Cheer up, the dollar drop will get worse
Mar 13th, 2008, 05:20 PM
#21
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Cowboy 1968 - the chalet is my plan - but, there is still time for this whole thing to swing back and fort a couple of times before I retire.... I feel bad for those who wanted to buy their chalet this year....but alas, we'll have anew President within the year....maybe we'll have "happy days" again.
Mar 13th, 2008, 10:16 PM
#23
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>still curious
A $ is just a piece of paper. It has no value by itself. The US inflation may well get astronomical in a rather short time. When people don't want $ , you need to use something else to pay. When your main thing is to consume foreign imported goods and you shift to a "service based economy"
, there'll be a grim awakening if nobody "accepts your paper" any more. Look at the price of gold (+50%) in the last year or that of crude oil.
Anyway, wait and see..., (I told you so )
A $ is just a piece of paper. It has no value by itself. The US inflation may well get astronomical in a rather short time. When people don't want $ , you need to use something else to pay. When your main thing is to consume foreign imported goods and you shift to a "service based economy"
, there'll be a grim awakening if nobody "accepts your paper" any more. Look at the price of gold (+50%) in the last year or that of crude oil.Anyway, wait and see..., (I told you so
)
Mar 13th, 2008, 10:23 PM
#24
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Did anybody realize how much "liquidity", the Fed and the other central banks have pumped into the market recently!!! And the effect lasted only a short while...
Banks don't want to lend eachother money anymore, because they fear the other bank may go bancrupt.
And here, people still talk about the problems exporting BMW to the USA... That's so totally non important right now!
Banks don't want to lend eachother money anymore, because they fear the other bank may go bancrupt.
And here, people still talk about the problems exporting BMW to the USA... That's so totally non important right now!
Mar 13th, 2008, 11:06 PM
#25
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Personally, I cannot derive any sardonic pleasure from the current situation.
The reason why I mentioned exports was to explain that also the consumers in the Euro zone or elsewhere pay their share to compensate for the weak dollar. This cuts into our disposible income in the Euro zone.
So no one here is off the hook or a "winner".
In a globalized economy no one benefits when one of the largest consumer markets is underperforming.
seafox - no worries, since you don't plan to retire this or next year, there is still lots of hope.
To cheer you up a little: Due to the level of taxes and costs for health insurance and pensions here in Germany, I have to work (almost) half of the year to fatten my incompetent political leaders' massive behinds, to feed a legion of civil servants, and to pay for whatever folly they think of.
From every € 1,000 I earn, only bit more € 500 end up on my pay check. So the currency might be solid as a rock right now, but I'd love have more of it ;-)
The reason why I mentioned exports was to explain that also the consumers in the Euro zone or elsewhere pay their share to compensate for the weak dollar. This cuts into our disposible income in the Euro zone.
So no one here is off the hook or a "winner".
In a globalized economy no one benefits when one of the largest consumer markets is underperforming.
seafox - no worries, since you don't plan to retire this or next year, there is still lots of hope.
To cheer you up a little: Due to the level of taxes and costs for health insurance and pensions here in Germany, I have to work (almost) half of the year to fatten my incompetent political leaders' massive behinds, to feed a legion of civil servants, and to pay for whatever folly they think of.
From every € 1,000 I earn, only bit more € 500 end up on my pay check. So the currency might be solid as a rock right now, but I'd love have more of it ;-)
Mar 13th, 2008, 11:09 PM
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i have to disagree that putting a democrat into the white house will fundamentally change the value of the dollar. Until we wake up as a country and actually buy things we can afford and don't needlessly go into debt for luxury items we will be in a mess economically.
Mar 14th, 2008, 01:09 AM
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<i>A $ is just a piece of paper. It has no value by itself. The US inflation may well get astronomical in a rather short time. When people don't want $ , you need to use something else to pay. When your main thing is to consume foreign imported goods and you shift to a "service based economy" , there'll be a grim awakening if nobody "accepts your paper" any more. Look at the price of gold (+50%) in the last year or that of crude oil.</i>
I think this analysis misses a couple of key points:
1) I'm not sure you are accurately segregating those demand-driven inflationary pressures, which one can expect to impact both the US and the EU, relatively equally. I think you are giving the US too much credit, by attributing the increase in the price of oil (or copper or gold) to some insatiable demand from the US market. Instead, I think that such increased demand is coming more from China and the rest of the developing world, rather than the US. Since the EU and China and the US and India should all be expected to remain significant importers of such raw materials, I'm not sure it is so clear that these impacts will devalue the dollar against those currencies. They are all price-takers in this market, and the inflationary pressures will be felt across all countries.
Of course, those countries which should be expected to be significant exporters of such items (Chile, Canada, Russia, the Middle Eastern States, Australia) may benefit from rising prices, but I don't see the EU making out in all of this.
2) You mention that it is the shift to a service-based, importing economy that puts the US at risk. However, it isn't clear how this differentiates the US from the EU. Indeed, the EU trade deficit with China has been growing very rapidly, and the EU's position as the largest importer of Chinese goods is only widening.
3) It isn't clear that there is much empirical or theoretical evidence that the US dollar would collapse beyond repair. If such a situation were to happen, we could expect exports and capital inflows to increase, sending the dollar back up. The US isn't Bangladesh, and there are real assets to be had - I'm quite sure that many in the EU will jump at the chance to invest while the Euro is valuable. Again, it is unclear why the current situation is any different from the decline in the Euro during the period from its introduction until 2002; a decline that saw it even cheaper relative to the dollar than the dollar is to the Euro today. The Euro rebounded and so will the dollar; it is a question of when, not if.
These things are cyclical, and all the grand prognosticators claiming that a new day has dawned eventually find their books in the bargain bin, and we will move onto the next fad. Money will be made. Money will be lost, but we will likely end up about where we started.
I think this analysis misses a couple of key points:
1) I'm not sure you are accurately segregating those demand-driven inflationary pressures, which one can expect to impact both the US and the EU, relatively equally. I think you are giving the US too much credit, by attributing the increase in the price of oil (or copper or gold) to some insatiable demand from the US market. Instead, I think that such increased demand is coming more from China and the rest of the developing world, rather than the US. Since the EU and China and the US and India should all be expected to remain significant importers of such raw materials, I'm not sure it is so clear that these impacts will devalue the dollar against those currencies. They are all price-takers in this market, and the inflationary pressures will be felt across all countries.
Of course, those countries which should be expected to be significant exporters of such items (Chile, Canada, Russia, the Middle Eastern States, Australia) may benefit from rising prices, but I don't see the EU making out in all of this.
2) You mention that it is the shift to a service-based, importing economy that puts the US at risk. However, it isn't clear how this differentiates the US from the EU. Indeed, the EU trade deficit with China has been growing very rapidly, and the EU's position as the largest importer of Chinese goods is only widening.
3) It isn't clear that there is much empirical or theoretical evidence that the US dollar would collapse beyond repair. If such a situation were to happen, we could expect exports and capital inflows to increase, sending the dollar back up. The US isn't Bangladesh, and there are real assets to be had - I'm quite sure that many in the EU will jump at the chance to invest while the Euro is valuable. Again, it is unclear why the current situation is any different from the decline in the Euro during the period from its introduction until 2002; a decline that saw it even cheaper relative to the dollar than the dollar is to the Euro today. The Euro rebounded and so will the dollar; it is a question of when, not if.
These things are cyclical, and all the grand prognosticators claiming that a new day has dawned eventually find their books in the bargain bin, and we will move onto the next fad. Money will be made. Money will be lost, but we will likely end up about where we started.
Mar 14th, 2008, 02:14 AM
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travelgourmet:
Thank you for injecting some basic sense into all this. As you say, America isn't Bangladesh.
Can I suggest, though, that you're missing a crucial point here. America's not Bangladesh - but it's not a special planet either. What we probably are seeing is part of the long process by which Americans are going to be forced to understand theirs isn't a special country. It's clear from ignorant nonsense (like the idiots who can't get it into their heads that Europe imports far more from China than the US does) that a huge swathe of Americans really believe America's subject to pressures the rest of aren't - and can behave in ways the rest of us can't.
America's already been overtaken by the EU as the world's international trader. Americans provide a trivial proportion of the world's international tourism: Germany, Japan and Britain are each bigger spenders on foreign travel than America. Britain buys more champagne. Throughout the next 20 years, we're going to see thousands of crucial tipping points as America loses its "biggest such and such" position to somewhere else in the world. Some of those lost leadership positions will see-saw back: most won't.
By any rational standards, the Taj Mahal no longer accepting dollars is spectacularly trivial. But it probably hits many Americans' amour propre a great deal more than the unpublicised fact that Americans never really mattered much to India's tourism industry anyway. Indeed, two seconds in any posh Bombay or Goa hotel makes it clear that no foreigners do.
Europeans have been reasonably comfortable being citizens of just one among many nations for a long time. Americans - exposed to relentless nationalistic propaganda from birth, in a way only Communist countries still do - will find the adjustment deeply traumatic.
And we're seeing the beginning of that trauma right now.
Thank you for injecting some basic sense into all this. As you say, America isn't Bangladesh.
Can I suggest, though, that you're missing a crucial point here. America's not Bangladesh - but it's not a special planet either. What we probably are seeing is part of the long process by which Americans are going to be forced to understand theirs isn't a special country. It's clear from ignorant nonsense (like the idiots who can't get it into their heads that Europe imports far more from China than the US does) that a huge swathe of Americans really believe America's subject to pressures the rest of aren't - and can behave in ways the rest of us can't.
America's already been overtaken by the EU as the world's international trader. Americans provide a trivial proportion of the world's international tourism: Germany, Japan and Britain are each bigger spenders on foreign travel than America. Britain buys more champagne. Throughout the next 20 years, we're going to see thousands of crucial tipping points as America loses its "biggest such and such" position to somewhere else in the world. Some of those lost leadership positions will see-saw back: most won't.
By any rational standards, the Taj Mahal no longer accepting dollars is spectacularly trivial. But it probably hits many Americans' amour propre a great deal more than the unpublicised fact that Americans never really mattered much to India's tourism industry anyway. Indeed, two seconds in any posh Bombay or Goa hotel makes it clear that no foreigners do.
Europeans have been reasonably comfortable being citizens of just one among many nations for a long time. Americans - exposed to relentless nationalistic propaganda from birth, in a way only Communist countries still do - will find the adjustment deeply traumatic.
And we're seeing the beginning of that trauma right now.
Mar 14th, 2008, 02:23 AM
#31
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For travelers, leaving to Europe within a few weeks, I do not think that at today's exchange rate that it would be a good idea to buy euro state side. I did that twice but fortunately, I did break even. Actually, I ended up saving money. I had both trips planned months in advance. Each time that I purchased euro from my bank, the exchange rate seemed like a rip-off but I ended up a little better than breaking even and I bought myself some peace of mind. It is a gamble you take by doing this. I hope that the dollar does not decline any further but you just don't know.
If I were returning to Europe in the summer, I would buy a few hundred euro.
Its a real slap in the face to see your currency so undervalued.
If I were returning to Europe in the summer, I would buy a few hundred euro.
Its a real slap in the face to see your currency so undervalued.
Mar 14th, 2008, 03:02 AM
#32
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I think it might be better to "worry about your life savings" if you plan on spending them IN
Europe.
All this consternation about the current Administration's persistent pursuit of it's WELL-KNOWN "weak Dollar" policy might have been better-employed in November 2004 but now all we hear is the whining.
Europe.
All this consternation about the current Administration's persistent pursuit of it's WELL-KNOWN "weak Dollar" policy might have been better-employed in November 2004 but now all we hear is the whining.
Mar 14th, 2008, 04:18 AM
#33
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Check out this article in today's New York Times
http://www.nytimes.com/2008/03/14/bu...anted=2&hp
For those who don't want to read it I will quote the last sentence...
For all its problems, the dollar is still widely seen as the world’s safest currency.
Logos999...I never knew you had such a violent anti American streak in you...I expect that from others here...
http://www.nytimes.com/2008/03/14/bu...anted=2&hp
For those who don't want to read it I will quote the last sentence...
For all its problems, the dollar is still widely seen as the world’s safest currency.
Logos999...I never knew you had such a violent anti American streak in you...I expect that from others here...
Mar 14th, 2008, 04:35 AM
#34
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<i>America's not Bangladesh - but it's not a special planet either. What we probably are seeing is part of the long process by which Americans are going to be forced to understand theirs isn't a special country.</i>
Perhaps, but my assertion that the dollar will recover is not based upon an assumption that it is special. Instead, it is based upon the assumption that, economically, it is in basically the same boat as the EU. Indeed, I don't think this is really anything that new. I think that most of the advanced industrial economies have been playing by the same economic rules for a while.
Perhaps, but my assertion that the dollar will recover is not based upon an assumption that it is special. Instead, it is based upon the assumption that, economically, it is in basically the same boat as the EU. Indeed, I don't think this is really anything that new. I think that most of the advanced industrial economies have been playing by the same economic rules for a while.
Mar 14th, 2008, 04:41 AM
#35
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The governments economic stimulus money will help me pay for the falling dollar when I go to Europe. I had my taxes done recently, and was told that that money will not be sent out until after April 15. In otherwords, if you don't file your taxes or you owe money on student loans, you won't get this money. I should quality.
BTW, I'm getting between 56-60 miles per gallon on my new Toyota Prius. It feels good to see it say, 99.9 miles per gallon as I coast to the stoplight.
Ronald Reagan proved that having tax cuts and borrowing large amounts of money from foreign countries makes a popular president. The Bush's just tried to follow in his footsteps.
BTW, I'm getting between 56-60 miles per gallon on my new Toyota Prius. It feels good to see it say, 99.9 miles per gallon as I coast to the stoplight.
Ronald Reagan proved that having tax cuts and borrowing large amounts of money from foreign countries makes a popular president. The Bush's just tried to follow in his footsteps.
Mar 14th, 2008, 04:46 AM
#36
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>Logos999...I never knew you had such a violent anti American streak in you
It's violently pro american but also anti-stupidity.
. There's only one ending possible, if some ignore it, they may (will) lose their wealth.
It's violently pro american but also anti-stupidity.
. There's only one ending possible, if some ignore it, they may (will) lose their wealth.
Mar 14th, 2008, 05:02 AM
#37
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"I think that most of the advanced industrial economies have been playing by the same economic rules for a while."
I'm sure you do. Your economic analysis is always spot on. What I think you're missing, though, is that Americans' howls over the dollar decline aren't about economics: they're about status.
It's just absurd that people from what claims to be the world's richest country should go into conniptions because a few days' hotel stay in Paris goes up in dollar terms by the equivalent of a couple of hours' work. It seems clear to me that what's really upsetting many of them is the discovery that Americans aren't able to be the care-free spenders that many other nationalities still are.
And if that's traumatic for the handful of Americans who travel abroad, just think about the trauma the entire nation will suffer if (or arguably when) the Chinese win more medals at the Olympics. The Sputnik panic will look trivial by comparison - and if the Chinese do come first, McCain will get hammered in November.
I'm sure you do. Your economic analysis is always spot on. What I think you're missing, though, is that Americans' howls over the dollar decline aren't about economics: they're about status.
It's just absurd that people from what claims to be the world's richest country should go into conniptions because a few days' hotel stay in Paris goes up in dollar terms by the equivalent of a couple of hours' work. It seems clear to me that what's really upsetting many of them is the discovery that Americans aren't able to be the care-free spenders that many other nationalities still are.
And if that's traumatic for the handful of Americans who travel abroad, just think about the trauma the entire nation will suffer if (or arguably when) the Chinese win more medals at the Olympics. The Sputnik panic will look trivial by comparison - and if the Chinese do come first, McCain will get hammered in November.
Mar 14th, 2008, 06:21 AM
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Good one Ira, I was thinking the same thing when I heard the news yesterday. I told myself to wait until March to by air tickets to Italy. They went up so I decided to buy and...if I had waited another day or two I could have saved over $100.00 per ticket!!! It seems like this year more than any other travel is just a roller coaster ride! I am trying not to think too much about this since I am already in "over my head" and try to enjoy our trip in May. It may be our last for awhile!
Mar 14th, 2008, 06:31 AM
#39
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..Remind me to gloat the next time the European markets take a nosedive....
I was in the US when the pound was devalued in 1967.
Believe me, there was a lot of gloating.
When the Prime Minister, Harold Wilson visited the White House Lyndon Johnson had the band playing "I've got plenty of nothing"
I was in the US when the pound was devalued in 1967.
Believe me, there was a lot of gloating.
When the Prime Minister, Harold Wilson visited the White House Lyndon Johnson had the band playing "I've got plenty of nothing"
Mar 14th, 2008, 06:36 AM
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I agree with xyz123 in that the dollar is, and always will be, considered the safest currency. Why? Because it's the currency of the world's largest and most robust economy, and it's the currency of only 1 country. Sure, it will bounce up and down, have very low, lows,and high, highs, but it is safe.
The EU uses the Euro and it is affected by what each country does. When you have that many countries who have historically never gotten along that well for any extended period, it can cause problems down the road.
Relax and forget Europe for travel for a while if you have to.
The EU uses the Euro and it is affected by what each country does. When you have that many countries who have historically never gotten along that well for any extended period, it can cause problems down the road.
Relax and forget Europe for travel for a while if you have to.
