Dollar at Near 15 Year Low

Started by zarby, Nov 29, 2006, 12:51 AM

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zarby

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US setbacks see dollar plunge to near 15-year low
By Ambrose Evans-Pritchard
Last Updated: 2:37am GMT 29/11/2006

Your view: Will the dollar hit $2 against sterling?
The dollar tumbled to a near a 15-year low against sterling yesterday on fresh signs of economic trouble in the United States.

An 8.3pc crash in US industrial orders and an admission by the Federal Reserve chairman that Washington does not know how bad housing really is set off another day of wild gyrations on the currency markets.

The Federal Reserve chairman Ben Bernanke said Washington did not know how bad a state the American housing market was in


US house prices fell 3.5pc to an average $221,000, the third month of declines. Stocks of unsold homes rose to 7.4 months' supply, the highest since 1993. The US consumer confidence index fell sharply to 102.9.

The "truckers index" of tonnage shipped by US haulage companies was down 1.8pc in October, a leading indicator of contraction. Merrill Lynch called the fall "borderline recessionary".

The dollar continued its slide against the euro, dropping to $1.3194 after the Federal Reserve chairman, Ben Bernanke, said the housing slump "would be a drag on economic growth into next year". Mr Bernanke said official figures did not pick up the "sharp increase" in cancellations on house deals and might understate the inventory glut.

"Any significant effect on consumer spending arising from further weakness in housing would have important implications for the economy," he said.



I think the more important exchange rate is between the dollar and asian currencies because so much of what we consume is made in asia particularly china. I don't think we consume all that much from England.

If the exchange rate between the dollar and the "RenMinBi" (apparently, this is the chinese currency -- I never heard that word before) goes through the floor we are in real, real trouble.

Frankly, I have been predicting severe economic problems for the U.S. for several decades. I have been surprised that it hasn't happened -- at least not openly. I think the tremondous efficiencies and wealth generated by the personal computer explosion of the 1980s and 1990s is a large part of the reason. The computer marketplace has stablized. Computers and even to an extent software are not mere commodities -- not huge generators of wealth -- commodities largely produced off shore.

I hate to be a doomsayer especially since I have been wrong now for several decades, but I think I will unfortunately eventually be right.

There are a lot of reasons why but one major reason is the subject matter of this forum -- family law and the destruction of the American family.

Kyo

Zarby, 'renminbi' -- 人民幣 in traditional characters -- means 'people's currency' and is the official (think 'The Party') name for what most people call the yuan (元),  Chinese people often call it a kuai.

The US dollar has been very stable against the Japanese yen, being in the 110-125 range for several years.  

Great Britain has many of the same ridiculous family law problems that the US has -- why is the pound so high these days?  The Canadian dollar and Aussie dollar are also surging.  What is different about their economies?

MAUS

If I had money to speculate with I would buy Chinese currency on the black market (you cannot obtain it through legal channels except through strict government control).

It has been deliberately and central planned undervalued for some time but no economy has ever been able to keep that up.

Canada'economy is booming because the US is weaning off middle east oil and we have picked up the slack. Being absurdly overtaxed has done a lot to improve our deficit books as well.

K9

What happens if this country goes into default on its loans? The last bankruptcy was never cleared off of the books officially. Does the UN get to move in and ensure peaceful takeover by the debt holders? Another reason to disarm the public.
The Depression was proven by one  Milton Friedman to have been caused and prolonged by the Federal Reserve's horrifying incompetence. When you see the words "federal reserve", think "international bankers". The Federal Reserve has nothing to do with democracy or elected officials save for the Chairman. The Feds members received fantastic benefits from that bankruptcy. The only thing Friedman couldn't prove was if the Depression was planned. Follow the money.
Explaining misandry to a feminist is like explaining "wet" to a fish.

MAUS

Nobody ever forecloses on a country. Germany and the former Austr-Hungarian Empire were rendered as poor as poor gets by the treaty of Versaille. A financial advisor told them to get a wllpaper press and pay the war reparations for WW1 with paper promise. This led to the worlds greates hyperinflation.

National debt is a choice made by those who invest in it. When the bond or treasury bill falls due the investor is given a choice,

(1) apiece of paper which says the debt is payed (currency)

(2) a piece of paper which says we still owe you the money (fresh issue of the bond)

Most investors prefer choice number two because they get interest and besides, what else are they going to do? Get a day job at their uncles Dellicatessen?

The principal of a national debt is rarely paid down. The whole idea is to keep it within a certain ratio of the national assets which is what makes the money worth anything in the first place.

PaulGuelph

I expect the US currency to drop another 10% or so.

Balance of trade deficit and Iraq war are both going badly. Gov debt is out of control.

But a low US dollar is bad for Canada, because our products will become overpriced in the US market. So it will hurt us for sure.  :shock:
Men's Movie Guide:  http://www.mensmovieguide.com   The Healing Tomb: https://www.amazon.com/dp/B081N1X145

Galt

Quote from: "PaulGuelph"
I expect the US currency to drop another 10% or so.

Balance of trade deficit and Iraq war are both going badly. Gov debt is out of control.

But a low US dollar is bad for Canada, because our products will become overpriced in the US market. So it will hurt us for sure.  :shock:


Apparently, the Big Wheel Investor Warren Buffet has been betting that the dollar will fall for more than a year (mainly because of the trade deficit).

A low dollar is actually good for the US in many respects, for instance exporters will be able to sell at a cheaper price in foreign countries (cheaper price in the foreign country but the same dollar amount to the exporter). The bad part is when Americans travel to foreign countries - everything will seem to be more expensive after exchanging currency.

Mongo

This is a huge boom for my company, we can't keep up with demand.

With this new dollar news we have orders for over 30 machines at an
average of $1m. The pacific rim is booming and the weak dollar is
helping us Americans sell our products IMHO.

zarby

Yes, a low dollar is good for some businesses and industries, but on the whole it is not good for the U.S. It means that we must pay more for the goods that we import and we import a lot of goods. You sell these machines but the money you get for the machines buys less. Most americans do not make more money as a result of a lower dollar and they as a result on worse off because they have to pay more for what they consume. Economics is hardly a science. It consists of a serious of inferences and economies are so complex that important things may be ignored in simplistic models. I think though on balance it is bad when the value of the dollar goes down.

MAUS

Building machines of war (on credit) and blowing up the assets of civilization (on credit) and then being obliged to replace them (on credit) does not create wealth.

War is only profitable if you enslave the population of the invaded country and confiscate its'assets.

If war was actually profitable the thing to do would be to declare war on a bird shit island in the Arctic and bomb the bejesus out of it. The Soviet Union was actually doing this and the economist who said it was foolish died of pneumonia in Siberia.

That is not to say that some people did not become wealthy as a result of this war. Maggots grow plump and prosperous in a pile of bullshit.

Titurel

A chart for the Chinese Renminbi against the US Dollar futures contract can be found at Futuresource.com.

http://www.futuresource.com/charts/charts.jsp?s=RMBZ6&o=&a=D&z=800x550&d=medium&b=bar&st=

It started officially trading at the CME Globex Exchange on August 28.

Note the accelerated upward bounce since mid-November.

MAUS

That is astounding!!! The Chinese were dead against letting their currency be traded on the futures exchange.

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