Dollar Falls as Concerns Grow About Economy

[Jon8503]

But, But, per Kudlow, CNBC, Bush & all his buddies this is one of the strongest economies they have ever seen & could not understand why the average american and worker could not see this:
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NY TimesBy JEREMY W. PETERS and CARTER DOUGHERTY - Published: November 24, 2006

The dollar dropped sharply against a broad range of major currencies today, and the euro broke through the $1.30 mark for the first time in a year and a half, highlighting concern about the strength of the American economy.

The dollar’s losses came during a thin trading day in which the British pound rose to its strongest value against the dollar in two years. The Japanese yen and the Swiss franc also gained at the dollar’s expense.

Stocks closed lower on Wall Street today after a shortened trading session that was soured by news of the dollar’s woes.

Though the Thanksgiving holiday probably accentuated the dollar’s fall, analysts said the drop appears to reflect concerns that the American economy will continue to weaken as economies in Europe and Asia grow stronger.

“To dismiss this as a technical correction is to overlook the structural reasons why the U.S. dollar is having a very hard time these days,” said Hans Redeker, global head of currency strategy at BNP Paribas in London.

A number of factors, including slower growth and the multibillion-dollar trade deficit, put the American economy in a vulnerable position compared with its global competitors. While the most recent data show that the trade gap tightened in September, the decline was largely due to falling oil prices. The trade deficit was $586.2 billion for the first nine months of the year, and it remains on track to break last year’s record of $716.7 billion. The biggest chunk by far represents imports from China.

More at link:

http://www.nytimes.com/2006/11/24/business/24cnd-econ.html?ex=1322024400&en=66f6be339722422e&ei=5088&partner=rssnyt&emc=rss
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EDIT: COPYRIGHT. PLEASE POST ONLY 4 OR 5
PARAGRAPHS FROM THE COPYRIGHTED NEWS SOURCE
PER DU RULES.

[acmejack]

1. Explains why this looks familiar.

I wondered how the dollar had recouped it's earlier losses in order to fall through the $1.30 mark against the Euro again. Then I understood, these were it's earlier losses. Wait till tomorrow, Ozymandias' Morning Stock Report will be very interesting indeed, we'll see what happened overnight. That will tell the tale, what the Japanese and Chinese currency traders do will we sleep. A little push could really screw things up...

[Jon8503]

9. US dollar 'will keep falling'

Heather Stewart = Sunday November 26, 2006
The Observer


The US dollar has reached a 'tipping point' as foreign exchange markets wake up to the threat that the Federal Reserve will have to slash interest rates in the new year to stave off recession, analysts say. After a sharp sell-off on Friday took the greenback to 18-month lows against the euro, and pushed the pound to $1.93, economists warned that there was worse to come for the US currency.
'We are just at the start of what we think will be a downtrend for the dollar - a tipping-point has probably been reached,' said Tim Fox, currency strategist at Dresdner Kleinwort Wasserstein, who expects sterling to hit $2 within the next three months.

The euro has been the main beneficiary. The European Central Bank is expected to continue raising interest rates into next year amid strong growth in the eurozone economies, while the Fed has left rates unchanged at 5.25 per cent since June.
'Steadily, the US dollar will decline through 2007, but probably at a faster pace in the second half of the year, as people realise the Fed is going to have to cut rates,' said Paul Mackel, currency strategist at HSBC.

Senators on Capitol Hill would like to see China allow its currency, the renminbi, to appreciate further against the dollar, making Chinese imports more expensive; but the chances are low.

http://observer.guardian.co.uk/business/story/0,,1956925,00.html

[Joanne98]

2. Cheney makes money if the dollar sinks...

Cheney bets against the dollar....

By Kiplinger's Personal Finance Magazine

Vice President Dick Cheney's financial advisers are apparently betting on a rise in inflation and interest rates and on a decline in the value of the dollar against foreign currencies. That's the conclusion we draw after scouring the financial disclosure form released by Cheney recently.

As of the end of last year, Cheney and his wife, Lynne, held between $10 million and $25 million in Vanguard Short-Term Tax-Exempt fund (VWSTX, news, msgs) (it's impossible to be more precise because the disclosure form lists holdings within ranges). The fund's holdings of tax-free municipal bonds mature, on average, in a little more than a year -- meaning that the fund should hold up well if rates rise.

The Cheneys held another $1 million to $5 million in Vanguard Tax-Exempt Money Market fund (VMSXX, news, msgs), which is practically risk-free and could benefit from continued increases in short-term interest rates. And the couple had between $2 million and $10 million in Vanguard Inflation-Protected Securities fund (VIPSX, news, msgs). The principal and interest payments of inflation-protected bonds rise along with consumer prices, making them good inflation hedges.


Expecting dollar drop?
The Cheneys also had between $10 million and $25 million in American Century International Bond (BEGBX, news, msgs). The fund buys mainly high-quality foreign bonds (predominantly in Europe) and rarely hedges against possible increases in the value of the dollar. Indeed, its prospectus limits dollar exposure to 25% of assets and the fund currently has only 6% of assets in dollars, according to an American Century spokesman.

The Cheneys' total assets could be as high as $94.6 million, according to the disclosure form. The vice president's advisers say the vice president pays no attention to his investments. His lawyer, Terrence O'Donnell, says outside money managers supervise the investments. "He has nothing to do with it," O'Donnell says.

[Warpy]

3. Now we know why they haven't done a fucking thing

to shore it up. They really DO want another Great Depression.

May this one blow up in all their piggy faces.

[Joanne98]

4. Great depressions are great for real estate fire sales....

The Cheney's will be on "Flip this House" 2 years from now...

[Warpy]

5. They're peachy for everybody who has more money than debt

unless they still want to buy food, clothing, cars, electronics, or just about anything else. Remember, as we go into one of those things, it becomes a vicious circle as more people fall into poverty: fewer customers first mean fewer retail jobs to sell to them, then fewer retail outlets, then fewer jobs ordering, shipping, and distributing merchandise, and so on and so forth. Until demand side economics get addressed the way they were by the New Deal, things have no chance of improving.

Focusing solely on demand side economics can cause or increase inflation; focusing on supply side economics (as we're seeing now) concentrates income into the fewest hands and eventually leads to a boom and bust cycle. We're about to see a bust.

And how.

[Joanne98]

6. Exactly!

[eliphaslevi]

7. We'll see their signs littered everywhere

"We Buy Houses
Foreclosures & Desparate sellers wanted!"

[tanyev]

8. Rat bastards.