Looks like the Dollar is getting even lower when compared to the Euro. I seem remember that at one point traveling abroad was cheaper because of the strength of the Dollar, not to mention the fact that a Ducati motorcycle used to be a bargain. Now not so much.
The euro on Thursday hit a new record of 1.4006 dollars as US interest rate cuts took a new toll on the American
currency .Markets are also nervously awaiting statements on the American economy by US officials later in the day.
The euro has hit new highs regularly since the rate cut on Tuesday. It rose to 1.3988 dollars during Wednesday’s trading in
Europe before falling back to 1.3949 dollars
Update: Al advised on 9/17/07 – Buy Gold – Junk Bonds
Robert Rubin’s greatest feat as SecTreas was his strong dollar policy.
On the flip side, pushing down the dollar could be chuck Schumer’s most harmful position.
Let’s get Rubin to run against Schumer!
“The United States supports a strong dollar.”
That was the extent of Rubin/Clinton policy, to say that over and over and over and over…
I think that the dollar is something that nobody can impact with a single policy. It’s the long-term aggregation of policies that are either based on facts or ideology.
If it’s facts, the dollar will rise.
If it’s ideology, the dollar will fall.
“Defecits don’t matter, Reagan proved that.” – Cheney
That ideology in particular, has ruled throughout this administration, and while it cannot be blamed for everything that has gone wrong, it constitutes an enormous pair of brackets surrounding way too many decisions.
Well, before Rubin served in the public policy arena, he cleaned up at Goldman (e.g. buying LTCM mistakes at pennies on the dollar).
Deficits don’t matter as much as net growth. If a person takes on 10% more in mortgage debt but gets 30% of real estate value, then (s)he should repeat that transaction frequently.
I’d suggest checking out Steve Conover’s work over at http://www.optimist123.com/optimist/a1_national_debt/index.html
Also, jobs and wages have increased since 2003. Perhaps the least noisy set of government data is the Fed Flow of Funds, which shows that household net worth has made really significant gains over the last 5 years:
http://www.federalreserve.gov/releases/z1/current/z1r-5.pdf
I’ll definitely check out both of those later on tonight. The amount we have to spend paying down interest on our debt month to month has skyrocketed. It cannot be ignored. The federal deficit has doubled under Bush, from 3.5 to over 7 trillion, and the lowering of interest rates while the government is continuing to add to that total doesn’t make any sense.
The stock market isn’t supposed to be the only measure of how the country is doing economically. Consumer spending being off for a spell doesn’t mean that more credit needs to be issued. That’s what the stats tell me. Americans are maxed out credit-wise, now unable to borrow off of their homes as easy as they had a couple years ago, and the whole supply-side theory is begining to show its predictable wear and tear.
Once the market overdoes it, for the government to hop into the mix like it has, will damage the dollar’s value in both the short and long term. It was a political move that reminds me of the steel tarrifs of 2002. Bernake isn’t an independent operator. No way in hell was a rate cut appropriate at this time. He should have kept it at the same spot for another month at least.
The Street understood this guy was a lightweight early on, and the market was pricing in this rate cut a week before it happened, which is also a sign of the FED’s operation growing more ragedy by the day. I’m seeing a correction today…aside from PBR, all of my stocks are up, Gold is up about 1.5% last time I checked.
I’m not encouraged by any of this. It’s the kind of manipulation that does more harm than good.
The national debt was actually $5.7 tril in 2000, and is around $9 tril now. The deficit has been averaging around $2-300 bil per year under the Bush admin.
I said this on Monday:
I think the best thing for Bernanke to do here is increase the rate by 25bps. When enough time passes, I suspect more people will agree with me. Inflation still looks like the greater threat.
Until August, it was a foregone conclusion that the target rate would remain above 5%. Shows what a lot of angst in the market can do. But like this piece says, I also think that the Fed needs to look in the mirror to see the biggest contributor to this current circumstance:
http://caveatbettor.blogspot.com/2007/09/fomc-rate-decision-tuesday-215pm.html
I think that Bernanke got pushed, but he’s still smarter than Greenspan. Francona can drive me batty sometime, but I prefer him to Grady Little.
You’re right on the money. I agree with your analysis 100% on this. A rate increase would have been the best thing here. Right now the FED is looking like it can be manipulated, and that’s a bad thing. This move here was political, and it sucks.
I’m following your mention of Schumer as far as I know he’s been working to put the squeeze on China for some time now, but if he’s on the record saying a weak dollar would be a good thing, I’d be surprised and all but done with him. China is but one piece in the puzzle. I hate to restate things, but the steel tarrifs in 2002, 30% on imports, another completely political, ideological decision, that was made against the insights of Greenspan, O’Neil…
I’m missing those two, but not as much as I’m missing Clinton. We’re heading for choppy waters, and if they pull off an attack on Iran, it could be the straw that broke the camel’s back.
I don’t get at all how you can honestly access the comparitive intelects of Greenspan and Bernanke. I’m heading over to check out your post, but those other two will have to be tomorrow, as I’m under the gun.
The more I’m engaged in this type of a discussion, the more I want to be an economist.