WASHINGTON, July 6, 2008
Dollar Doldrums: Low Value Has High Impact
The Declining Value Of A Dollar Is Fanning Inflation And Driving Up The Cost Of Oil And Gas
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(AP)
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In early June, Bush declared before his trip to Europe: "A strong dollar is in our nation's interests. It is in the interests of the global economy." That, plus a warning by Fed Chairman Ben Bernanke that the dollar's weakness was contributing to U.S. inflation, seemed to temporarily break the dollar's tumble. Presidents and Fed chairmen don't usually talk directly about the dollar and exchange rates - leaving that up to the Treasury secretary - and international bankers and investors took note of the high-level attention.
Over the past few weeks, the dollar has remained relatively stable, although it took a dip after the Fed decided to leave rates unchanged. The long slide may not be over.
Still, if the Fed moves to lift rates later this year, as some traders and investors anticipate, it could buttress the dollar and spur an exodus of speculators from the oil market - helping to both prop up the dollar and drive down oil prices. But few economists are sanguine that the economy will improve any time soon.
The other main tool to move the dollar - intervention in currency markets by buying dollars and selling other currencies - is risky.
It would take great sums of money to make any difference. The foreign exchange market is the largest in the world, with over $1 trillion traded each day. Seeing the U.S. trying to prop up the greenback by buying dollars could be taken as a sign of desperation and possibly trigger a renewed round of selling.
Furthermore, there has been little encouragement for such a strategy from finance ministers from the Group of Eight wealthy democracies - Japan, Britain, Germany, France, Italy, Canada and Russia plus the U.S.
Leaders of the eight countries were to meet in Japan beginning Monday, but the falling dollar was not even on the formal agenda. It's too touchy an issue, and the dollar's relative stability over the past few weeks makes it easier for world leaders to steer clear. "People will be talking about it in the corridors," said Reginald Dale, a senior fellow with the Center for Strategic and International Studies.
Treasury Secretary Henry Paulson has suggested that nothing is "off the table" including intervention. But Bush has made statements suggesting he intends to let market forces set exchange rates.
The dollar has fallen so far, it will be difficult to halt or reverse its slide.
U.S. efforts to persuade Saudi Arabia and other major oil-producing nations to increase their production - and help ease pressure on both oil prices and the dollar - have brought scant results.
"There's no magic wand," said White House press secretary Dana Perino. "It's not going to be a problem that we solve overnight."
The impact of the falling dollar is not always visible to the average consumer. Not like the big numbers on gas pumps that give stark evidence of price levels.
But imported goods, from fuel to cars from Japanese automakers and toys from China - are getting more expensive just as U.S. wages are either stagnant or falling.
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 64 CommentsPosted by copyat5 at 05:42 PM : Jul 07, 2008
Are you a religious person? Do you ever wonder why, in the last days the bible says those in the Churches will be persecuted, hunted down and killed--that they will be hated? Because of decisions like yours.
Those who voted for Bush and failed to see the writing on the wall even when the man attacked people who had done nothing to us and was caught in so many lies--is really fueling the rage of all of us who NEVER voted for him. In the end, as things really go to hell in a hand basket, the main thing our children and those of us who are left will remember is the idiocy and stupid short sightedness of those who voted for Bush twice and put us here. That is a lot to pay back. Obviously your judgment svcks a big one. Next time you want to vote--stay home or at least choose the candidate you like and believe in the least--that way, maybe you have a chance in picking the right one. Just saying "I told you so" to all the Bush clusterfvck voters--does NOT cut it anymore. You all are despicable.
Posted by Edward1975 at 01:11 AM : Jul 07, 2008
It still will take years for those jobs to return and when/if they do--we will have to work for less than they do in China, India, Mexico, etc--so you can cheer yourself on, when you are on the high road making 3.50/hour and can add another wing onto your cardboard box that replaced the house you used to own.
maybe some foreigner will buy your home and let you work in it. If you are male, you can do the gardening and your wife can take care of your old house and the kids of the new owners. Get a clue. LOL
And just what would our government buy our near worthless currency with? Oh yeah--MORE of our worthless currency. Since Nixon stopped tying the value of the dollar to gold and we got rid of that standard, the value has been tied to our gross national output--not anything tangible. Since that is sinking due to outsourcing, the war and insourcing--we are a victim of our own greed and our own web. The worse the economy is, the more our government desperately tries to bail us out.
The more they try to bail us out, the less the dollar is worth and the higher inflation gets--the higher it gets with a weak dollar--the less jobs--and round and round and round. Save yourself--it''s what our politicians have been doing.
Dude, give it up, will you? Hillary is NOT running for President. What part of this do you not understand and refuse to accept? If you really want to help the world, go out and buy a Toyota Prius and install solar energy panels on your roof.
"I want the American people to understand that I had every intention to not attend the Olympic opening ceremony. But then I got a call from the Chinese leaders, saying ''Yoo must go, yoo hear?'' What am I supposed to do?"
Posted by ToolMangler at 12:18 PM : Jul 07, 2008
Don''t forget there is Palladium in there too.
Hey Toolmanger!
Source: United States Comptroller General
August 15, 2007
Decline and Fall
U.S. comptroller general: America is Rome
Is America going the way of Rome? David Walker, the comptroller general of the U.S., has issued a report that basically answers in the affirmative: "The U.S. government is on a "burning platform" of unsustainable policies and practices", Walker avers, including "fiscal deficits" and "overseas military commitments" threatening a crisis if action is not taken soon. "If we continue on our present course, Walker warns, we are in for "dramatic" tax hikes, a radical reduction in government "services", and "the large-scale dumping by foreign governments of holdings of U.S. debt." The Chinese certainly concur with that last prediction.
On the Positive side: the Bush/Cheney Crime Cartel is Flush with $Trillions$ in War Profiteering Cash....
The Federal Reserve System has taken all of the copper and nickel out of your pennies and quarters and replaced them with Reynolds Wrap aluminum.
Why? Because copper and nickel cost too much to mint for worthless Federal Reserve Notes.
Wake up America!
The Federal Reserve System is a scam!
This is what happens when you double the deficit in 7 years. Thanks Bushies!
Now step aside while the rest of the country rallies to fix everything that you''ve broken.
''Hey, Meester, you want to buy my seester?''
It is amazing that we had a candidate who stood for the Constitution and getting rid of the Federal Reserve Bank, yet no one wanted him and those who did were called lunatics on the fringe.
Clinton and Daddy Bush killed this country with NAFTA and CAFTA is being invoked too...?
So what are we as a people to do? Let''s hear from those informed peoples as to a solution. Maybe we can overthrow those who have sold us out and take our country back. Remember... They are our servants, not us.
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