus*. (*Please note: a "surplus" is something George W. Bush inherited when he took office in 2000.)

the bigger the U.S. deficit gets, the more money foreigners have to buy U.S. treasury bonds and the greater the pressure becomes on bond prices. U.S. treasure bonds have already lost 40% of their value since Bush moved into the Whitehouse and it looks like they are likely to fall a great deal more.

In a recent speech in Berlin, Allen Greenspan referred to the U.S. Account deficit saying "foreign investors" would eventually "reach a limit" in their desire to finance the deficit and "diversify into other currencies" or demand "higher U.S. interest rates."

Now, as i said we all have heard how Bush wants to cut taxes, but if U.S. interest rates on bonds go up. guess who will be paying the difference !

I thought democrats were out to kill the middle class. If raising my taxes is their "gift" to the middle class, who needs enemies?

Originally posted by The Great Gatsby
They're using the dollars they've horded to buy stuff here. And that explains the largest trade DEFICITS in the history of our economy? Reality check please.

We cannot count on the the largess of foreign investors to subsidize our deficits forever. At a certain point they will pull the plug. The question is: where is that point? Possibly when Moodys and S&P downgrades US debt from triple A. It's a bit of a food fight if they do it publicly, so if I were them I would be selling discreetly into every rally. Bush should take these trade and budget deficits more seriously than he appears to. They are not a sign of strength by any stretch of the imagination.

No, it explains the DECREASE in our trade deficit over the past onths though. Obviously, you don't pay attention. Who will pull the plug? They have dollars and want to use them. They're not going to just throw them away. Already, they're buying real estate in NY at a record rate, bringing the dollars home.

I'm telling you, a strong dollar does NOTHING to decrease trade deficits. It helps to increase them.