Bad news about the dollar for travelers to Europe (and everyone else, too!)
Dec 2nd, 2006, 03:41 AM
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Bad news about the dollar for travelers to Europe (and everyone else, too!)
from the UK Independent:
Transatlantic travellers hoping to cash in on a $2 pound for the first time in 14 years should enjoy the good times while they last, because a tumbling dollar could start an economic whirlwind.
Sterling hit its highest level against the dollar since September 1992 for the second day in a row, with little sign of obstacles to the magic $2 level. At one point yesterday a pound was worth $1.9848 on the open market.
"Two dollars is a certainty," said Neil Mellor, a currency strategist at the Bank of New York office in London. He said the crucial test would be $2.002, its peak the pound reached on 9 September 1992 before its ejection from the exchange rate mechanism on Black Wednesday. "If it does, there's a possibility it would catapulted up and there's a lot of space for it to rise," he said.
Last Christmas, the pound was languishing at $1.80 so those iPods, Hugo Boss suits and Manolo Blahnik shoes will feel 10 per cent cheaper. Back in the UK shoppers might expect to see cheaper clothes and electronics goods as the prices of imports from the US and countries whose currencies are tied to the dollar, such as China, fall. Some companies too will benefit as they pay less for a host of raw materials including oil and wheat, which are priced in dollars.
But these short-term benefits - which will shared by UK - may well be outweighed by the short-term costs of strong pound - and the danger that the fall in the dollar could presage a major economic shock that would reverberate around the world.
Sterling's rally to 14-year highs against the US dollar is a significant threat to Britain's strong corporate earnings and economic growth rates, experts warn. Just as exports to the US and China are cheaper, so imports from the two industrial powerhouses will become more expensive.
"A strong exchange rate makes UK exports more expensive and UK firms could see sales into the dollar area negatively affected by the strength of the pound," said Chris Iggo, senior strategist at AXA Investment Managers. ..........
The complete article is at: http://news.independent.co.uk/busine...cle2032660.ece
Transatlantic travellers hoping to cash in on a $2 pound for the first time in 14 years should enjoy the good times while they last, because a tumbling dollar could start an economic whirlwind.
Sterling hit its highest level against the dollar since September 1992 for the second day in a row, with little sign of obstacles to the magic $2 level. At one point yesterday a pound was worth $1.9848 on the open market.
"Two dollars is a certainty," said Neil Mellor, a currency strategist at the Bank of New York office in London. He said the crucial test would be $2.002, its peak the pound reached on 9 September 1992 before its ejection from the exchange rate mechanism on Black Wednesday. "If it does, there's a possibility it would catapulted up and there's a lot of space for it to rise," he said.
Last Christmas, the pound was languishing at $1.80 so those iPods, Hugo Boss suits and Manolo Blahnik shoes will feel 10 per cent cheaper. Back in the UK shoppers might expect to see cheaper clothes and electronics goods as the prices of imports from the US and countries whose currencies are tied to the dollar, such as China, fall. Some companies too will benefit as they pay less for a host of raw materials including oil and wheat, which are priced in dollars.
But these short-term benefits - which will shared by UK - may well be outweighed by the short-term costs of strong pound - and the danger that the fall in the dollar could presage a major economic shock that would reverberate around the world.
Sterling's rally to 14-year highs against the US dollar is a significant threat to Britain's strong corporate earnings and economic growth rates, experts warn. Just as exports to the US and China are cheaper, so imports from the two industrial powerhouses will become more expensive.
"A strong exchange rate makes UK exports more expensive and UK firms could see sales into the dollar area negatively affected by the strength of the pound," said Chris Iggo, senior strategist at AXA Investment Managers. ..........
The complete article is at: http://news.independent.co.uk/busine...cle2032660.ece
Dec 2nd, 2006, 04:01 AM
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And a <b>weaker exchange rate for the Dollar</b> is just what the folks in the US who continue to advocate a "weak Dollar" policy want to make US goods cheaper overseas and attract foreign investment in the US.
Now, if somebody could just figure out a way to travel to the UK and <b>not have to buy anything</b> while you are there.....
Now, if somebody could just figure out a way to travel to the UK and <b>not have to buy anything</b> while you are there.....
Dec 2nd, 2006, 06:50 AM
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Get used to it folks. The US national debt is the highest in the world.
We collectively owe over $8 trillion because we buy much more than we sell.
Japanese banks alone own over $4 trillion of US debt.
Essentially we borrow from the Japanese banks so we can buy from China.
I think there is nothing more telling about the economy than the plight of both Ford and General Motors.
Two American flagship industries are now threatened with bankruptcy. Did you ever think you would see the day when American automobiles were regarded on the world market as "junk?"
Years ago, the CEO of GM said "What's good for GM is good for the country."
Well, we need some good from GM!! It will indeed be good for the country.
In addition, anything good from Ford will also be good for the the economy.
Recapturing the lost international markets will take time, but lets hope it works for all of us. A cheaper dollar will not hurt the sales, but it will pinch those of us who want to travel.
We collectively owe over $8 trillion because we buy much more than we sell.
Japanese banks alone own over $4 trillion of US debt.
Essentially we borrow from the Japanese banks so we can buy from China.
I think there is nothing more telling about the economy than the plight of both Ford and General Motors.
Two American flagship industries are now threatened with bankruptcy. Did you ever think you would see the day when American automobiles were regarded on the world market as "junk?"
Years ago, the CEO of GM said "What's good for GM is good for the country."
Well, we need some good from GM!! It will indeed be good for the country.
In addition, anything good from Ford will also be good for the the economy.
Recapturing the lost international markets will take time, but lets hope it works for all of us. A cheaper dollar will not hurt the sales, but it will pinch those of us who want to travel.
Dec 2nd, 2006, 07:51 AM
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>Years ago, the CEO of GM said "What's good for GM is good for the country."<
Actually, he said, "What's good for the country is good for GM and vice versa".
>Did you ever think you would see the day when American automobiles were regarded on the world market as "junk?"?<
Oh, from about 1960-1985.
Actually, he said, "What's good for the country is good for GM and vice versa".
>Did you ever think you would see the day when American automobiles were regarded on the world market as "junk?"?<
Oh, from about 1960-1985.
Dec 2nd, 2006, 08:06 AM
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The reason why the dollar is falling:
http://www.msnbc.msn.com/id/11880954/
A $1,000,000,000,000 war that was totally unnecessary. That's a mere $3,333,333 for every man, woman and child in America, thanks to good ol' Dubya.
http://www.msnbc.msn.com/id/11880954/
A $1,000,000,000,000 war that was totally unnecessary. That's a mere $3,333,333 for every man, woman and child in America, thanks to good ol' Dubya.
Dec 2nd, 2006, 08:34 AM
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Let's not be too harsh on the boy. Remember, for him, and his buddies, it's all a big joke. He's unaffected by it all and daddy will bail him out once again, leaving the rest of us to pay the bills.
He also gets a nice retirement check when it's all over and he's back on the ranch cutting brush.
He also gets a nice retirement check when it's all over and he's back on the ranch cutting brush.
Dec 2nd, 2006, 09:18 AM
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We ARE used to it, Bob, so save the history lesson for the Republicans who always talk about not having big government (except when they want hurricane relief) and fiscal responsibility that Clinton gave them and then they threw away.
Dec 2nd, 2006, 09:33 AM
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All this financial stuff is too complicated for my brain, but I have noticed that a couple of my investments have increased by nearly 9 and 12 percent in the past four months alone, thanks to other economic factors! That's a whole lot more than I'll spend on the poor exchange rate this summer.
Dec 2nd, 2006, 09:53 AM
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Time to face facts - BOTH parties are big spenders now! With the substantial economic boost that lower taxes provided, we could have financed the liberation of Iraqi and lowered the national debt, but we allowed congresional "add ons" and far too many "bridges to nowhere". POLS use your money to buy votes, it really is that simple.
Dec 2nd, 2006, 11:45 AM
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kaneda, I believe your calculation is off by a factor of 1,000. Isn't the correct amount $3,333? But maybe you're right, after all it is government work.
For those convinced the dollar will go lower against the Euro, GBP or other currencies, you can buy the FXE (Euro ETN) or the FXB (GBP ETN).
More information can be found at this Marketwatch site:
http://tinyurl.com/y7ttk2
For those convinced the dollar will go lower against the Euro, GBP or other currencies, you can buy the FXE (Euro ETN) or the FXB (GBP ETN).
More information can be found at this Marketwatch site:
http://tinyurl.com/y7ttk2
Dec 2nd, 2006, 12:40 PM
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This is WAY too much information for my non-financial thinking brain! But if the Euro and GBP are just going to keep going higher against the dollar, why wouldn't it make sense to purchase enough to cover most of the expenses for a trip next year, and just have them at the ready at today's prices?
I'm sure there's many reasons this doesn't make sense, including the exchange rate that one would have to pay buying them here, but it's just a thought from my stupid brain.
I'm sure there's many reasons this doesn't make sense, including the exchange rate that one would have to pay buying them here, but it's just a thought from my stupid brain.
Dec 2nd, 2006, 12:59 PM
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Now if I knew that stock A was going to increase in value, I would certanly buy it now...but I never know (unless I'm an inside trader and of course that's illegal).
Nobody knows what's going to happen...interest rates in the USA could increase.....the administration could finaly see the light and get out of Iraq, yada yada yada....it is just as likely six months from now the exchange rates could go down as they will go up.
Economists all think they know and speculate but we were told a year ago that by the summer, the euro would be $1.50 while in actuality it went down to about $1.18....you just never know...nobody knows.
Nobody knows what's going to happen...interest rates in the USA could increase.....the administration could finaly see the light and get out of Iraq, yada yada yada....it is just as likely six months from now the exchange rates could go down as they will go up.
Economists all think they know and speculate but we were told a year ago that by the summer, the euro would be $1.50 while in actuality it went down to about $1.18....you just never know...nobody knows.
Dec 2nd, 2006, 01:21 PM
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A low dollar will benefit US industry if it makes products the rest of the world wants to buy. Unfortunately, there's precious little reason to buy an American car.
While America remains the home of much of the world's technical and scientific innovation, the US car makers resemble a pair of dinosaurs fighting over a diminishing territory dominated by ridiculous SUVs and monster pickups. Their products fall well short of their Japanese and European rivals, and for that matter the products of their own European (and even Australian) subsidiaries. 5000 miles in a Taurus during a recent US visit was enough proof of that. I get the impression that Detroit still believes that marketing spin can compensate for products that lag its competitors.
Here in Australia the manufacturing sector is also taking big hits from foreign competitors, and we have the usual chorus of free-market economists reassuring us that this doesn't matter as we move increasingly into a services-based economy. Why am I not convinced that all will be well when we're all waiting on foreign tourists or working in merchant banks?
While America remains the home of much of the world's technical and scientific innovation, the US car makers resemble a pair of dinosaurs fighting over a diminishing territory dominated by ridiculous SUVs and monster pickups. Their products fall well short of their Japanese and European rivals, and for that matter the products of their own European (and even Australian) subsidiaries. 5000 miles in a Taurus during a recent US visit was enough proof of that. I get the impression that Detroit still believes that marketing spin can compensate for products that lag its competitors.
Here in Australia the manufacturing sector is also taking big hits from foreign competitors, and we have the usual chorus of free-market economists reassuring us that this doesn't matter as we move increasingly into a services-based economy. Why am I not convinced that all will be well when we're all waiting on foreign tourists or working in merchant banks?
Dec 2nd, 2006, 02:12 PM
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>>>>>>
The US national debt is the highest in the world.
>>>>>>
not true.
US debt is 37th highest in the world as a % of gdp. many european countries (eg germany, france, italy, austria, belgium, etc) have a much higher debt level than the US....as does japan. italy's level of debt is nearly twice that of america and belgium's is about 50% more.
america has the largest economy in the world by far (3x larger than number 2 japan) so measuring debt in absolute terms is completely useless as a comparison. like looking at 10,000 of credit card debt....sort of matters what your salary is in order to decide if it's appropriate or not, doesn't it?
i think it's sad that so many people are so badly misinformed about their own country.
The US national debt is the highest in the world.
>>>>>>
not true.
US debt is 37th highest in the world as a % of gdp. many european countries (eg germany, france, italy, austria, belgium, etc) have a much higher debt level than the US....as does japan. italy's level of debt is nearly twice that of america and belgium's is about 50% more.
america has the largest economy in the world by far (3x larger than number 2 japan) so measuring debt in absolute terms is completely useless as a comparison. like looking at 10,000 of credit card debt....sort of matters what your salary is in order to decide if it's appropriate or not, doesn't it?
i think it's sad that so many people are so badly misinformed about their own country.
Dec 2nd, 2006, 02:53 PM
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>>>>>>
Europeans are paying for all that generous social welfare with debt?
>>>>>>
no, that's not a correct assumption. too much agenda here not enough objectivity.
some of the countries with the most social welfare (eg denmark, sweden) have the lowest debt levels.
Europeans are paying for all that generous social welfare with debt?
>>>>>>
no, that's not a correct assumption. too much agenda here not enough objectivity.
some of the countries with the most social welfare (eg denmark, sweden) have the lowest debt levels.
