How much value is the dollar going to lose because of this bailout?

[JohnnyCougar]

Just to take a shot in the dark:

23% by the end of the week.

[DJ13]

1. I think the other countries will step in to support the $

Limiting the fall more than we expect.

They have too many dollars in their own treasuries to see it collapse.

I bet the immediate downside will be 5% +/- .

[Statistical]

2. I say no.

You do know that a move of even a tenth of 1% is a BIG daily move in currency markets?

If you think you are right:
1) Sell everything you own, hell even borrow from the mafia.
2) Open Forex account.
3) Buy diversified portfolio of euro, jap yen, chinese, yen, and pounds.
4) Fully leveraged (200:1) if the $ fell 23% you would realize a .......... 4,600% return.

For each $1K invest you would make $46,00 Not bad for one weeks "work".
So borrow, steal, sell, beg for about $20K and you would have a cool million.
Give me 1% for "financial advice". Take half a million and start a 527 to defeat McSame and you are STILL ahead a 1/2 million.


Then again the $ will not fall 23% in a week.

The dollar fell about 30% against the Euro over the course of 4 YEARS and mainly due to....... an expansion of federal debt to $9.7 TRILLION.

[TexasObserver]

3. more than it should

less than 10% diminution by the end of the week

[kurt_cagle]

4. No

Dollar's currently being supported by magical fairy dust coming from the combined efforts of the G7. Everyone's holding their breath right now seeing what happens with the RTC2, whether it will be handled responsibly (i.e., as messy as the solution is, pushing it into Congress to implement as law) or whether BushCo will attempt to wait out Congress and then try to pass HIS version via executive decree when Congress recesses.

Of course, if this happens, then you have a constitutional crisis - the Treasury Department does not in fact have the authorization to spend money, only to manage it. This should be an interesting Fall.

[TheKentuckian]

5. I wouldn't stress short term unless OPEC dumps us

If that happens, it'll be too late to do much is my guess.

[endthewar]

7. Agreed.

See my post below. :hi:

[endthewar]

6. Not as much as it would lose WITHOUT the bailout

Those members of Congress sounded like they were scared to death over the details of what was told to them in that meeting with Paulson. Here's my best guess:

China has about $1 trillion worth of US treasury notes. China has lost somewhere around 200 billion to 300 billion dollars just by holding onto those notes instead of selling them over the past couple of years. If China dumps those notes on the market it would be an instantaneous collapse of the US economy because the US dollar would lose a LOT of value.

However, China depends heavily on OPEC for lots of oil for its large population. Since OPEC still trades with US dollars, if China dumped the US currency, OPEC would be severely harmed as well. No doubt they'd cut off the oil flow to China in retaliation. So strangely I see it as OPEC being the last hurdle between the US and an economic depression.

If OPEC decided to trade on euros or if China felt a pressing need to dump the US treasury notes, then the US dollar will be completely screwed. My guess is that the White House thought that either one of those scenarios might have been a possibility without this bailout.