Dollar selling could push euro to 125c

[mumon]

http://www.businessworld.ie/livenews.htm?a=815818;s=rollingnews.htm

The dollar has continued to lose ground following the publication of weaker than expected jobs growth in the US last month, with non-farm payrolls rising by just 57,000 against an expected increase of 150,000.

The Federal Reserve holds its latest policy meeting tomorrow, at which it may start to move away from its commitment to keep rates accommodative "for a considerable period of time", which may provide some mild support for the dollar.

[cthrumatrix]

1. nobody wants to hold a currency that is forced to devalue becuase of it's

trade imbalances and deficits.

Some say another 20+%...this is why you see gold doing much better..the dollar has been declining for 2+yrs...

[dbt]

2. Only a 2+ year decline?

Gonna be hard* to blame that on Clinton's penis, innit?

:evilgrin:
dbt

* all puns fully intended!

[R Hickey]

4. I started watching the dollar when Euros were worth 85 cents each

Since Bush stole the government, the Euro has increased in price from $0.85 to $1.25 each. I'm no math major, but it looks like, if I want to travel to Europe again, it will be quite a bit more expensive.

I can only imagine what our loss in good-will has been. Some places I wanted to visit now, if they saw me as an Amerikan, they would chase me down the street, and try to kill me. Thanks Bush, you've made Americans poor and less safe abroad.

And now, to showcase my ignorance, and I hope that I'm wrong, I must say that I believe the Bush family has a large stake in Barrak's Gold, and that history is starting to resemble, to me at least, the plot of the 1960's James Bond movie 'Goldfinger.'

Poppy Bush's gold holdings, like with the gold holdings of the movie character Eric Goldfinger, will geometrically increase in value when the evil crime family renders the US dollar worthless.

[SpiralHawk]

3. They love to give you the "non-farm payroll"

But do you ever get the "farm payroll" ? Hell, no.

Ever wonder why?

The food system has mutated massively in the last 40 years to become exceedingly ugly industrially, chemically, and genetically. The economics are ugly, too.

[UpInArms]

5. here's some more on the dollar

http://www.forbes.com/business/newswire/2003/12/08/rtr1172546.html

excerpt:

The BIS report said money brought home to OPEC countries in the first half of this year exceeded all of 2001 and 2002 combined. Speculation was rife in the financial markets earlier this year that Middle East investors were pulling out of financial centres like the U.S. and UK.

The BIS report also noted that heavy repatriations of overseas deposits by Chinese banks and money flows into the country from foreign banks may make it harder for other governments to finance their deficits.

Asian central banks have been huge buyers of U.S. Treasuries this year as a way of recycling dollars bought to stop their own currencies from strengthening against the greenback.

The dollar posted a one-cent fall against the euro on Friday after U.S. payrolls fell far short of inflated expectations, gaining just 57,000 on the month in November.

...more...

Tomorrow will definite tell its own tale - if the Fed holds rates steady at nothing (oh yeah 1%), it will signal the world that the US is toast and show China as the emerging market -

Venezuela comes to mind - where all the media is in large corporate hands and the people are poverty stricken - but they have an advantage of the US - they have oil and a president that attempts to represent the poorest of the poor (but for how long?)

Will we be living in tin shacks on some hillside soon?

[HereSince1628]

9. US tariffs are bad but currency manipulation is ok. . .

"Asian central banks have been huge buyers of U.S. Treasuries this year as a way of recycling dollars bought to stop their own currencies from strengthening against the greenback."

Of course, China isn't trading dollars, they've just pegged their currency to ours regardless of market conditions. And why would nations try to prop up the dollar? Do yo think it could be to protect their ability to produce exports that can dominate the American market while keeping any American products as expensive as possible?

An earlier poster says that there has been a 40% lowering of the dollar to the Euro since Bush took office. Even if we are only "assembling" foreign-made parts its hard to understand how Germany, a country 1/3 our population, with salaries equal or better than our own and better social benefits, a country that is dealing with the costs of rebuilding the old east Germany, was reported to be ahead of the US in export trade.

I don't mean to sound isolationist and protectionist, but something is out of whack.

[Just Me]

13. Meaning, Asian banks,...

,...have the US by the balls? Is that what the massive purchase of treasuries mean? What is happening? Is there another full-blown economic war taking place under the radar as some form of counter-measure against known imperial endeavors by the PNACs?

[Don_G]

6. Probably

The only thing holding our economy up right now is because oil is bought and sold with the US Dollar. If that "trust" in the US economy disappears, then the money will shortly follow.

[ze_dscherman]

7. If the Japanese weren't buying Dollar in massive amounts ...

"Japanese authorities have spent around 17.8 trillion yen ($164.2 billion) in intervention so far this year and other Asian countries have bought dollars to slow or prevent currency appreciation against the dollar from eating into their exports."

Source: http://www.forbes.com/business/newswire/2003/12/08/rtr1172546.html

[Lydia Leftcoast]

16. And yet, according to the Japan Times website

the dollar is at about 107 yen today, which is the lowest it has been for a couple of years. In the spring of 2002, it was at 136!

[Art_from_Ark]

19. The yen-dollar exchange rate is like a yo-yo

Is now the time to start buying dollars with my yen? Or is the dollar going to sink further?

[UpInArms]

8. well, this should make things

better (sarcasm thickly applied)

http://www.smh.com.au/articles/2003/12/08/1070732145994.html

Mr Bush will also try to extract promises from Mr Wen that China will move sooner than its present vague target date to free up its pegged currency - blamed ahead of next year's US elections for the expected $US120 billion ($165 billion) bilateral trade gap this year and a transfer of US factory jobs to China.

[RPG-7]

10. are they saying they are moving to a weak dollar position?

If so that's quite incredible and it's a position that's never been taken before by any sitting administration.

It's also rather nutty. It's inviting a mass exodus of foreign investment.

[HereSince1628]

11. Outside of treasuries, what were/are foreigners investing in?

HMO's?

Wait, wait, I've got it!!! They were investing in Congressional Representatives! We've had LOTS of them to sell. Investiment opportunities in the Executive are just TOO limited making their price unattractive to the average foreign investor.

[htuttle]

12. They are saying: "We believe in a strong dollar.."

But then they add, "...whose value is determined by the markets."

So, Yes. No.

(truth: They are completely out of tools to deal with it. The dollar is going to drop quite a bit more, and there's little the US government can do anymore to stop it).

[Nancy Waterman]

15. They can raise interest rates

Eventually they will have to. It will make investment here more attractive and keep some of the money in this country. But it will slow our already feeble economy.

[HereSince1628]

14. A doubling of gas prices would prove a windfall to the states

and local governments that don't have the political strength to raise taxes.

Imagine the states with enough sales tax/gas tax revenue to keep from going banckrupt and a federal administation stuck explaining gas prices at $3.25 a gallon? That would be a test of Roverer's spinning ability.

Not to mention the respect I would gain from the Soccer Moms as a foresighted owner/operator of a Ford Escort which still gets 30 mpg on the highway.

[tom_paine]

17. The Free World is divesting from Imperial Amerika

I suppose I would, too, if I were in their shoes.

Totalitarian Societies as the Amerikan Empire is becoming are notoriously unpredictable.

Plus there's the added disincentive of investing in a nation who's Rulers are hell bent on looting it. Plus, there's the added disincentive of investing in Tyranny...

[UpInArms]

18. a couple related stories

http://straitstimes.asia1.com.sg/commentary/story/0,4386,224344,00.html

The trouble with a weakening US dollar

In fact, the only reason the dollar hasn't fallen even faster than it has is due to frantic support by Asian central banks, concerned about a weak dollar undermining their nascent economic recoveries. Japan, for example, has spent a record US$164.5 billion this year to keep the yen from appreciating. As a result, Japan's foreign reserves hit a record US$644.57 billion at the end of last month.

The Bank of Japan (BoJ) and other Asian central banks that have been accumulating dollars mostly invest their greenbacks in US assets. They have been doing so to such an extent that holdings of US bonds by foreign central banks have now passed the US$1 trillion mark. That's more than the US Federal Reserve's own bond portfolio, which is worth less than US$660 billion. Reuters reported that foreign central banks took up as much as a third of US Treasuries auctioned last month.

The dollar's unique role as the world's reserve currency means there is no risk of a default. The Federal Reserve can always print more dollars to pay the country's debt. But by doing so, and in the massive amounts required, a sharp devaluation of the greenback's worth is inevitable. Hence the growing concerns over a weak dollar.

If the dollar's fall is inevitable, some have argued that perhaps Asia should simply stop trying to prevent it. Currency manipulation, after all, only distracts Asia from fixing real problems, like reinventing their economies.

In fact, a somewhat similar situation unfolded in the latter half of the 1980s, and the world managed to survive that episode of financial turmoil. Fear of a weak dollar led the BoJ to sell US Treasuries, resulting in a sharp rise in US interest rates. It was an important factor triggering the 1987 stock market crash.

...more...

and

http://www.thestreet.com/markets/joelrothstein/10130692.html

Fed Unlikely to Do Treasury's Dirty Work on Dollar

The Treasury has repeatedly professed a "strong dollar" policy this year but has done little tangibly to prevent the currency's depreciation. Back in January, Morgan Stanley economist Stephen L. Jen argued that Treasury Secretary John Snow had adopted a "de facto" neutral dollar stance in an effort to allow the dollar's value to correct vs. the euro and the yen. Jen also argued in May that until the euro/ dollar exchange rate reached 120, no credible effort to stabilize the dollar would materialize.

Now that the euro's risen to about $1.22, Jen thinks other parties might be heard from. "The G3 likely will take action on the U.S. dollar," he said, referring to Japan, Europe and the U.S. Jen expects that the dollar could bleed as low as $1.25 per Euro before rebounding.

There are three things the G3 can do to bring the dollar back up. First, national treasuries could simply buy dollars in the open market. Second, central banks outside the U.S. could cut interest rates and/or the U.S. Federal Reserve could raise them. And third (and by far the least likely), the federal government could put its fiscal house in order and stop printing money to finance an expanding budget deficit.

...more...

[54anickel]

20. I don't think there is a "Strong Dollar Policy" beyond crossing ones

fingers.

http://www.gata.org/StrongDollar.htm