-3200 billion question

[Rattus_Rattus]

I have a little question for you american buisnessmen, and women: Do you think the dollar will be stronger after the US election, or will it drop even lower then it is at the moment?

I see that American economy is having a hard time, and with a big negativ annual result from-2600 to -3200 billion dollars. Will the $bubble crack, and the dollar drop like a rock?

(exuse my bad english)

[Mark1]

need a crystal ball?

[ricktoronto]

Originally Posted by Rattus_Rattus

I see that American economy is having a hard time, and with a big negativ annual result from-2600 to -3200 billion dollars. Will the $bubble crack, and the dollar drop like a rock?

(exuse my bad english)

$3,200 billion dollars is $3.2 TRILLION dollars - the US economy is in the sack but you are off by a factor of 700% as the budget deficit is about $500 Bn. If you haven't been watching the dollar already has fallen like a rock. The entire public debt of the US is about $7 Trillion (7,000 Billion).

Anyway this is unrelated to the DR isn't it? Other than using the DR of an example of even worse economic policy and management than the Americans.

[Rattus_Rattus]

Originally Posted by ricktoronto

$3,200 billion dollars is $3.2 TRILLION dollars - the US economy is in the sack but you are off by a factor of 700% as the budget deficit is about $500 Bn. If you haven't been watching the dollar already has fallen like a rock. The entire public debt of the US is about $7 Trillion (7,000 Billion).

Anyway this is unrelated to the DR isn't it? Other than using the DR of an example of even worse economic policy and management than the Americans.

Hmm, ok thank you very much for correcting me in my misprinting.... Maybe the DR government need my matemathic skills in their managment office..

But serious-i still belive that this is importent for the DR also. weak dollar= lesser tourism from US, with less money to spend in DR....

[andy a]

So far, Bush is the only president since Eisenhower who hasn't presided over a dollar at an all-time postwar low. (Reagan had the "iron" dollar early in his presidency before he allowed his advisors to start bashing it. Clinton had a weak dollar early on before recovering. The other presidents regularly and gleefully bashed the dollar at every opportunity).

The highest profile "weakening" of the dollar in the last year or so has been against the euro. But the Euro is new and has a short history as the "euro". Its constituent currencies are NOT at record highs against the dollar. In fact, the euro itself is approximately where it was when it was formed in the late '90's.

It'll be hard for the euro to make further significant gains against the dollar for various reasons:

1) The hard mark, guilder, and schilling have been "watered down" by being mixed with lira, pasetas, francs, and krona (The Dutch, German, and Austrian people were robbed).

2) The US economy is starting to recover from the bust of the biggest stock market bubble in history (which ALWAYS ends in a bust and started before he took office).

3) The expense of the Iraq war has been largely absorbed already.

4) Interest rates are probably in the process of turning up in the US - a process which strengthens a currency.

Last year I speculated on this board about whether the dollar would turn the tide without going to a new low. It looks as if it has. Of course, I could be wrong.

[PICHARDO]

Originally Posted by andy a

4) Interest rates are probably in the process of turning up in the US - a process which strengthens a currency.

Last year I speculated on this board about whether the dollar would turn the tide without going to a new low. It looks as if it has. Of course, I could be wrong.

Well, I don't know of which economy you're talking about there!

The Rates are not going to go up anytime soon in the US neither a\has the Dollar gained any extra strength since last year, as a matter of fact the Dollar is lower than last year's first quarter corresponding to the market pointers, the Euro meanwhile has been invigorating the European economy and there ain't no signs of a slow down anytime soon.

The fact that the war in Iraq continues at this very moments contributes to the factor that most of the money planned to cover for war costs has gone up in smoke the minute they realized the terrible and poorly maintained Iraq's oil industry was under, add to this the failure to create a secured frame work for oil companies to jump start Iraq's oil production to at least normal levels in the foreseeable future.

The only reason the Dollar still holds the line it's mainly due to the use of it by most international trade markets as a common pay tool, take that security out and it would drop like a ton of bricks from atop the Empire State Building!

The free trade market is not just an option right now for the US economy but a must to be able to survive the global trade now taking shape for the past two decades with the Asian and European markets having ironed out most of the problems by adopting a common monetary value, something the US will take a long while to implement with their poor next door tenants anytime soon, yet the sign it's on the wall and Chine sure isn't making much of an effort to conceal their lead on this new Global trade market, you snooze you lose.

Politics aside whether Bush or Kerry or whomever comes to batting cage, the economy it's not tied to the ups and downs of say political systems rather in the way such administrations opt to pursue the goals any self respectable economist or good old capitalist would: "GET THE MOST BANG FOR YOUR BUCK", the current trend towards free trade from worker's unions and short minded people like Lou Dobbs from CNN are in fact making it much harder to reach a balanced playing ground for US companies to compete in the global market, they rather wait for the companies to sink whole like many already had leaving thousands upon thousands of workers without a job or a chance to be retrained to new ones...

But if I was you and had to vote for either Kerry or Bush I would make it a point to remember the quote Bush made to a reporter back in his political campaign when he somehow got the seat from under Gore's butt* when asked what he though of the economy and the interest rate affecting it "I don't understand fuzzy numbers I leave that to the mathematicians" Bad omen back then even worst now that he took a surplus and built it into a nasty will we make it out of the woods line!

[andy a]

Even at the dollar's weakest in the last year or so, the "indicated" value of the former "hard" currencies (mark, guilder, and schilling) as reflected in the euro did NOT reach new all time highs against the dollar. In recent weeks the dollar has recovered significantly in fact, and now the euro is only back to about where it was born in the first place (in the late 90's).

With the euro now being dragged down by the weaker members, it's not likely to ever have the prestige of the old Deutsch Mark.

In case you missed it, yesterday interest bearing instruments got absolutely clobbered, indicating the possibility of higher interest rates. That kind of action is sometimes a key reversal of trend. Interest rates have been dropping for a long time, but I don't think that you are ever going to pay a bank to hold your money for you - a condition that would be approached if interest rates continued their downward trend indefinitely.

As far as that "balanced" budget, to the extent that it had any legitimacy at all it involved stealing the entire social security fund to do so. It had the same legitimacy as Clinton feeling sorry for those nonexistent black churches torched in Arkansas or Gore inventing the internet.

My main point was that the dollar seems to have turned the corner and will probably NOT go to new lows during this presidency. As nearly as I can determine, you do NOT dispute that, nor state your own position at all.

[PICHARDO]

Originally Posted by andy a

Even at the dollar's weakest in the last year or so, the "indicated" value of the former "hard" currencies (mark, guilder, and schilling) as reflected in the euro did NOT reach new all time highs against the dollar. In recent weeks the dollar has recovered significantly in fact, and now the euro is only back to about where it was born in the first place (in the late 90's).

With the Euro now being dragged down by the weaker members, it's not likely to ever have the prestige of the old Deutsch Mark.

In case you missed it, yesterday interest bearing instruments got absolutely clobbered, indicating the possibility of higher interest rates. That kind of action is sometimes a key reversal of trend. Interest rates have been dropping for a long time, but I don't think that you are ever going to pay a bank to hold your money for you - a condition that would be approached if interest rates continued their downward trend indefinitely.

As far as that "balanced" budget, to the extent that it had any legitimacy at all it involved stealing the entire social security fund to do so. It had the same legitimacy as Clinton feeling sorry for those nonexistent black churches torched in Arkansas or Gore inventing the internet.

My main point was that the dollar seems to have turned the corner and will probably NOT go to new lows during this presidency. As nearly as I can determine, you do NOT dispute that, nor state your own position at all.

So I guess that's why the US Dollar is exchanged for less value than the Euro and the fact that the FED has no intention anytime soon to raise the interest rates by 0.01% or the fact that the current and past major Tax breaks are a major fiasco in moving the economy out of it's parking spot for the last five and half quarters to be conservative in any form or shape. As far as the economy report out of 1600 Penn. Ave we're in deep sh*t and it don't look too promising in the near future with major orders to replenish our Dept. of Defense stock piles due in no little part to the never ending war in Iraq and Afghanistan alongside major Navy and Air Force assets deployed in the Taiwan-China fracas on high alert. With a major looming trade deficit growing by the minute with China, the lack of support of other nations to share the monetary burden of terrorism, yes I sure can see the Dollar rebounding just right now, as a matter of fact I think I can see it from my Penthouse porch right now...

Let's clear the channel out of politics a little bit, I couldn't care one bit about who's running the country unless they opt to run the economy into a grinding halt. For starters let me point out the total lack of a plan by the present administration until after they noticed along the other 79% of Americans that it was getting a tad too rough out here in the job market (a premium indicator of the economy) just as all IT jobs were going south no sooner major industrial rocks of the US economy (even as they themselves requested that the protection regulations be removed many times during the Administration imposed time) among them the steel industry, textiles, auto part plants etc. started to close plants like if someone had sprinkled Anthrax on them, moved to China and several Toxins-filled factories south of the border, you can't play a fair hand while you hold your own market to higher standards than your competition, time and time again free trade is upon this economy like the plague! free trade can be a sword with a double edge if you try to manipulate it to your own gain without thinking that others are bigger fish than you, point in case: CHINA... Which holds one of the largest untapped markets in the world yet US companies are held back by ignorance from this administration to play a major role without local govt. political involvement and controls, if capitalism is the true mother of all economies then China will prove it or busted. Holding back major US investments now in China will hurt our economy more than 9/11 did for a short time back then. This administration has chosen to send mix messages to Taiwan about their prospects to declare itself an independent nation, just like if NY could call itself the republic of NY and break away from the Union, lets stop meddling with other nations problems and tend to our half of the globe in dire need of a major overhaul and a strong leader, if the US doesn't take a lead soon then the scenes of boats passing by the Panama Canal with China flags will multiply in the thousands...

The Dollar if anything is weaker than before, you can't compare the economy from 3 years back to the present because it's like comparing the cake you ate to what came out from your bowels soon after, today's economy is anything but looking good anytime soon, no matter how many times you keep repeating to yourself "everything will be fine, everything will be fine" it won't be if this administration or the one to come won't take their heads out of their as* and plan a real recovery solution soon and stop thinking that because you hand out a few extra bucks here and save a few extra bucks there the economy will jump-start on it's own, no cigar...

As an example I will give you this: A local(NY) supermarket owner with whom I was chatting about the economy gave me the perfect statement of the actual situation for them, he's now having to cover more expenditures related to electrical/gas/utilities etc. than he can provide for without rising the prices for items he won't sell if he tried to do that in the first place, solution? he had to cut his payroll drastically to cover the drop in earnings and still remain as a for profit and not a "non for profit org", yet his markup continues to fall by the quarter and the way it's going either he forget about being competitive in his immediate local market or closes the door for good, another excellent example he provided was the relatively new Pathmark on Lexington Ave and 125th st in Harlem which is running on a red book for a long time now and trying to get into the black before their tax incentive's breaks run out.

Another good example: I run a liquor store in Queens NY and to this date many imported wines had have to freeze their prices in order to remain in the US market in competition with local labels like the ones coming form the Napa Valley, starting this coming quarter I'll need to save the my markup just to restock the cellar of these producers, it's either that or not carry them at all, in result offering less selections to our clients and losing more profits. All this because the Dollar continues the trend to weaken to the Euro along other markets as well.

[NALs]

It's very clear that China is on a roll. It is already the second largest economy in the world, expected become the largest in the world (beating the U.S.) in 2006. China is making it big and it's beginning to show in many types of markets. Global prices for Iron are skyrocketing thanks to China, Wood products are being sucked into China by the boatload, Hotels (American companies and foreign) are beginning to built flashy hotels in southeast Asia with the prospect of alluring the new affluent 1 billion plus Chinese into these resort heavens. Recently, in the Economist, there was an article saying how Japan's companies are facing a crunch when it comes to delivery. It just so happens, that China is gobbling up all the cardboard boxes in Asia!! Even Cardboard is not safe from China.

Need I also mention that Indian is not too far behind China, gobbling up American first class job positions for much less. All that India has to do is offer tax free business for any American corporation that moves it's headquarters to India and make a quarter of it's headquarters employees Indians. Before you know it, Cheap but very intelligent Indians could push out the American CEOs, and like I predicted before, Indians will be running the global multinationals from Bombay with names like Coca Cola, Deloitte and Touche, Citicorps, among many others.

Europe is very proud to be holding a strong currency, it's mostly a way of thinking rather than on pure economics for the Europeans. The world is becoming less sympathetic towards Americans, especially after the Iraq deal, so don't be surprised if more and more people change their benjamins for Euros.

Latin America is not too happy with it's economic performance which was great when Free Trade was started, when the Americans made promises of riches for Latin Countries. Now, most Latin countries are seeing their bank reserves run dry at the blink of an eye (thanks to free trade) and the hispanics are asking the Americans what happen? Now we got many left wing leaders like in Brazil and Argentina, (not to mention Spain, eventhough it's in Europe). These are political parties that don't bend their way of thinking too easily for the sake of American politicians. If the Euros start their marketing machine to the Latin Americans, the Euro could replace the Dollar as the number one hard currency of choice in Latin America.

It's also very likely that if the African nations opt to get into this free trade deal, they will do it via European means, just because everybody else is doing it! I'm not saying the U.S. is doomed already, there is still a huge margin of error for anything that I have posted here to fail in materializing. But it must be said, that the margin for success is much greater today, than it was in 2000. All that we need is for a continental army in Europe (which is currently being planned by the EU) to create a buffer to the American army that is sprinkled all over the world, more global economic control by other sources than Americans (which is beginning to happen), and little care by the world's people for America to keep leading the world (which is beginning to happen).

In the words of Chris Colon, so many people were praising free trade because at first it was clear that America was going to come out a winner. Now, things are not nearly as bright for America as it was in the beginning, and people want to scrap it. Well, Free Trade lovers, you once wanted it and praised it, now take your medicine. I'm convince that if America would ever fall, it would be via free trade. If you want to make your case against what I have posted here, prove to me otherwise. Have a nice day.

[mondongo]

andy_a: I agree with you on interest rates. The action recently is very interesting on the 10yr and 30yr treasuries. I have been trading these two, mainly on the down side (higher yields). I am currently neutral to see if the 10 can clear 4.2%. The US$ is a little more difficult to read, I think. I'm neutral there also, waiting to see if the EUR can hold 1.20. The currency that is starting to pique my interest now is the YEN. Is it possible that the Japanese economy will wake up from its 15 year nap? How long can the Japanese Central Bank continue to buy US$ to keep a lid on the YEN? We'll see.


CHINA: China is not the #2 economy in the world. You cannot use PPP to measure a country's economy. China has pegged its currency to the US$. If allowed to float, it would appreciate against the US$. This is why the per capita income is chine is 5 times less than the difficult to calculate PPP per capita. If the YUAN appreciates, the China loses exports and its GDP goes down....this is why you cannot use PPP per capita.