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"Mahmoud Ahmadinejad, Iran's president, seems to think the long run is now: two weeks ago he decried the dollar as a “worthless piece of paper”. And Jim Rogers, a famously shrewd investor, asks why anyone would buy dollars. America's currency has been infected by the sense of crisis that bedevils its economy and financial markets. Speculative selling of the dollar is close to an all-time high, reckons Stephen Jen at Morgan Stanley. Many believe—and some evidently hope—that the greenback might be on its way out as an international currency. Worrying parallels are seen between the dollar's recent fall and the decline of sterling as a reserve currency half a century ago. The dollar's value against the basket of leading currencies tracked by America's Federal Reserve has recently been at an all-time low. Against a broader range of currencies, the dollar has lost a quarter of its value in the past five years. Its decline has been especially marked against the euro. At one point in 2002 the euro was worth 86 cents; today it buys $1.48. "
"A full-blown dollar crisis on top of a credit crunch and a weakening economy would be frightening. It would send financial markets reeling and tie the hands of the Fed, perhaps forcing it to raise interest rates even as recession looms. The sky-high euro would soar further, choking off Europe's growth. Political tensions would also rise. Already Airbus has called the dollar's decline “life-threatening” and France's president, Nicolas Sarkozy, has given warning of “economic war”. At worst, the shadows could darken further. For half a century the dollar has been the hegemonic currency. A large slice of global trade is counted in dollars. Central banks hold most of their foreign-exchange reserves in dollars, a boon for America that has allowed it to issue debt more cheaply. That dominance has survived dollar slides before, as in the late 1970s and mid-1980s. But now, with the euro as an alternative, the fear is of a sudden shift in the global monetary system, with investors switching quickly from one currency to the other. "
Last edited by maverick4; 11-30-2007 at 03:42 PM..
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Re: The Economist: 'Losing Faith in the Greenback'
Originally Posted by shmessy
......except "Thank you, George Bush"!!!!!!!
Ah, the B word again.
Regarding the subject, I'm not any kind of economist but I watch a lot of them on TV to help with my mutual funds and it's very much mixed on whether the weak dollar is bad. Some say it is but at least an equal number say it's not a problem at all. Again, I can't defend that latter position but I've seen enough people hold it that I'm not about to freak out about it.
Re: The Economist: 'Losing Faith in the Greenback'
The Eur was this high during the Clinton administration here is a monthly chart on the EUR/USD pair a higher price indicates a weaker dollar vis a vie the Euro.
What you will note about the price had been weakening during the term of Bush I and this general trend continued through the firs 2 years of the Clinton administration. When the Gingrich congress was elected and the prospect of fiscal sanity loomed the price of the dollar went from a high of 1.4517 to a low of .8225 in Oct 2000 (when it appeared Bush would win the election. The price then went up a 1200 pips to .9430 during the time when Gore disputed the election. The dollar then strengthened until....9/2001. the dollar then proceeded to weaken until Bush won the 2004 election then strengthened until the end of 2005, as the prospects of a democrat controlled congress loomed the dollar weakened. this weakness has continued as the prospect of a dem president remains strong.
The markets are working to the future not the present. the big boys are placing their bets on where they think things are heading. The value of the dollar indicates they don't feel too good about the prospect of a dem congress and a hillary presidency.
A weak dollar does make imported stuff more expensive and reduces the cost of American produced goods, helping the balance of trade OTOH it make the people holding our paper nervous as it deflates the value of the debt they are holding. It increases pressure of the Fed to raise interest rates so it can sell our treasury paper. The Japanese, Chicoms and Europeans don't want the value of our currency to go too low, that will hurt them also.
HEre is an article from a British paper on the topic.
"Some guys play in all-star games, some guys don't. I don't know who picks all those all-star teams. In all honesty, I don't know who picks the combine, for that matter," Belichick said. "How does (Miami-Ohio offensive lineman Brandon) Brooks not get invited to the combine? How did Vollmer not get invited to the combine? I don't know. We can't really worry about that. We just have to try to evaluate them the best we can."