Dollar keeps falling against euro

[Anarcho-Socialist]

Source: BBC News

The euro has risen to new highs against the dollar, near the $1.38 mark, amid lingering worries about the US economy.

With investors fearful that the ongoing downturn in the US housing market will restrict economic growth, the euro rose as high as $1.3784 early on Wednesday.

The dollar's latest fall came after the Standard & Poor's credit rating agency said it may downgrade $12.1bn of bonds backed by US sub-prime home loans.

Meanwhile, the pound hit $2.0279 as it extended its gains against the dollar.

Read more: http://news.bbc.co.uk/1/hi/business/6291090.stm

[SpiralHawk]

1. "That's what happens when you let corrput republicon cronies run things." - Commander AWOL

"But you can be sure that me and my fatcat republicon cronies will somehow Profit Massively, while you little people lose your shirts. Smirk, smirk, smirk."

- Commander AWOL, Top republicon crony boyo

[indepat]

7. Just give the neocon surge a little more time and the real fun will begin

[Eurobabe]

2. Holy shit.

:shrug:

[murray hill farm]

4. Holy shit is right.

I spent a few weeks in Ireland last Nov/Dec. and it was wonderful, but very costly because of the low value of the dollar when converting every cost to euros while I was there. Now I plan every travel to non euro countries where I can at least come close to breaking even..and I am sure I am not the only one giving this consideration.

[Anarcho-Socialist]

13. Interesting. I remember back in early 2001

The Euro was worth $0.85, compared to $1.37 now, and the Pound was worth $1.38, compared to $2.02 now. I wonder which Party has been governing the US since then? :shrug:

[anakie]

49. I travelled to the US in 2003

and got approx 70 cents US for one Aussie dollar. Yesterday it was at 86 cents. I am afraid your dollar is tanking.

Peace

[HonorTheConstitution]

3. This is done to prevent Americans spending their $$$ overseas...

... and waste it to buy more gas guzzling SUV instead. Also takes the burden of issuing passports.

[Eurobabe]

5. LOL, like that passport connection

It's GREAT for Europeans to buy up all the shit in America though. :headbang:

I mean who would you rather have take you over? Old Europe or China?

[CountAllVotes]

29. I find it angering myself

on eBay many very fine old musical instruments are being sold to people overseas. These fine old musical instruments are all MADE IN THE USA. I have noted however, that some sellers have a conscience and refuse to sell to overseas buyers. However, it seems the greed factor wins most of the time.

Soon, nothing that is worth a damn will be left in America, including the things that are made here in the USA that cannot be bought anywhere but here. :(

:kick:

[Anarcho-Socialist]

11. I don't think it is to do with that

The market price for the Dollar reflects global demand. The US has been pumping surplus Dollars into the global economy through borrowing, but the growth in Dollar supply is much faster than demand and as such the Dollar is falling to lows against the Euro and Pound. An uptick in US inflation has also made the Dollar less attractive for holdings as Dollar holdings depreciate more than Euro or Pound holdings. A recovery in the Eurozone's economic growth, and sustained growth in China and Britain in comparison to a slowing US economy makes other non-Dollar denominated holdings more attractive, again impacting the decline in the Dollar.

[DBoon]

33. It is eventually meant to lower our standard of living

to that of the countries to which we have outsourced our jobs

We have all just had a 20% cut in income thanks to this, with more to come

[mainegreen]

6. I suppose this is why my non-US, dollar denominated investments are growing like a bastid?

:shrug:

edited to add a comma that changes the meaning of the subject.

[mahina]

39. Any suggestions?

Thanks!

[Tiberius]

41. I've had 80% of my paltry 401k...

... in the global funds (which spread them around the world to various countries). Most 401k plans offer some funds that invest overseas.

I'm up about 40% in the last 18 months.

[mahina]

47. Holy Moses.

Interesting, thanks. What do you review to decide? Are there any websites you check regularly?
I put mine in Fidelity Contrafund and the index fund and left it alone for the last 15 years, and I know I'm blowing it.
Thanks.

[whoneedstickets]

8. Reaching a tipping point...

Despite the huge US trade deficit that has existed for decades, the US dollar has long been valued (over valued) because of its role as a reserve currency and its use as the common currency for global exchange (oil is still priced in US dollars). How much this built in demand props up the level of the dollar compared to where it would be if just the economic realities of trade determined its price is hard to estimate but it could be 25% or more of its value. If our deficit, debt and seemingly incompetent government begins to erode that 'reserve' demand, watch out. The dollar could drop to half or less the value of the Euro. If the oil exporting countries decide to only accept Euros, not dollars, for barrels of oil we could see enormous fluctuations in the price of oil reflecting both commodity price changes and exchange rate fluctuations. This could have a profound impact on our economy and standard of living it could also spark 70's style inflation.

While a lower US dollar would make US exports more attractive (presumably bolstering the export side of our economy and creating jobs), higher prices for commodities and energy could offset the positive effects of this and lead to stagnant job creation coupled with a higher cost of living. Incredibly, Bush's economic policies are more dangerous to our future than his defense policy!

[JCMach1]

15. Kuwait already went to a basket pegging of their currency

Other Gulf countries are considering it...

[roamer65]

21. We're already in 1970's style inflation.

If you use the old inflation measurement from 1980, we are around 10 percent right now.

http://www.shadowstats.com/cgi-bin/sgs?

[TexasLawyer]

34. excellent post

thank you.

[Bitwit1234]

9. Just heard on BBC News

things like this never appear in our MSM....India is having money problems and their profits are dropping. First they sell most of their software in the US (suprise suprise) and the dollar falling is cutting into their profits.

But, get this, and payback is hell. The Indian people are demanding higher salaries and benefits. So corporate America took their industries to India and other third world countries so they could stuff more money in their pockets and now, the shoe is on the other foot and wages have to go up to keep the people satisfied. They will probably not meet the salaries of what they paid American workers, but their profit is dropping. Maybe eventually they will start to spiral out of control. Hope hope hope..

[onehandle]

10. Europe and our Chinese masters will run the world within 50 years.

Our country will be a footnote in history.

A young upstart that drowned in its own greed.

[CanonRay]

12. You are correct, but it won't take that long. Try 20 years.

[Anarcho-Socialist]

16. I think you may be right

Many economists believe that PR China will be the next world's largest economy, surpassing the US in about 2020-30. So it would fit in with your 20 years prediction. If you take the EU as a single economy (which it is) then it's already the largest economy although the EU is not a nation-state but may evolve into a post-national state in the next 30 years.

[onehandle]

30. In 20-30 years they'll pull far ahead. In 50 years we'll be a third-world country.

The wealthy will be long gone by then leaving our descendants to clean the world's toilets.

[coalition_unwilling]

42. We already are a footnote in history (at least to professional

historians). American history (non-indigenous, anyway) is really mostly just current events, imho.

[maxkeiser]

14. falling dollar - it's not new for Al Jazeera who shows my films

the main reasons behind the dollar's fall I cover in this film I made for Al Jazeera English. No U.S. network would play this film due to the startling information contained. this is the first of a 13 film series I'm making for AJE

http://uk.youtube.com/watch?v=zmyvEhU-gmw

I mention this because i think the u.s. blogosphere needs to think about blogging for the world and not just the tiny 5% of the world's population that is American...

[JCMach1]

17. Welcome to DU... I watch AJE all the time

I am an American living in the UAE... AJE is a brilliant left-leaning news network.

[maxkeiser]

18. our next AJE film; the root cause of sub-prime collapse, etc.

we are going to be in Dubai in a few weeks to shoot "death of the dollar" part 2 (and yes, we get paid in British Pounds). Maybe we can meet? Our newest film for AJE is about how the yen-carry trade is the root cause of the sub-prime, CDO, CLO, CDS, and structured finance disasters... where we travel to Iceland and I swim around the Blue Lagoon explaining credit swaps...

[JCMach1]

19. Lucky you, I get paid in UAE Dirhams (dollar pegged)

I would be glad to give any help I could with filming, locations, etc. here... However, I am leaving for the States as soon as summer school finishes (July 26)... I am a professor with the American University of Sharjah. You can contact me at my screename [e-mail]

[Ghost Dog]

36. Yeah. Hi man. Y'all.

One of the most important factors, apart from (relatively) free markets, are (relative) freedom of information, thought and expression.

Please protect those things. above all. THAT is strength. Truth sets free.

Everything is relative. You're still, economically, the biggest; if perhaps not the best.

Greetings from Old Europe (mixed-blood Celt/Brit/Nordic, Jewish/Spanish, here, paying close attention to the voice of the People as represented in DU).

:hi:

--> DU's daily "Stock Market (Economy) Watch":
Yesterday: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2910970#2912043
Today: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2912702

(To be continued...)

With permission, please allow me to comment: While your many contributions to human civilization on this planet (especially human rights AND ECOLOGY) have been very great, you have meanwhile (like many of us, for example, 'Old Europeans', done a lot of damage. Overconsuming dumbed-down fat pigs, too many of you. Turn off the TV.

Sorry. But, essentially, we know you, love you and need you.

[Ghost Dog]

43. Hmm. The edited version (seems I caught it too late) read as follows:

Some of the most important factors, apart from (relatively) free (and (relatively) well-regulated) markets, are (relative) freedom of information, thought and expression.

Please protect those things. above all. THAT is strength. Truth sets free.

Everything is relative. You're still, economically, the biggest; if perhaps not the best.

Greetings from Old Europe (mixed-blood Celt/Brit/Nordic, Jewish/Spanish, here, paying close attention to the voice of the People as represented in DU).

:hi:

--> DU's daily "Stock Market (Economy) Watch":
Yesterday: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2910970#2912043
Today: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2912702

(To be continued...)

With permission, please allow me to comment: While your many contributions to human civilization on this planet (especially human rights AND ECOLOGY) have been very great, you have meanwhile (like many of us, for example, 'Old Europeans'), done a lot of damage. Overconsuming dumbed-down fat pigs, too many of you. Turn off the TV.

Sorry. But, essentially, we know you, love you and need you.

(Edited for added clarity).

[mahina]

48. Well that certainly was clear.

[TexasLawyer]

37. really interesting

thanks... and welcome to DU. Hope you'll stick around and keep us informed.

[roamer65]

20. Can you say "dollar crisis"?

:evilgrin:

[JCMach1]

22. Since 2006 the US Central Bank stopped publishing the money supply statistics

known as M3..

So, just how many dollars has the Bush administration been printing to prop up the US economy?

[roamer65]

23. Here's a good source...

M3 money supply is now growing at a 13+ percent/year pace.

http://www.shadowstats.com/cgi-bin/sgs?

To maintain the 120 level on the yen, the Bank of Japan is also "printing" at the same rate. The BoJ seems to want to follow us into this rathole. The FRB is massively debt monetizing right now to soak up all of the Treasury paper that no one wants.

[JCMach1]

26. I haven't followed money supply so closely recently

because, frankly, the games being played makes my head hurt... none of this is good...

[truthisfreedom]

24. This is very, very good news for people to export to Europe. I'm personally enjoying

a boom in my business as a result. For those who like to travel to Europe or those who import from that area of the world, it's snot puppies for them!

[MissMillie]

25. doesn't this have a lot to do w/ our national debt?

I'm thinking that the fact that we owe money all over the place makes our money not worth anything.

Is it more complicated than that?

Isn't this what happens whenever there's a cross-the-board tax cut?

Shouldn't tax cuts be targetted.... toward middle-income people? Isn't our economy most healthy when the middle class has a few bucks to spend?

[Anarcho-Socialist]

27. You're on the right track

The US is borrowing a lot of money from abroad. This means getting creditors to trade Renminbi, Yen, Euros and Pounds for Dollars. Due to the demand from the US for foreign credit, it means foreign creditors can demand a better Dollar exchange for their initial currencies, this helps to drive down the worth of the Dollar. The laws of supply and demand.

"Isn't this what happens whenever there's a cross-the-board tax cut?

Not quite. Although this happens when the US Government uses borrowing to finance its deficit spending. The last time the Dollar was this low against the Pound and the Euro's predecessors it was Reagan using deficit budgets to "cut taxes" for the wealthy.

"Shouldn't tax cuts be targetted.... toward middle-income people? Isn't our economy most healthy when the middle class has a few bucks to spend?"

There is good economic sense in that. In monetarist theory Bush and the GOP policy makers hoped the wealthy would spend their tax cuts in the economy to get it growing again and theorised that this effect would benefit "tickle-down" those on lower and middle incomes. However the effect didn't work out like that. Often the wealthy just pocketed the tax rebate and didn't spend it, or didn't spend or invest it in the US economy. This is in contrast to the Rubin-Clinton policy of raising taxes on the wealthy and cutting taxes for low and middle-income earners, who were much more likely to spend their tax-rebates in the domestic US economy which helped the US out of the early 1990s recession.

[Yavin4]

32. " Bush and the GOP policy makers hoped the wealthy would spend their tax cuts in the economy

to get it growing again and theorised that this effect would benefit "tickle-down" those on lower and middle incomes. Often the wealthy just pocketed the tax rebate and didn't spend it, or didn't spend or invest it in the US economy."

Are you trying to say the our economy is not benefitting from Paris Hilton's all-night, wild partying? The devil you say.

[Skink]

28. When do we start refering to it as the Petro Euro?

[Yavin4]

31. Oh Great, More European Tourists Flooding NYC

Vacationing in the US gets even cheaper for Europeans. They're all over NYC with their little maps, asking me where stuff is. Clogging up the sidewalks. Laughing at our weak dollar.

[entanglement]

35. Actually, there's been a sharp decline in the number of foreign tourists

since 2001.

[Laughing Mirror]

38. Laughing the weak dollar as they spend spend spend

More percentage-wise than their poor American tourist cousins do, and thus doing their part as good consumers propping up the shaky economy, which is based on buying and selling shit nobody needs, so be thankful they're there. They may not be around much longer.

Clogging up the sidewalks? Well, get out of the way and give them space.

[Endangered Specie]

40. Bad karma for all our jokes about Canadian money.

[Anarcho-Socialist]

45. The USD is worth C$1.05 now, parity is not far away

[eppur_se_muova]

44. Chart from the OP ... Can you spot the Clinton/Bu**sh** transition?

[Up2Late]

46. But, butt, but, the economy is great*

*when compared to November 1930 or January 1982.

Funny, the Dollars been falling steadily since November 2000, hummm. I wonder what changed in November 2000???



<http://news.bbc.co.uk/2/hi/business/991447.stm>

<http://news.bbc.co.uk/2/hi/business/1237693.stm>

I wonder... :sarcasm: