Weak Dollar

[Alpha]

The US, for some time now, had been headed towards a service economy, particularly in-light of outsourcing and movement of industry overseas. It's clear to me, for a variety of empirical reasons, that service economies are inherently untenable. We have a sort of popular ideal of the service economy, conjuring images of accountants dropping by Starbucks and ordering a latte from one of their clients, etc etc. Without getting into a lengthy discussion of how unfortunate many of us feel it is that "jobs are going overseas" and the like, I will say that service economies are particularly sensitive to economic shocks, and it's rarely a good thing (even in light of globalization-era interdependence) to have such a large proportion of industry specifically based in other countries.

So about that dollar...
It's pretty weak these days. Well, very weak. So weak, in fact, that the Euro is slaughtering it even in light of new members in the Balkans and Eastern European bloc joining the EU. But a weak dollar does have some interesting benefits. It will, on one hand, put something of a damper on my travel to other countries not tied to the dollar. On the other hand, a weak dollar greatly encourages exports. So much so that a weak enough one can incite repatriation of industry and domestic growth of export markets.

So I don't know that it's such a bad thing. Am I willing to put off traveling for a while in the hopes that the weak dollar could spell something of a turnaround for the domestic economy? Perhaps.

 

[nealjpage]

And I'm not sure if the weak dollar helped, but the real estate market on the west coast finally cooled off enough for me to buy a house...

 

[astrostu]

And I'm not sure if the weak dollar helped, but the real estate market on the west coast finally cooled off enough for me to buy a house...

I know folks are saying that the housing market sucks at the moment, but I honestly think it's more of a market correction. Housing prices the last few years have been really high. I think one of the main reasons it really sucks is that people have loans based upon the value of their homes, and when their home value collapses, well, there goes their borrowing power.

Oh, and I think this makes my 1000th post.

 

[Senor Hound]

Its pointless to speculate about what the dollar is going to do cause no one, not even Ben Bernanke. The only facts we have are what things look like now.

If the weak dollar worries you and you think its going to get worse, invest in Swiss Francs, the Euro or British Pounds. If you don't like that, gold makes an excellent hedge against inflation, so much that the US government used to back up every dollar with gold. There was no inflation between the late 18th century and the depression, because gold kept it in check. Its only since the late 30s or 40s (when we got rid of the gold standard) that inflation started being a problem.

Travel is going to suck for any American right now. But usually these sorts of things are cyclical. But we're spending more than we're bringing in, and that causes our dollar to be weak. You can't borrow almost a trillion dollars from another country, and expect the value of the dollar to remain the same.

 

[Alpha]

Ayn Rand is a soul-less narcissistic whore, by the way.

 

[usayit]

No country's economy can survive very long with a trade deficit that directly impacts middle class America. I think our problems are for the long run... the causes are deeply rooted. I'm not confident in the government's ability to make improvements in the short term (let alone find the cause of Tomato contamination :er: ) You are right... globalization, taxes, trade agreements... and yes... I will add pure greed. We were a country of hard working blue collar workers proud to be the largest producer of goods in the entire world (shortly after WWII). Somehow the generations afterwards lost respect/sight on that part of the U.S. and traded it all away... along with the Chrysler Tower, Anheusur Bush, and other US assets. (but that's ok.. its business afterall.. )

Although the housing market is very much an important concern, I think we are focusing way too much on it. Those that purchased their home before the sky rocketing prices will remain where they are and continue to weather the crisis with the reasonable mortgages they can handle. Those that have yet to purchase a home will wait and take advantage of a buyer's market. Whose left??? Those that were too eager to purchase well above their means. Sorry... I'm going to be harsh, I don't pity them. They continue to blame lending corporations but forget that a large part of their problems is purely their lack of judgement. The other group are those that played the real estate market as an investment vehicle. I do feel sorry for their losses but investing is just like a game.. win some loose some.

I for one will still continue to travel but do so here in the States like I have always planned. I never understood why people would spend thousands and thousands of dollars traveling the world but never even leave their state. The U.S. is such a large beautiful country and many die never seeing it. I guess saying your traveled Europe gives you a bigger ego boost than saying you traveled the entire United States.

 

[passerby]

The US economy started going down with the start of the Vietnam war. By the time Ronald reagan enter the office the huge Gold reserve that made the shining dollar shines was no more, the war consumed the lot. From then on the steady dollar was steady because loan. Now the debt is in trillions wich must be paid.

The Chinese foreign currency reserve in 2007 was already 1.3 trillion dollars, with the US side as the largest. And they can use that money at any time whenever they want it, it's their money. The people in America must pass that money on call regardless, that what debt is all about.
But that only China, there are also others: Japan, Germany, Canada, Mexico, Saudi arabia, Kuwait, Korea, Taiwan etc etc etc .

Here are two links which are worth 20 minutes (at most) reading. It gives an idea what was the cause, when it start and what is happening now in a nutshell, dated 2006 and 2007.

http://www.globalresearch.ca/index.php?context=viewArticle&code=ENG20061014&articleId=3482

http://english.pravda.ru/business/finance/96909-0/

 

[Senor Hound]

Ayn Rand is a soul-less narcissistic whore, by the way.

And your point is??? Besides, its been my experience many people are soul-less narcissistic whores. Some are just more vocal than others.

BTW, how is this NOT a political discussion?

 

[Puscas]

I never understood why people would spend thousands and thousands of dollars traveling the world but never even leave their state.

I would like to know how you can travel the world without leaving the state.... (j/k: I know what you're saying)

The U.S. is such a large beautiful country and many die never seeing it. I guess saying your traveled Europe gives you a bigger ego boost than saying you traveled the entire United States.

I don't know about the boost, but you're right about the US. It's so beautiful and divers. I'm trying to see all the states before I have to go back to Europe. Oh and the weak dollar makes that journey a little bit more affordable.





pascal

 

[Senor Hound]

I don't know about the boost, but you're right about the US. It's so beautiful and divers. I'm trying to see all the states before I have to go back to Europe. Oh and the weak dollar makes that journey a little bit more affordable.

pascal

Don't bother with that strip of states down the middle: North and South Dakota, Nebraska, Kansas, Oklahoma and West Texas. There's nothing there for the most part, unless you really like farming. But that's just my opinion, so maybe you should see it for yourself.

I always want to travel to Europe over America cause I want the experience to be more unique. The US has differences from place to place, but its also very similar. I want to go someplace where everything has a different architectural style, and I can't understand anyone. Plus I have family in Finland I'd like to meet.

 

[Puscas]

I've been to North and South Dakota and with something like the Badlands, you can hardly say that's not worth a visit. It's a gorgeous place. I'm sure I'll find something interesting in those other states as well.








pascal

 

[Josh66]

BTW, how is this NOT a political discussion?

This is an economic discussion. If talking about money gets banned too, I just might leave this place, lol.



I am glad the dollar is so weak right now though. I accidentally gave the pizza delivery guy a $32 tip tonight. :sad anim:

 

[Senor Hound]

I've been to North and South Dakota and with something like the Badlands, you can hardly say that's not worth a visit. It's a gorgeous place. I'm sure I'll find something interesting in those other states as well.

pascal

Good point. I forgot about the black hills and badlands. I guess its what you make of it, so I should keep my mouth shut.

This is an economic discussion. If talking about money gets banned too, I just might leave this place, lol.

I always considered economic policies to be political, but I'm glad the mods are trusting us with this thread. I guess I can now say that if the US had raised taxes for our excessive spending the last 5-6 years instead of borrowing most of it from China, I think our dollar would be a lot stronger than it is now. But it also could have created its own problems, which might have very well been worse. But don't take my word as more than opinion. I'm a strong believer in Keynesian economics--a lot more than most people nowadays are (those darn Chicago Schoolers ).

Gee, that was fun!

 

[Senor Hound]

BTW, the US economy could be a LOT, LOT, LOT worse!

http://news.yahoo.com/s/afp/20080719/bs_afp/zimbabweeconomyinflation_080719174524

It perplexes me how such extreme inflation occurs. I guess if I was a better economist, I would know.

 

[Josh66]

BTW, the US economy could be a LOT, LOT, LOT worse!

http://news.yahoo.com/s/afp/20080719/bs_afp/zimbabweeconomyinflation_080719174524

It perplexes me how such extreme inflation occurs. I guess if I was a better economist, I would know.

Damn, I want some of those! I wonder if they had to make the bill bigger to fit that many zeros on it...


Seriously though...
If things keep going the way they are, it will affect my job. With fuel getting higher and higher, people not being able to pay for all the stuff they have on borrowed money, and just generally not having much left at the end of the week - they won't go on that vacation they had planned for the summer (or maybe they will and just get a new credit card...), business will hold a tele/videoconference instead of flying out to meet in person, etc...

Less people flying means less planes for me to fix. Luckily I'm in the defense sector right now so it doesn't affect me as much, but if commercial aviation suffers too much there will be lots of layoffs and the job market will be over-saturated with mechanics.