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.