Dollar Declines as New Home Prices Fall the Most Since 1970

[NorthernSpy]

Dollar Declines as New Home Prices Fall the Most Since 1970

By Daniel Kruger and Min Zeng

Oct. 26 (Bloomberg) -- The dollar fell against the euro for a third consecutive day, its longest losing streak in more than a month, and weakened versus the yen after a report showed the U.S. median price for new homes declined the most since 1970.

The U.S. currency also weakened against the South African rand, South Korean won and Swiss franc as further evidence of a cooling housing market supported the Federal Reserve's decision yesterday to keep borrowing costs unchanged.

``The numbers suggest the market is not deteriorating rapidly, but it's not improving,'' said Brian Dolan, research director at Forex.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey, which has about $250 million worth of funds under management. ``It means there's very little impetus for the dollar to recover.''

More at http://www.bloomberg.com/apps/news?pid=20601103&sid=a4JEYmwdsD4M&refer=us

:scared:

[whistle]

1. Isn't a devalued currency, in our case the U.S. dollar, yet one more

...contibuting factor to lost purchasing power and ultimately inflation? I realize that reducing the dollar against the euro causes a squeeze on demand by Americans for goods and services and capital from the European Union, but most of what is bought and imported from Europe are high ticket and luxury items such as Mercedes cars and fine expensive jewelery by the wealthiest segment, the upper 20% of the U.S. households. They will just fire more U.S. workers, outsource more and increase their profits and bonuses for themselves to pay for their insatiable appetites of expensive goods and services imported from abroad. The rest of the 80% of working middle class and low income Americans will be hit yet again with higher prices on basics. The Smart Car that was to be sold for $12,000 next year will now be $15,000, energy prices will skyrocket and so forth.

[NorthernSpy]

2. in case anyone wonders why this matters...

We owe much of our supposed credit-worthiness to the dollar's de facto status as the world's reserve currency. If that were to change...


Also:

``This will keep the Fed worried about the economic growth going into the fourth quarter,'' said Kathy Lien, chief currency strategist at Forex Capital Markets LLC in New York. ``U.S. consumers living freely on paper wealth of their homes will have less to spend for the Christmas season. This is a bearish picture for the dollar.''

But many of those people weren't living it up, but rather reluctantly tapping into home equity in order pay huge medical bills and education expenses. The media need to stop making it sound as though America's debt problems are all about stupid purchases of champagne and bonbons.

[redqueen]

3. But that might 'spook the market'.

They don't want to do that.

[superconnected]

4. excellent point.

[Sivafae]

5. exactly. The cost of getting medical treatement in this country is going to leave us

all bankrupt. Never mind the fact that the cost of college is rising at twice the rate of inflation leaving our youth (and their parents that tapped into the wealth of their home) with crushing debt to pay off after school. or the fact that the "baby boomers" are retiring and the fate of Soc Sec is hanging in the balance. Bleak.

[thingfisher]

6. There seems to be little

public concern about the economy or at least there is little talk about it in the news. Judging from the television version of America we are a nation of Lexus driving mini-mansion dwellers with lots of disposable income for taking vacations to Vegas and Atlantic City. The other Americans are just for local color and the occassional injection of danger from the underclass.

I think the ice is a lot thinner than the average person thinks and it wouldn't take much for the cracks to open up and swallow a lot of the unwary.

[redqueen]

7. Thin Ice

That's precisely why they won't talk about it openly. Much of the economy is psychological. If they can continue to prop it up with feel-good stories, the correction we must inevitably face may come more gently. If they can't, God help us all.

[Mithras61]

8. A significant part of the rising cost of...

post-secondary education is the cutting of funding of colleges at the state level. If government at all levels stops paying for higher education, the colleges & universities have to make up the shortfall somewhere, and the only other somewhere I can think of is the students.

At the rate things are going, only the wealthy or the impoverished (from student loans) will be able to pay for their offspring to go to college.

I wonder if the Repukes think that will make us more competetive with the Chinese and Indians, or if they plan to outsource our economy to those countries along with the jobs...

[Psephos]

16. Wow, I really disagree

College education costs have been rising at between double and triple the inflation rate for over fifteen years straight. No state that I'm aware of has cut its total university funding. What's been "cut" is the rate of increase in funding.

Another astonishing aspect of this hyperinflation in college costs is that the price has gone up regardless of the current business cycle. Whether the economy is strong or in recession, costs keep rising at roughly ten percent per year. They keep going up regardless of the tax receipts of the state governments that support them. They keep going up regardless of the increased debt load students must assume to pay their tuition.

Who can say with a straight face that the quality of education delivered to the student has gone up ten percent a year, too? Or for that matter, has gone up at all?

So where is the money going? The answer is clear: to purposes other than providing students with affordable education.

Peace.

[raccoon]

18. "So where is the money going? "

A very good question. One thing I can tell you: It isn't going to the rank and file at these state colleges.

I work at a community college. An employee in HR told me that HALF the employees there are part-time, which means no benefits. Lots of part-time workers have been here for years. Raises are quite rare for us part-time folks.

So, to reiterate: The rank and file sure aren't getting it.

Wonder who is? :sarcasm:

[sweetpotato]

23. Look at SC

Check the South Carolina Commission on Higher Education's website. They have a chart showing the dollar amount of state appropriations over the last 10 years.

http://www.che.sc.gov/Finance/Fin/10YR_Appropriations_2005.XLS
(its an excel file)

The dollar amounts appropriated increase over the first 6 years, and then the dollar amounts go down.

What happened?

[anotherdrew]

17. under bush we're not even trying to compete against the china that will exist in 10 years

repig business leaders and pols have already written us off folks, that's what "this all" is all about.

[1932]

14. Amen, brother.

[TexasLawyer]

9. US house price fall steepest since 1970/ FT

US house price fall steepest since 1970
By Daniel Pimlott in New York

Published: October 26 2006 18:37 | Last updated: October 26 2006 18:37

Prices for newly built American homes have suffered their largest drop year-on-year since 1970, according to data released yesterday, highlighting the dramatic nature of the downturn of the US housing sector. However, growing sales offered homebuilders some hope of recovery.

The median price of a new home fell to $217,100 (€172,000, £116,000) in September, 9.7 per cent lower than in the same month a year earlier. Average house prices fell 2.1 per cent, down from a growth rate of 6.4 per cent in August.

However, sales of new homes increased for a second consecutive month following three months of decline, rising by 5.3 per cent from August to 1.075m and beating the consensus expectation of 1.04m.

The fall in house prices comes as builders try to slash swelling inventories of houses by reducing the number of residential permits they seek and increasing incentives to buy – such as including larger bathrooms and more expensive kitchens for free.

<snip>
http://www.ft.com/cms/s/255d32c8-6518-11db-90fd-0000779e2340,_i_rssPage=6700d4e4-6714-11da-a650-0000779e2340.html

[pooja]

10. Yes, but it is still unaffordable for most people since the interest went up

wages are stagnant, and in certain areas the price tag for property tax and insurance is like paying a second mortgage. There will be another demographic shift. Right now, people are leaving Florida. It used to be the cheap place to live. Sure the wages sucked, but homes were still affordable.

Now, it is completely unaffordable for most working people. Florida touts one of the highest needs for workers, but the low pay wage is not enough incentive to live in an area that has become a high cost living area.

[raccoon]

19. No problema--they can always hire illegal immigrants. :sarcasm:

"but the low pay wage is not enough incentive to live in an area that has become a high cost living area."

[cornermouse]

11. You noticed that although our economy is "roaring along"

and the housing market is "strong" the fed did not raise interest rates, didn't you?

[ozone_man]

12. Even the Fed sees what's coming.

Nothing they can really do but watch it happen. A huge credit bubble about to pop. But it is also psychological, the markets, housing, commodities even. When it goes finally, driven by massive debt and exhaustion of irrational exhuberance, it will go fast. Looks like the housing market leads the way this time.

[Viva_La_Revolution]

13. kick!

[enid602]

15. housing market

What worries me is that the dollar is declining in response to the US housing slump. That tells me that much of the foreign investment in the US is in real estate. If foreign investors then pull out of the US housing market, it will make the market decline all the more, especially in major cities.

[bleedingheart]

20. Personal debt and a big housing bubble pop could really f*ck

up the economy and send us into a Depression the likes of which would dwarf the Great Depression.

[thingfisher]

21. Any thoughts on the reasons

for such cavalier federal attitudes toward the long term health of the economy? We have some brilliant minds in Washington working in varous fields who can understand the ramifications of monetary policy and the limits of debt and yet the government continues to run gargantuan deficits for war and arms and security, etc. hence depleating the funds we could be using to educate our population and tend toother pressing domestic needs.
I am beginning to recognize the post war decades as an historical aberration, where human needs were recognized and funded, and the newly victorious America could ramp up for an unparalelled burst of investment in human potential and the manufacture of goods before being wept away in a war mongering mind set that has led us to our present sorry state.

The death of JFK is the pivitol point where things went horribly wrong and the fact that the perpetrators have never been brought to justice is ample proof that the coup was successful. The heirs of that political assasination are inpower today. One must consider whether the economic destruction of America is part of a greater global strategy of which we are not privy and which is designed to aid the birth of global governance.

[earth mom]

22. This could be the reason: The North American Union.

http://www.vivelecanada.ca/staticpages/index.php/20060830133702539

:(

[ozone_man]

24. That's where we're headed.

How far we fall is less certain, maybe worse than the Great Depression. We do have financial controls not available at that time, but the leveraging, derivative markets, mortgage (home equity) debt, credit card debt, and national debt will fuel a downward spiral never experienced before.

[Akoto]

25. Wouldn't know it here in South Florida.

I'm still seeing houses being sold at two, three, sometimes more times their worth.