Let's discuss the Dollar. - AnabolicMinds.com

Let's discuss the Dollar.

  1. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Let's discuss the Dollar.


    I am curious what people think the US dollar is worth right now in today's world. Where do you see our economy in 5 years? Where do you see the global economy? Do you notice the Gold vs Petrol vs Currency ratios?

    I feel we're on the verge of a HUGE recession, which albeit is a bad thing, is also a necessary evil. How do you guys feel about it?

  2. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by RisingAgainst View Post
    I am curious what people think the US dollar is worth right now in today's world. Where do you see our economy in 5 years? Where do you see the global economy? Do you notice the Gold vs Petrol vs Currency ratios?

    I feel we're on the verge of a HUGE recession, which albeit is a bad thing, is also a necessary evil. How do you guys feel about it?
    It is hard to say for sure how much the dollar is worth. It is over-valued, though. With such unprecedented balance-of-payments imbalances, the dollar should be weaker than it currently is. However, it is being propped up by huge dollar investments by international investors, especially in the Arab and Asian parts of the world. That, and the fact that it is still the global currency (although it is fast losing this position to the Euro) provide further help.
    Yet, the American economy has deep structural imbalances, especially at the fiscal level. The Clinton administration left more than USD 250 billion in surpluses to the Bush administration. That has now turned into a massive deficit, largely traceable to increased defense spending (Iraq and so on). Government should be shrunk again, and re-focused. Spending should focus on areas that can help America regain its economic competitiveness that is now hard to locate.

    If the American economy continues the way it functions now, in five years, it would have been overtaken by Asia, the dollar would further devalue, and we will see further bursting of the housing bubble beyond a level that the Fed can significantly control. If America loses economic power, loss in political influence must follow.

    Now to the global economy. The Asians, led by China, are becoming the new engine of world growth. The US continues to lag behind. China appears to want to grow by all means, even without any meaningful environmental policy. The world economy will expand, even if the costs will be high. If America loses its economic power, there will be a re-shuffling of economic and political interests. This might stall global growth for a while until the new co-ordinates are stabilized. Global growth would continue. Interest rate adjustments, by the way, might accompany this shift.

    Whenever currencies face instabilities, precious metals regain attention. They represent a better store of value in such cases. Petrol prices appear to be fueled these days more by arbitrage speculations than by real economic scarcity.
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  3. Professional Member
    Australian made's Avatar
    Stats
    6'2"  213 lbs.
    Join Date
    Apr 2006
    Age
    31
    Posts
    3,160
    Rep Power
    4320

    Reputation

    Well im enjoying seeing the USD fall against other major currencies mainly because it means my NP orders are a lot cheaper then they would have been a few years ago and when i go to places like New York everything is so damn cheap!
    •   
       

  4. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Quote Originally Posted by strategicmove View Post
    It is hard to say for sure how much the dollar is worth. It is over-valued, though. With such unprecedented balance-of-payments imbalances, the dollar should be weaker than it currently is. However, it is being propped up by huge dollar investments by international investors, especially in the Arab and Asian parts of the world. That, and the fact that it is still the global currency (although it is fast losing this position to the Euro) provide further help.
    Yet, the American economy has deep structural imbalances, especially at the fiscal level. The Clinton administration left more than USD 250 billion in surpluses to the Bush administration. That has now turned into a massive deficit, largely traceable to increased defense spending (Iraq and so on). Government should be shrunk again, and re-focused. Spending should focus on areas that can help America regain its economic competitiveness that is now hard to locate.

    If the American economy continues the way it functions now, in five years, it would have been overtaken by Asia, the dollar would further devalue, and we will see further bursting of the housing bubble beyond a level that the Fed can significantly control. If America loses economic power, loss in political influence must follow.

    Now to the global economy. The Asians, led by China, are becoming the new engine of world growth. The US continues to lag behind. China appears to want to grow by all means, even without any meaningful environmental policy. The world economy will expand, even if the costs will be high. If America loses its economic power, there will be a re-shuffling of economic and political interests. This might stall global growth for a while until the new co-ordinates are stabilized. Global growth would continue. Interest rate adjustments, by the way, might accompany this shift.

    Whenever currencies face instabilities, precious metals regain attention. They represent a better store of value in such cases. Petrol prices appear to be fueled these days more by arbitrage speculations than by real economic scarcity.
    Awesome! very well spoken... should make for a good convo!

    First, I will give my views and standpoints.

    I feel the US dollar's TRUE value is somewhere around 9-10 dollars. After being spent and respent so many times of course. The lack in the dollar is mainly (opinion here) due to our neighbors to the south, coming here, working their asses off and shipping out their earnings back to Mexico. The problem here, should be obvious.

    Gold and Petrol prices are on the rise, or are they? I don't believe so.. I believe the dollar is just depreciating rapidly and it APPEARS that they are skyrocketing.. standard cost of living in America is outrageous, whereas in a Gold mining town (where I live currently) we're doing extremely well due to our major sources of income here coming from Gold, which is priced well over 800/t-oz. Compensation doesn't seem to exist currently (one of the imbalances you mentioned) which leads me to believe that the "check" for this "balance" will be a sudden and well needed DROP in the economy. We're looking at the US dropping out of the runnings for economical (insert word here... something similar to... domination with a little less totality).

    I feel that the ridiculous market we see today (housing/vehicles) will plummet, and we will see the true VALUE of things, instead of popularity and conveniency prices we see today. Status items will hopefully fail to exist shortly after this proposed recession, at least temporarily. I can't see into the future, but I'm sure if I could, I wouldn't wanna make it to it!
  5. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Quote Originally Posted by Australian made View Post
    Well im enjoying seeing the USD fall against other major currencies mainly because it means my NP orders are a lot cheaper then they would have been a few years ago and when i go to places like New York everything is so damn cheap!
    you greedy bastard! lol Also note that NP is based in the US... if we fall, they fall... so don't get to happy yet.
  6. Professional Member
    Australian made's Avatar
    Stats
    6'2"  213 lbs.
    Join Date
    Apr 2006
    Age
    31
    Posts
    3,160
    Rep Power
    4320

    Reputation

    Quote Originally Posted by RisingAgainst View Post
    .. standard cost of living in America is outrageous, make it to it!
    It certainly is not! USA vs other developed countries around Europe and Asia (including Australia) has a much better deal then the rest. Try living in London or Paris or Tokyo etc and you will see how much lower the cost of living in USA is compared to them.
  7. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Quote Originally Posted by Australian made View Post
    It certainly is not! USA vs other developed countries around Europe and Asia (including Australia) has a much better deal then the rest. Try living in London or Paris or Tokyo etc and you will see how much lower the cost of living in USA is compared to them.
    That's exactly the opposite of what we're discussing, we're talking about the RISING cost of living... dude.. you won't find a home in Elko NV (where I live) for under 250k. Homes in Chicago = 750+... the point here, is that 10 years ago, they were 100k-250k...
  8. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by RisingAgainst View Post
    Awesome! very well spoken... should make for a good convo!

    First, I will give my views and standpoints.

    I feel the US dollar's TRUE value is somewhere around 9-10 dollars. After being spent and respent so many times of course. The lack in the dollar is mainly (opinion here) due to our neighbors to the south, coming here, working their asses off and shipping out their earnings back to Mexico. The problem here, should be obvious.

    Gold and Petrol prices are on the rise, or are they? I don't believe so.. I believe the dollar is just depreciating rapidly and it APPEARS that they are skyrocketing.. standard cost of living in America is outrageous, whereas in a Gold mining town (where I live currently) we're doing extremely well due to our major sources of income here coming from Gold, which is priced well over 800/t-oz. Compensation doesn't seem to exist currently (one of the imbalances you mentioned) which leads me to believe that the "check" for this "balance" will be a sudden and well needed DROP in the economy. We're looking at the US dropping out of the runnings for economical (insert word here... something similar to... domination with a little less totality).

    I feel that the ridiculous market we see today (housing/vehicles) will plummet, and we will see the true VALUE of things, instead of popularity and conveniency prices we see today. Status items will hopefully fail to exist shortly after this proposed recession, at least temporarily. I can't see into the future, but I'm sure if I could, I wouldn't wanna make it to it!
    Rising, help me understand what you mean by "I feel the US dollar's TRUE value is somewhere around 9-10 dollars." Shouldn't the value of the dollar be better expressed with reference to another currency, item, or point in time?

    Those folks that work their asses off also contribute to economic growth in the US. And, by transferring US dollars home, they help feed the international demand for the dollar.

    The dollar is depreciating, alright. But the increase in prices of precious metals and fuel more than compensate for the weakness in the dollar, implying real increases.

    "Outrageous" living costs in the US should reflect the proportion of imported consumer and durable goods to locally-sourced consumer and durable goods in the US. If the Americans now focus on consuming mostly domestically produced goods, their living costs would not be that outrageous anymore.

    I agree the housing bubble in the US will have to burst sooner or later. The implications, though, would be global!
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  9. Advanced Member
    NateWA's Avatar
    Join Date
    Oct 2007
    Age
    28
    Posts
    792
    Rep Power
    482

    Reputation

    I hope our next president can start to undo some of that damage that has been done...
  10. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by NateWA View Post
    I hope our next president can start to undo some of that damage that has been done...
    The rest of the world hopes so, too. An important starting point would be to review America's defense spending. This cannot be fully done without reviewing the Iraqi strategy. That adventure, from a financial point of view, has been like pouring water into a bottomless pit.
    It is hard to talk the dollar without talking politics...
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  11. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Quote Originally Posted by strategicmove View Post
    Rising, help me understand what you mean by "I feel the US dollar's TRUE value is somewhere around 9-10 dollars." Shouldn't the value of the dollar be better expressed with reference to another currency, item, or point in time?

    Those folks that work their asses off also contribute to economic growth in the US. And, by transferring US dollars home, they help feed the international demand for the dollar.

    The dollar is depreciating, alright. But the increase in prices of precious metals and fuel more than compensate for the weakness in the dollar, implying real increases.

    "Outrageous" living costs in the US should reflect the proportion of imported consumer and durable goods to locally-sourced consumer and durable goods in the US. If the Americans now focus on consuming mostly domestically produced goods, their living costs would not be that outrageous anymore.

    I agree the housing bubble in the US will have to burst sooner or later. The implications, though, would be global!
    The value, the TRUE value that I am referring to, is the actual IMPACT each dollar spent has...

    The don't feed international demand on a GLOBAL plane.. only Mexico has a demand for the dollar.. nobody else wants to touch it.

    That's just it.. precious metal prices aren't actually increasing.. they remain STEADY while the dollar depreciates (thereby making it LOOK like they're climbing..)

    key word to your statement.. "IF". LOL

    Global?? whoa.. dude how do you figure? Unless it's the entire recession I made reference to.. instead of just the housing market..
  12. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Quote Originally Posted by strategicmove View Post
    The rest of the world hopes so, too. An important starting point would be to review America's defense spending. This cannot be fully done without reviewing the Iraqi strategy. That adventure, from a financial point of view, has been like pouring water into a bottomless pit.
    It is hard to talk the dollar without talking politics...
    I feel some good ol Reaganomics would be nice right about now...... oh and our next pres will screw us no matter who it is... so don't get your hopes up! haha
  13. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by RisingAgainst View Post
    ...

    Global?? whoa.. dude how do you figure? Unless it's the entire recession I made reference to.. instead of just the housing market..
    If the housing bubble bursts, the impact would be global. Here's why:
    1) A lot of Americans bought properly-financed homes. Many others bought sub-prime-financed homes. Most of these homes were bought when economic growth, the Internet economy, international borrowing, and so on fueled American consumption. Regardless of the source of the incomes for buying the homes, when the bubble finally bursts, home prices will crash. Yet, interest payments would still have to be made on loans borrowed with those homes as collateral. This means a typical family would have to reduce its consumption of other economic goods to make up for the rising portion of his wealth spent on interest payments. This fall in total (aggregate) demand will also imply fall in imports. As America is one of the current global engines of economic growth, a fall in American imports would be felt globally.
    2) The banks that provided funding for those homes also borrow internationally. If the homes they financed lose value, they would have to make appropriate adjustments in their portfolio of international assets. The rest of the world would feel the impact, too.
    3) There are other less prominent transmission mechanisms for such global effects.
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  14. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Quote Originally Posted by strategicmove View Post
    If the housing bubble bursts, the impact would be global. Here's why:
    1) A lot of Americans bought properly-financed homes. Many others bought sub-prime-financed homes. Most of these homes were bought when economic growth, the Internet economy, international borrowing, and so on fueled American consumption. Regardless of the source of the incomes for buying the homes, when the bubble finally bursts, home prices will crash. Yet, interest payments would still have to be made on loans borrowed with those homes as collateral. This means a typical family would have to reduce its consumption of other economic goods to make up for the rising portion of his wealth spent on interest payments. This fall in total (aggregate) demand will also imply fall in imports. As America is one of the current global engines of economic growth, a fall in American imports would be felt globally.
    2) The banks that provided funding for those homes also borrow internationally. If the homes they financed lose value, they would have to make appropriate adjustments in their portfolio of international assets. The rest of the world would feel the impact, too.
    3) There are other less prominent transmission mechanisms for such global effects.
    ok.. I am in agreement with number 1. When these loans are made, banks sell them off SEVERAL times, so number 2 is inclusive. However, number 3 is in no way pertinent, although totally correct

    I can see a global effect, but this will also hit the same time as this recession... it's going to be global anyways, so this is just fuel for the fire. Although this will be a global thing, the US will be centralized, in terms of most damage received.
  15. Senior Member
    datBtrue's Avatar
    Join Date
    Sep 2007
    Posts
    1,173
    Rep Power
    839

    Reputation

    To get the U.S. economy going post-911 (i.e. get the American consumer solvent enough to spend) the Japanese monetary authorities were induced to recycle billions of US dollars into the the US which the US monetary authorities channeled into the housing market. A price bubble ensued and now as the housing market collapses all of that excess "money" externally injected into the US monetary system is finding its way into every sector with the result being general inflation. That's why my Costco tuna packs have gone up in price.

    A similar well-controlled bubble was started in the last month of George Bush Senior's term and continued throughout the Clinton years. It was necessary to create a guaranteed game so that the US banks which were in horrible shape financially could save themselves. That bubble was a slower well controlled stock market bubble.

    As long as people perceive that the dollar has value it will have value, but really it isn't even currency. Many non-U.S. entities know this and have entertained such schemes as pricing oil in gold, euros and yen. The U.S. has used the carrot and the stick approach at various times to ensure that oil remain (for the most part) priced in dollars. The international community has gone along in part because they have huge external dollar holdings (thanks to consistent trade surpluses w/ the U.S.) that they recycle by using them to purchase oil.

    China needs the U.S. to continue to consume as does most of Asia. There just hasn't been enough time to develop a large enough group of consumers outside the U.S. to replace us. But given time...perhaps 40 years the U.S. won't be indespensible as a global consumer. So those countries bide there time continue to grow economically...

    Europe believes that they are now insulated from a U.S. recession but they are not. Germany sells machined parts and industrial goods to China but China will only continue to purchase these things IF they can continue selling goods to the U.S. The global economy is still very much wound up in what happens in the U.S.

    A US recession is coming. Institutional and consumer debt needs to be shaken out. But will this recession be protracted? I very much doubt it. A new mechanism will be fashioned out of whole cloth to pump things up again.

    The problem for the US middle class is that with each succeeding bubble or economic manipulation they get poorer. Free trade has meant that well paying jobs at all levels are being sent overseas. Illegal immigration has been allowed by "established interests" in order to create a larger domestic labor pool here which keeps salaries down. Its not just low paying jobs that are taken...as those children of illegals born here and naturalized graduate and seek jobs pressure is put on white collar jobs as well.

    The long-term trend-line for the U.S. economy is downward. Those that need to work for a living will see their real wealth erode. Those with capital will grow wealthier as more and more global opportunity for profit arises. It is already happening.
  16. Registered User
    RedwolfWV's Avatar
    Stats
    5'10"  185 lbs.
    Join Date
    Dec 2005
    Age
    50
    Posts
    3,258
    Rep Power
    1986

    Reputation

    I really don't know much about this, but it would seem to me that with the devaluation of the dollar, our exports are going to soar. Like our Aussie friend said, he can buy a lot more from Nutraplanet for the same amount. Nutra is still making their margin, so thats going to mean growth for them. Wouldn't this be the kick-start our economy needs?
  17. Professional Member
    Australian made's Avatar
    Stats
    6'2"  213 lbs.
    Join Date
    Apr 2006
    Age
    31
    Posts
    3,160
    Rep Power
    4320

    Reputation

    Quote Originally Posted by RedwolfWV View Post
    I really don't know much about this, but it would seem to me that with the devaluation of the dollar, our exports are going to soar. Like our Aussie friend said, he can buy a lot more from Nutraplanet for the same amount. Nutra is still making their margin, so thats going to mean growth for them. Wouldn't this be the kick-start our economy needs?
    Well it should definitely attract more foreign investors into things like the housing market etc as it makes your property prices looks quite cheap......i mean that $750k for the Chicago house RA mentioned would only get you a half decent 2 bed apartment with no backyard or drive way in an average area of London and definitely not in Sydney.

    But the economy is not looking like its on the upside. A few Americans who work with me including the owner (investment company) are expecting some pretty nasty falls to the US stock market in the next 6-12 months. Meaning the rest of the world will follow suit. Is it a reccession or more of a "correction"? Time will tell.
  18. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by RedwolfWV View Post
    I really don't know much about this, but it would seem to me that with the devaluation of the dollar, our exports are going to soar.
    Absolutely right! When a currency depreciates, imports become more expensive and exports become cheaper. It is usually a good thing for a country with trade imbalances (for instance, a country that usually imports more than it exports). A depreciation helps it correct this. This is also a justification for the Bush administration not fighting to allow the dollar to appreciate. By the way, if it interests you, devaluation (or the opposite, revaluation) is used for a currency regime that is fixed or pegged to another currency, basket of currencies, or precious metal. Depreciation (or the opposite, appreciation) is used to describe a currency such as the US dollar, that is freely floating.

    Quote Originally Posted by RedwolfWV View Post
    Like our Aussie friend said, he can buy a lot more from Nutraplanet for the same amount. Nutra is still making their margin, so thats going to mean growth for them.
    In principle, yes, as long as NutraPlanet sources its ingredients and products locally and the domestic content of the goods and services they sell is high. If they also import what they sell, they would have little or no advantage from a dollar depreciation.

    Quote Originally Posted by RedwolfWV View Post
    Wouldn't this be the kick-start our economy needs?
    Again, in principle, yes. The advantages of a dollar depreciation would translate into domestic economic growth, if imports fall and exports rise. High import prices can also force companies to source materials and services domestically, producing an expansion of the domestic economy, also a source of growth. And so on!
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  19. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by Australian made View Post
    ...Is it a reccession or more of a "correction"? Time will tell.
    May be a "corrective recession", or a "recessive correction"

    Just kidding! More seriously, though, you are right! Time will tell. Personally, I judge it would have elements of both a recession and a correction. More a temporary correction than a sustained recession
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  20. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by datBtrue View Post
    ...
    Europe believes that they are now insulated from a U.S. recession but they are not...
    There are one or two things in your discourse that might require more clarification, but I could not resist commenting on the one about Europe. I am not sure how to justify that conclusion. The key European economies (Germany, UK, France, Italy) and the others definitely do not consider themselves insulated from economic shocks in the US. Many economically significant countries in the European Union nurture strong economic ties with the US, such that adverse shocks in the US would be rapidly transmitted via trade channels to those countries, and consequently, to the aggregate European-Union economy.
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  21. Professional Member
    Australian made's Avatar
    Stats
    6'2"  213 lbs.
    Join Date
    Apr 2006
    Age
    31
    Posts
    3,160
    Rep Power
    4320

    Reputation

    Quote Originally Posted by strategicmove View Post
    There are one or two things in your discourse that might require more clarification, but I could not resist commenting on the one about Europe. I am not sure how to justify that conclusion. The key European economies (Germany, UK, France, Italy) and the others definitely do not consider themselves insulated from economic shocks in the US. Many economically significant countries in the European Union nurture strong economic ties with the US, such that adverse shocks in the US would be rapidly transmitted via trade channels to those countries, and consequently, to the aggregate European-Union economy.
    When the sub-prime crisis came to the surface a few months back believe me, Europe felt it. Dunno where Datbtrue got his info from. Unfortunately the rest of the world does follow the the direction of the States.
  22. Diamond Member
    Irish Cannon's Avatar
    Stats
    5'8"   lbs.
    Join Date
    May 2006
    Age
    27
    Posts
    12,615
    Rep Power
    74317

    Reputation Reputation

    I hear people complaining so much about the rising interest rates on homes and all that...during Carter the interest rates were in the teens!
  23. I am faster than 80% of all snakes
    Dwight Schrute's Avatar
    Stats
    6'1"  221 lbs.
    Join Date
    Nov 2002
    Age
    41
    Posts
    12,911
    Rep Power
    7016

    Reputation

    Quote Originally Posted by Australian made View Post
    Well it should definitely attract more foreign investors into things like the housing market etc as it makes your property prices looks quite cheap......i mean that $750k for the Chicago house RA mentioned would only get you a half decent 2 bed apartment with no backyard or drive way in an average area of London and definitely not in Sydney.

    But the economy is not looking like its on the upside. A few Americans who work with me including the owner (investment company) are expecting some pretty nasty falls to the US stock market in the next 6-12 months. Meaning the rest of the world will follow suit. Is it a reccession or more of a "correction"? Time will tell.
    Correction. GDP is still strong although is will slow a bit. Its very cyclical...if the US dollar was in real danger the fed wouldn't cut rates and considering they have done it twice in a row and its being priced in again, I don't tihnk they are too worried. The single worst thing they want is stagflation.

    Its not on its upside, its just in a slowing down period. Once we actually get specific numbers on the amounts of loss from the subprime fiasco, it should correct itself.

    And the housing bubble burst...so I dont' understand people saying if...it burst...a while ago.

    Weakness is definitely attracting foreign investment. Commodities are skyrocketing (hitting record highs) and you are starting to see Europeans coming over for "shopping trips".
    For answers to board issues, read the Suggestion and News forum at the bottom of the main page.
  24. Senior Member
    datBtrue's Avatar
    Join Date
    Sep 2007
    Posts
    1,173
    Rep Power
    839

    Reputation

    Quote Originally Posted by strategicmove View Post
    There are one or two things in your discourse that might require more clarification, but I could not resist commenting on the one about Europe. I am not sure how to justify that conclusion. The key European economies (Germany, UK, France, Italy) and the others definitely do not consider themselves insulated from economic shocks in the US. Many economically significant countries in the European Union nurture strong economic ties with the US, such that adverse shocks in the US would be rapidly transmitted via trade channels to those countries, and consequently, to the aggregate European-Union economy.
    I agree. But you neglected to mention that while that is the understanding TODAY it hasn't always been so. Over the last few years I can not tell you how many business men in Paris & Frankfurt and even Amsterdam made sure to tell me with glee in their eye (and for the French & Germans some smugness) that "they didn't need the US anymore" and that a "US recession would not pull Europe into a recession...slowdown sure but Uncle Sam's problems were not their..."

    I didn't dream this up...it was a generally expressed sentiment. But you are right that sentiment has changed.

    Here is a recent article from the TAIPEI TIMES that mentions the previous Europeen sentiment and their current understanding (which mirrors that which you expressed).

    The myth of Europe's successful decoupling
    By Melvyn Krauss

    Thursday, Nov 22, 2007, Page 9

    The fact that the US economy is slowing is bad news for Europeans, regardless of claims that Europe's economy has successfully decoupled itself from the US. Decoupling is an idea that is based on bad economics -- and on some Europeans' reluctance to accept the fact that Europe's short but sweet economic expansion is also coming to an end.

    True, the US market has become less important for European exports, while Asia's trade significance for Europe has grown. So what? Trade is just one among the many linkages between the US and European economies that matter. In today's interconnected global economy, uncertainty about the US economic outlook increases one day, and Dutch consumer confidence, for example, takes a tumble the next.

    The links between Europe and the US are, frankly, much more complex than the advocates of decoupling appreciate. The US Federal Reserve, for example, is aggressively cutting interest rates to forestall a possible recession. As a consequence, the euro is rising not only against the US dollar, but also against Asian currencies, whose central banks intervene in foreign exchange markets to fix their currencies' value against the dollar.

    This damages European exports to both the US and Asia. Reduced European dependence on the US export market can hardly protect Europe from the effects of the US economic slowdown if the euro appreciates as much against the key Asian currencies as it has against the dollar.

    The decoupling argument also assumes that a US recession has no effect on Asia. This is nonsense. Asian income certainly will decline if Asians export less to the US, and this, in turn, will reduce Asian imports from Europe.

    Thus, the US slowdown affects European exports in two ways. It has an indirect effect on European exports to Asia, which can be sizeable because the US market is vital to Asian exports. And it has a direct impact on European exports to the US.

    Even in the case where the direct effect is small, the US slowdown still can have a substantial net impact on European exports because of its indirect effect on Asian imports from Europe.

    So Europeans should not be tempted to think that they are somehow "decoupled" from the US' foibles and woes. Until recently, many Europeans thought they were insulated from the current US housing and mortgage crisis. But in what has been a truly malignant "export" from the US to Europe, the US created "garbage debt" in the form of subprime mortgages, and Europeans -- hungry for extra yield, and as reckless as Americans -- bought it. Many European banks' balance sheets are now as contaminated as those of US banks, and no one is sure who is holding -- or hiding -- the junk, and how to value it.

    This is why European banks are now reluctant to lend to each other. They could be lending to an institution that is in serious financial trouble.

    It is hard to imagine that higher interest rates and reduced credit availability will not lead to distress for Europe's overall economy. Yet this is exactly the stance of the European Central Bank (ECB), which is treating the euro zone as if its financial sector were somehow decoupled from the rest of the economy -- and running a different monetary policy for each sector at the same time.

    By pumping in whatever liquidity the financial sector needs to alleviate the credit crunch, the ECB is effectively maintaining a deflationary bias for the financial sector, whereas it has announced an inflationary bias for the rest of the economy.

    A monetary policy at war with itself cannot long endure. The ECB's inflationary bias will most likely be dropped as the effect of the financial crisis and the US slowdown sends Europe's economy into a spin that even the ever-optimistic ECB will be unable to deny. That outcome should moderate Europe's inflation concerns.

    Until then, decoupling arguments, whether applied to relations between Europe and the US or Europe's financial sector and the rest of the economy, should be seen as having a single purpose -- to deny the very real threats to the continued expansion of the European economy. Some of this, no doubt, is wishful thinking on the part of economically unsophisticated people. Others have a special interest.

    After all, a strong economy makes it easier for the ECB hawks to sell rate hikes. It makes it easier to sell stocks and other investment vehicles. It makes it easier for politicians to sell their policies, themselves and their parties.

    But ordinary Europeans should not be fooled. The very existence of decoupling arguments is a warning that they should be concerned about the continuing robustness of Europe's economy. Special interests would not be peddling such dubious pabulum if they felt confident about the economy's future.


    Melvyn Krauss is a senior fellow at the Hoover Institution, Stanford University.
    http://www.taipeitimes.com/News/edit.../22/2003389050
  25. Diamond Member
    strategicmove's Avatar
    Join Date
    Jun 2007
    Posts
    10,754
    Rep Power
    774630

    Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation Reputation

    Quote Originally Posted by datBtrue View Post
    I agree. But you neglected to mention that while that is the understanding TODAY it hasn't always been so. Over the last few years I can not tell you how many business men in Paris & Frankfurt and even Amsterdam made sure to tell me with glee in their eye (and for the French & Germans some smugness) that "they didn't need the US anymore" and that a "US recession would not pull Europe into a recession...slowdown sure but Uncle Sam's problems were not their..."

    I didn't dream this up...it was a generally expressed sentiment. But you are right that sentiment has changed.

    Here is a recent article from the TAIPEI TIMES that mentions the previous Europeen sentiment and their current understanding (which mirrors that which you expressed)...
    It is refreshing that the article supported my comment. Those businessmen that expressed contradictory views were dangerously naive and short-sighted
    Product Educator | USPowders
    Statements made by this online persona are the sole property of the owner, and do not necessarily reflect USPowders’ opinion as a whole.
  26. Senior Member
    datBtrue's Avatar
    Join Date
    Sep 2007
    Posts
    1,173
    Rep Power
    839

    Reputation

    Quote Originally Posted by strategicmove View Post
    It is refreshing that the article supported my comment.
    Of course it did bro. You're still the man!
  27. Professional Member
    Australian made's Avatar
    Stats
    6'2"  213 lbs.
    Join Date
    Apr 2006
    Age
    31
    Posts
    3,160
    Rep Power
    4320

    Reputation

    Quote Originally Posted by Bobo View Post
    Weakness is definitely attracting foreign investment. Commodities are skyrocketing (hitting record highs) and you are starting to see Europeans coming over for "shopping trips".
    Very very true. Those shopping trips won't just be to the designer clothes stores in NY, it will be to real estate agents etc all over the country. Got to love earning the pound!
  28. New Member
    camaroguy18's Avatar
    Stats
    6'0"  170 lbs.
    Join Date
    May 2007
    Age
    29
    Posts
    58
    Rep Power
    119

    Reputation

    Quote Originally Posted by strategicmove View Post
    The rest of the world hopes so, too. An important starting point would be to review America's defense spending. This cannot be fully done without reviewing the Iraqi strategy. That adventure, from a financial point of view, has been like pouring water into a bottomless pit.
    It is hard to talk the dollar without talking politics...
    I agree, and whether you support bush or not, he's faced with the same dilemma as Nixon and Reagen faced in terms of military spending. They push/ed for so much spending because there are threats to the nation's security. Though we aren't in an arms race like we were during the Cold War, oddly enough we are now fighting former alliances with weapons we most likely sold them during Reagan's admin. Iraq is such a stalemate condition that your point rings very clear...progress cannot be made until the strategy is reworked at a new angle...somehow I don't think we can rely on negotiations like we did with the Soviets.
  29. Advanced Member
    manifesto's Avatar
    Stats
    6'0"  218 lbs.
    Join Date
    Apr 2007
    Age
    29
    Posts
    755
    Rep Power
    471

    Reputation

    Quote Originally Posted by NateWA View Post
    I hope our next president can start to undo some of that damage that has been done...

    SHUT YOUR MOUTH!!!!!!!!!
    Armed to the teeth.
  30. Banned
    RisingAgainst's Avatar
    Join Date
    Apr 2007
    Posts
    2,069
    Rep Power
    0

    Reputation

    Quote Originally Posted by manifesto View Post

    SHUT YOUR MOUTH!!!!!!!!!
    how... in any way shape or form is this in any way pertinent to the conversation we have going on here? .. Work has me tied up for a few more weeks, but when I get back I intend on replying to everything. Good stuff so far guys, let's keep it going.
  •   

      
     

Similar Forum Threads

  1. Why does this government let the dollar slip ?
    By lutherblsstt in forum Politics
    Replies: 8
    Last Post: 01-06-2010, 04:15 PM
  2. Let's Discuss the Noles - Long Term
    By jmh80 in forum Sports Talk
    Replies: 28
    Last Post: 11-20-2006, 11:58 AM
  3. Replies: 74
    Last Post: 05-23-2006, 11:14 PM
  4. When will the dollars show?
    By Nuteboy in forum General Chat
    Replies: 5
    Last Post: 08-25-2004, 10:19 AM
  5. Replies: 7
    Last Post: 01-21-2003, 11:09 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
Log in
Log in