Dollar's Retreat Raises Fear Of Collapse

[Purveyor]

Source: International Herald Tribune

FRANKFURT: Finance ministers and central bankers have long fretted that at some point, the rest of the world would lose its willingness to finance the United States' proclivity to consume far more than it produces - and that a potentially disastrous free-fall in the dollar's value would result.

But for longer than most economists would have been willing to predict a decade ago, the world has been a willing partner in American excess - until a new and home-grown financial crisis this summer rattled confidence in the country, the world's largest economy.

On Thursday, the dollar briefly fell to another low against the euro of $1.3927, as a slow decline that has been under way for months picked up steam this past week.

"This is all pointing to a greatly increased risk of a fast unwinding of the U.S. current account deficit and a serious decline of the dollar," said Kenneth Rogoff, a former chief economist at the International Monetary Fund and an expert on exchange rates. "We could finally see the big kahuna hit."

In addition to increased nervousness about the pace of the dollar's decline, many currency analysts now also are willing to make an argument they would have avoided as recently as a few years ago: that the euro should bear the brunt of the dollar's decline.



Read more: http://www.iht.com/articles/2007/09/13/news/econ.php

---

Perhaps we won't have to depend on Congress to defund our bastard wars as the world buyers of our debt will 'cut off our credit'...

[razors edge]

1. Just a mater of time.

[madrchsod]

2. i`m beginning to think that`s the only way out of iraq

i have a feeling the democrats won`t be able to stop bush`s war by cutting the funds,not enough votes, or even demanding withdraw time lines.

[KAZ]

12. No. It's a way into Iran. n/t

[Earth_First]

3. Stock up...

It could be a long winter.

[Purveyor]

7. We have been picking and canning since the 2nd week of August.

All thats left to do is spaghetti and pizza sauce.

Planted a new 'big mama' type roma tomato this year and indeed they are huge but really slow in ripening.

I get just giddy walking into the pantry this time of year, observing our chemical free harvest.

[gateley]

11. I admire you for actually taking the steps to do the things I only think

about doing. Good for you!

[Lone_Star_Dem]

15. Mmmm, I love to can

Almost as much as I love growing my own fresh, clean and organic veggies.

May I always be fortunate enough to continue to do so. :)

Currently, I'm making my cajun okra and tomatoes, and my prickly pear jelly. :9

[Purveyor]

19. It's work but brings back so many memories that it is almost like Thanksgiving...

Memories of Grandma making sure we boiled those jars to the point were I thought they might melt.

Thoughts of long passed Aunt Ameta who was scared silly over the pressure cooker (one that I still use to this day) as it would hiss away. Of course, we kids knew her fears and when we knew the cooker was under pressure would sneak up behind her and let out a big 'hiss' that would scare the daylights out of her...

Oh and Grandpa. Never pick the green beans if the plants were wet.

I could go on and on but now I'm welling up with tears thinking about how 'simple and fun' it used to be and how I miss all those wonderful times and long passed family...

[shanti]

26. awww!

:hug: i know exactly how you feel!

[sendero]

39. Very cool...

... the wife and I have been working this direction also. While we've done no large scale gardening (when we move to the country that will change), we have learned to can and saved off a few things in the process.

But we also have a large store of all kinds of staple foods and canned goods, because I've seen this coming for 3 years.

Let's just hope it is just a long recession, and not an all-out depression. A long recession is the absolute least that can happen IMHO.

[Le Taz Hot]

42. Me too!

I've been canning all summer. Luckily, I'm in California's Central Valley and we have VERY long growing seasons here. I probably have another month of canning ahead of me. And we've already started the winter crop.

[bikeboy]

46. I'm with you Puveyor!

We've been doing the same thing since the second week of August. well over 150 quarts of jam, sauce, pickles, dried beans and tomatoes. I live in the Bay Area under fault and things have been active recently. That along with my serious doubts about the economy has lead us to expand our gardens and really plan for what we need when everything goes down.

I too smile at the pantry...even though it's outside so the house won't fall on it...

bikeboy

[knitter4democracy]

51. Us, too.

I'm getting things on sale and stocking up the pantry, too. Canning, freezing, dehydrating, and stocking up. I've got plenty of firewood, too.

Our Romas were really slow in ripening, too. It was an odd summer here in Battle Creek.

[jedr]

4. add on $80/barrel oil and the housing bubble burst;

with the ripple effects that it is having on the economy and things don't look very good.

[gateley]

5. This is so sobering -- think Germany after the war. I don't understand

why/how we still refer to ourselves as the richest nation on earth.

What can we do now, at this point, to re-build before it's too late?

[MaryRN]

6. IMHO, unless we impeach, it IS too late.

[gateley]

9. Even if we do impeach, I think we're still pretty far gone.

[Purveyor]

8. Most of the world is kind and will assist us once we 'humble ourselves'.

[gateley]

10. God -- who ever thought that Almighty America might some day lose its

way like this?

I read a book about the making of the Federal Reserve and, of course, it was begun by those of wealth wanting to control it. I'm pretty sure that's indicative of how we got to this point -- greed.

[ancient_nomad]

13. Question for you....

What was the name of the book? I'd like to read it. TIA.

[gateley]

16. Here's a link

to amazon

http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986395/ref=pd_bbs_1/103-2497031-7441467?ie=UTF8&s=books&qid=1189739597&sr=8-1

It's called the Creature from Jekyll Island (Jekyll Island is the retreat where the first meeting was held).

I never know whether these are going to be conspiracy theories run amok, or if they'll be factul, un-biased reporting (as far as that's possible).
It was recommended to me by a gentleman at work who is definitely does not own a tin foil hat, which is why I read it. I found this to be informative and non-alarmist, and if there's a bit of conjecture, I think the gist of it is probably accurate.

On the amazon page, there are links to other books on the Fed which, if this particular one doesn't resonate with you, might be more to your liking.

Regardless of which you choose, prepare to be pissed off!

[Theduckno2]

17. Me thinks you are on to something.

I understand that the EU economy is on a par with the US economy.

Maybe it is time for the EU and the world to tell the US that it is no longer financially feasible for the US to maintain an unrivaled military preeminence in the world.

The costs of our far-flung military empire and its network of bases is becoming financially impossible. Conducting an off the budget war in Iraq/Afghanistan does nothing to bolster a falling dollar.

The part that really hurts is that President Clinton left office with the budget in surplus.

[AntiFascist]

32. Chicken and egg...

about all we have to offer the world at this point is the bombing capability of our military. That's probably why it is so important to stir up terrorism and keep a perpetual war going.

[Oggy]

35. That's what the US said to the British

After WWII the US effectively said to the British you need to give up your empire, you can't afford it (we obviously owed you a lot as we only paid off our debts last year, or maybe the year before, I can't remember exactly).

[melody]

29. The vast majority of this country was always "humble"

It's that majority that will be hurt most of all.

The very rich who caused the problem will just move.

[Deja Q]

55. And judging by current events, what happened in the US reverberated through the WORLD.

If the world economy collapses, those responsible may not be welcomed. Which means those who move may not be welcomed in the countries they want to move to, assuming that's what they're going to want to do, which I doubt.

[melody]

60. Exactly

What's they are planning on doing, however, is creating a global economy out of the
pieces of the old one.

Those of us who aren't affluent won't notice a big change. Those who voted for the
GOP will.

[UncleSepp]

27. I keep thinking of that, and it unsettles me...

I keep thinking of Germany toward the end of the first world war, looking at our economy, looking at the attitudes, and wondering if we ain't seen nothing yet. I've been thinking of that since we went to Afghanistan.

IMHO, the thing to do is going to be bitter. I think we (being the big WE, Americans, not left and right, lib and con) need to find ways to hold our noses and work together to ensure that our government actually works, that budgets get passed, projects get funded, bills get debated, laws get made, and so on and so forth. We, the big we, also need to make sure we are taking care of the vets of this war and of their families. We, the big we, need to get some kind of WPA type of programs in place *before* the unemployment hits.

If we don't have effective government, we'll have the Weimar Republic. If we have vets who feel like they've been stabbed in the back and who have nothing to lose, we'll have Freikorps. If we don't have some kind of meaningful work for people to do that can at least put some food on the table, we'll have potential armies of hungry people with time on their hands and anger to work out who will fall in line behind whatever political organization has the biggest pot of soup.

I think I'm going to go find a beer to cry in. I really don't want to see the 20er in reruns.

[SlowDownFast]

41. Astute observations.

Worrisome, indeed.

[happyslug]

44. Germany 1917-1918, a good comparisons.

While everyone knows Germany was at war at that time, people forget the details. The German Navy Mutinied in 1917 and again in 1918, do more to food shortages and rationing then anything else (The German Officers were able to buy food for their messes, but the enlisted ranks had to put up with short and questionable food, similar problems in the Russian, English and French Navies with the Germans being the worse off).

Food was a critical shortage during this period (Much worse then During WWII, given that during WWII Germany had Italy and Poland till after the harvest in Poland, till the Planting in Italy and during mid-summer held France). When Russian surrendered in 1917 one of the first things the Germans demanded was food shipments from Russia.

During this time period (1917-1918) Germany was being lead by Lundendorff and Hindenburg (Technically Hindenburg was in Charge, but Lundendorff was actually making the decisions). The Kaiser while technically still the head of State, was sidelined by this pair who ran Germany. Everything was geared for the War Effort, at the cost of everything else. People had to sacrifice and do without, people were dieing at the Front. Germany was taking over most of Russia, but sending its troops to France to participate in the Spring 1918 offensive. The Spring Offensive was Germany's "Surge" it was the last throw of the dice to win the war. France had to be knocked out of the war before the US was able to get enough troops to France. Once the US troops started to arrive in Number Germany was doomed and Lundendorff knew it. Thus he planed and launched his Spiring 1918 Offensive and for the first time since 1914 Trench Warfare ended. Movement of Troops were measured in Miles NOT inches. The Spiring 1918 offensive was the single largest military operations ever in terms of men and weapons (With Desert Storm of 1992 coming in tied or just beating it). They have been "larger operations" for example the 1941 Invasion of Russia, but that was THREE separate attacks, one in the north, one in the center and one in the South, unlike the Spiring 1918 offensive which was ONE massive attack (D-Day was the largest Amphibious operation ever, but is quite small compared to any of the three attacks mentioned above).

Anyway, the Spiring Offensive failed. Why it failed has been debated. Lundendorff blamed the men for NOT wanting victory enough, other have blamed the introduction of 1918 killer flu, but the most likely reason is that it was to much for Germany to do (or any country to do). Germany fought onward till it was clear the Germany army could NOT stop an allied invasion of Germany. Do to the crisis of an Allied Invasion of Germany, the right wing Government was removed and a left wing Government was installed. The left wing Government promptly Surrendered to prevent such an invasion. The right wing of Germany NEVER liked the Surrender even through it was needed and said for the next 20 years Germany was stabbed in the back (The Nazi would refined this to be "by the Jews" but in 1918 it was the Working Class who did it). The Surrender was required but the Right wing never liked it.

A word of Warming. Come November 1918 and the Armistice, Lundendorff ran off to Sweden to avoid arrest (The Kaiser ran to the Netherlands were he died in 1940). Hindenburg became President of Germany in the mid-1930s and appointed Hitler Chancellor in 1933 (Just before he died and Hitler merged both the Presidency and the Chancellery into one office). All three blamed someone else for the defeat of Germany in 1918, not their leadership and not their plans. Compared this to the last Emperor of Austina-Hungary, who upon accession to the throne actually tired to make peace. His reward was to be used by the French Government to show the French people their were "Winning " the war for Austria was trying to make peace not war. He was attacked by Politicians in his own Country and Germany for "advocating Surrender". When the war did end with Austria Surrender and breakup, Austria declared itself a Republic let he still be its Emperor, and Hungary was ruled by a Regent for the King who refused to give up Power for he was still mad at the Emperor for Surrendering in 1918. The right wing just NEVER forgave him for Seeing the situation as it really was and saying it was madness to continue, some sort of peace had to be made.

I point this out for the Right Wing is planning on the same policy the Right Wing in Germany used in 1918, blame the left for the results of the Right wing's own actions.

For more on the last Emperor of the Austina_Hungary Empire (Karl I died 1922):
http://en.wikipedia.org/wiki/Charles_I_of_Austria

And his wife (Who died in 1989):
http://en.wikipedia.org/wiki/Zita_of_Bourbon-Parma

More on Lundendorff
http://en.wikipedia.org/wiki/Erich_Ludendorff
http://www.spartacus.schoolnet.co.uk/FWWludendorff.htm

For more on Hindenburg:
http://en.wikipedia.org/wiki/Paul_von_Hindenburg
http://www.spartacus.schoolnet.co.uk/FWWhindenburg.htm

[UncleSepp]

50. Thank you!

I really hadn't thought about the Ludendorff-Hindenburg-Kaiser Wilhelm parallel to our current government. I have been watching for the "stab in the back" theories to start coming out, and they are now. The ones that seem to be rising to the top are:

1. The neocon revolution failed because it didn't go far enough and wasn't extreme enough. "Hypocrites and traitors in our own midst! No more Mr. Nice Guy!"

2. The war failed because it was wrong, and the war was wrong because it was fought in the interests of alien powers. "AIPAC did it!"

3. Both are failing because "the American people don't have the will to do what it takes". Solution to this? See #1. Reason for this? See #4.

4. It's the liberals fault. Liberalism weakens us. Solution to this? Also #1.

#1 seems to be the one the left is having the most fun with. #2 seems to be the one that the left and right can both agree on. #3 is a hard sell during elections. #4 is getting a bit tired, and won't work well unless the liberals really are a small minority. We're not. Unless someone comes up with a clever #5, I'm afraid what we'll see will be, once again, a combination of #1 and #2 that equates #2 with #4. Do we at least get egg roll with those leftovers?

[kestrel91316]

14. Oh dear. "Dollar" and "collapse" are two words we never want

to see in the same sentence......

[cliss]

18. Stan Goff wrote, "As the U.S. sways back and forth,

the rest of the world is trying to figure out the new dynamics, after we've fallen".
"They're jockeying for position to be the new leaders".

Countries like China, Russia, India, Venezuela and Yes, Iran will be the new Power brokers. The countries with the energy resources are going to be calling the shots, provided they haven't been bombed into oblivion like (hopefully not) Iran.

It's unbelievably scary for people like currency traders. Right now, the importers are getting hammered. The people who export are actually doing really well. But - all bets are off if the damn dollar collapses.

[Art_from_Ark]

20. It depends

A lot of times, both importers and exporters will have agreements with customers in other countries regarding exchange rates-- say, setting a constant rate for one, three, six, or even twelve months. So a temporary decline in dollar value might not spur more US exports, unless the exports are to new customers whose currency is rising against the dollar.

[cliss]

48. Good points.

I'm doing exports of Ag products from the US to other countries, like India and Europe. It's one of my biggest headaches - how to deal with currency fluctuations. Are you also an exporter?

Thanks for the excellent info.

[Deja Q]

54. And it might. Not everything is 'made in China'.

I don't think it's gloom and doom just yet, though problems have occurred that need correcting. Once corrected, things will improve.

Anything we can personally do to help isn't going to hurt, either, and cowering in fear does nobody any good at all.

[feloneous cat]

57. Sometimes "corrections" are called DEPRESSIONS

It is an ugly word, but when 80% of the Euro's stay in Europe...

The reality is that China, RIGHT NOW, can tell us anytime they want "don't let the dollar fall any more than it has". They have the power of the purse.

It's been done before folks.... WE did it.

Feloneous

[Deja Q]

58. The difference is, China's big lapse of quality might lower their credibility.

There are a lot of ways that or other situations can pan out.

And if someone says "don't let it fall", the response seems easy - improve the dollar; which means exporting more goods. We can still do that.

In short, it's not doomsday yet. There are as many positive outcomes as there are negative ones.

[eridani]

28. Is that in one of his books?

None of the phrases plus Goff give any Google hits.

[cliss]

47. There was a series of articles,

written by Stan Goff. I think they were on the web site From the Wilderness
www.fromthewilderness.com/
I think if you do a search, you should be able to find it.
Also, Goff has his own web site
www.stangoff.com/
The problem is, I think he's prohibited from posting his own articles because he got paid for selling them to FTW. I'll do some looking. It was an unbelievable article because this man has been so amazingly correct about everything that has happened.

[hedgetrimmer]

21. Buy Canadian currency .... it is just about even with the dollar

and if the dollar goes bust you have a little nestegg, A?

[RainDog]

22. Isn't China the biggest buyer of U.S. $?

...so that we will turn around and buy their goods that have become the basis of their capitalist economy? (and the basis of our consumer economy...which reminds me of how I wanted to vomit when Bush told everyone, after 9-11, to "go shopping...)

And doesn't China have a deal with Iran to buy oil?

And...hmmmmmm... maybe all the huffing and puffing by the neocons about invading Iran has made some people think it is in their interests to rock the U.S. economic boat? China has been working to build a consumer economy of its own. With such a huge population as an almost "new market," they can be their own consumers as more people in China become "middle class."

Bush may want the dollar to fall so that the deficit costs less (on paper) - but with the neocon attitude that they can boss around the rest of the world... there's more than one way to fight a war, as Osama noted 7 or so years ago.

anyway, wish I had money because I was telling people to buy Euros 5 years ago just because of the exact scenario we see now.

[melody]

30. Bingo

That's exactly what they're trying to do -- and why they tried to hurt Clinton. The neocons were trying
to destroy us economically. They've done their job.

[Javaman]

43. China, South Korea and Japan, hold the lions share of our debt..

and it's odd that Japan announced that they will now be buying their oil in Yen.

Strange things are afoot at the circle k.

[Spazito]

23. When the ability to borrow was equated to equity as opposed to

the old definition of equity, that being you owned outright more than what you owed, was the beginning of the building of the house of cards that is now starting to collapse. Credit became the equivalent of cash which was a false foundation that was bound to fail, it was only a question of when NOT if, imo.

[trusty elf]

24. I wish the 'dullard" would collapse, and soon!

[shanti]

25. this bit

"...the United States' proclivity to consume far more than it produces". come ON! we don't produce as much because every goddam thing has been OUTSOURCED!!!!! we have been destroyed from within!

[melody]

31. precisely -- well put n/t

[amandabeech]

49. The Chinese economy is overheating.

They just raised interest rates this week.

At some point, they may have to give in to pressure and let their currency make a meaningful upward movement. It would help them with their imports, like oil and gas if their currency were worth more. Right now, they're tied to the dollar.

If that were the case, and the Chinese currency appreciated 25-40% as Chuck Schumer predicts, then moving everything to China may not look so good.

Add to that the increasing price of oil. Those huge container ships are very efficient, but rail, and particularly trucks, are less so. Putting factories close to consumers may not look so bad if oil goes to $125 or so.

[Warren Stupidity]

33. Print another 50B!

Who could have thunk that trying to print our way out of the 'liquidity crisis' would affect the value of the dollar?

[Solar_Power]

63. LOL

[0007]

34. Impeachment is a start of responsible government if not

The run on the banks are next.

[Doctor_J]

36. I think this would be good for the US

If we turn into 1993 Russia, and dollars turn into rubles, we can start to rebuild. Unfortunately our media has determined that the ultra-fascist movement started when Reagan was elected is going to have to run itself to its natural ruin. Best to get it there ASAP, put Matthews, the hate radio crowd, and everyone at Fox in prison, and start over.

[fasttense]

37. October seems to be the month the DJIA likes to suddenly drop.

I'm sure the savvy marketeers out there know this but I just figured it out and thought it was interesting.

October 1929 - The signal for the Great Depression
Between September and December 1974 - (didn't actually start in October but occurred during that month) All the main stock indexes of the future G7 bottomed out having lost at least 34% of their value in nominal terms, and 43% in real terms.
October 1987 - Black Monday
October 1997 - The mini-crash
October 2002 - Down -27.29%. The Dot-Com bubble burst

Of course there was a drop after 9/11 and there have been other downturns in the market that didn't occur in October. But enough have happened in October to make you wonder.

[Deja Q]

53. Maybe, maybe not. If it does crash, it'll likely happen in 2008;

once all the xmas sales and Q4 reports come in. And assuming those aren't going to be good, of course.

I don't think it's freak-out time just yet.

[Joe Bacon]

38. Who cares? Jesus is coming back in a week or 2!

Try talking to my brainwashed family about all the damage the GOP has done. They will not listen. All they do is watch Jesus TV and Fox News. They swear up and down that the worse it gets, the sooner Jesus will rapture them off the planet.

Christianity has effectively destroyed this nation the same way Communism destroyed the USSR.

[ryanmuegge]

59. LOL. Love the subject line.

You're completely right about them.

[Vidar]

40. Our rendition of the Weimar Republic just gets better & better.

[happyslug]

45. Not Wiemar Republic but the Third Supreme Command.

The Third Supreme Command was the rule of Germany by Hindenburg and Lundendroff between 1916 and 1918:

For more see my previous post above And the following:
For a Stub:
http://en.wikipedia.org/wiki/Third_Supreme_Command

[Vidar]

62. Thanks for the history lesson.

[Deja Q]

52. Then stop offshoring for a while. What's the problem?

:shrug:

[Ex Lion Tamer]

56. Anybody remember the movie "Rollover"?

Kris Kristofferson and Jane Fonda. If I recall, the movie had this very premise.

[defendandprotect]

61. No -- never did; can you recap -- ???