Dollar to Collapse?

[nadinbrzezinski]

Dollar to collapse?
Posted by Ambrose Evans-Pritchard on 12 Jul 2007 at 16:48
Tags: Economics, dollar, World economy, Demographics, Currency markets
Disregard all hysteria. The ailing Greenback will not collapse this year, not in ten years, not in twenty years, not in half a century. There is no credible currency against which it can collapse. (Unless you count gold). None of the world's rival power blocs have the economic and demographic depth to challenge American dominance.


Built to last: the US dollar

Yes, we have a dollar rout on our hands. The markets have suddenly begun to discount a nasty crunch in the US as the subprime debacle spreads through the credit markets. The prospect of rate cuts by the Federal Reserve is drawing closer, knocking away the dollar's yield prop. Investors have switched reflexively to the euro as the default currency.

http://blogs.telegraph.co.uk/business/ambrosevanspritchard/july07/willtheusdollarcollapse.htm

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Ok for all of you who posted yesterday that our "fearless leaders" were too harsh on the Chinese

This is certainly a shot across the bow

[JDPriestly]

1. Never say never. It's dangerous.

The dollar could collapse. It depends on how you define "collapse," but the dollar could lose a lot of value. It has already lost a lot of value against the Euro. It is way overvalued. That is what Walmart banks on.

[nadinbrzezinski]

2. Well me and Hartmann are thinking off

the Weimar Republic kind of a scenario

And by the way... where are our fearless leaders saying a thing about it, well they kind off said such yesterday durign the debates, but over the last six years

I'm so sick and tired of politics before country

[JDPriestly]

9. Thanks for bringing up the Weimar Republic.

I did a lot of research on the great German inflation. Americans just don't realize. Imagine a currency becoming worthless so quickly that the cost of the heating bill on an apartment was many times that of the contractually agreed rent. The landlords went to court begging the judges to rewrite their contracts so that the landlords would not lose their shirts and their properties. The judges obliged -- and so was born an interpretation in the German courts of the period that the implied (and codified in Germany) covenant of good faith compelled revision of the contracts. This concept influenced Lewellyn who was the leading author of our Commercial Code. Thus, our Commercial Code contains a section on the covenant of good faith. But our courts are not supposed to rewrite contracts. Therefore, should we have runaway inflation a la the Weimar Republic, our landlords and others caught up in long-term contracts (like 10-year leases or 50-year ground leases) would really be hurting.

Americans do not study history to our peril.

[ben_meyers]

5. Just the opposite

I put in an order for 1000 shares of TGT last night. Target doesn't get 99% of their stuff from China like Walmart does. I guess the "smart money" saw that too! Look at the charts.

[Vilis Veritas]

10. The dollar has value?

Isn't the dollar a nothing note for the last several decades - propped up by agreements between the bankers and the fed?

Peace.

[JDPriestly]

19. True. True. But nothing's something or so they seem to be saying.

[enid602]

3. Ah, yes

Ah yes. The old 'we don't need to manage our currency because the rest of the world is ill-served if our currency collapses' school of thought.

[nadinbrzezinski]

4. Well it is the US Dollar you know and the Empire

didn't the brits have the same school of thought over the Sterling?

(oh never mind)

[Speck Tater]

6. The article's conclusion is that a dollar collapse is IMPOSSIBLE. US is too wonderful.

The article waxes poetic about the intrinsic strength of the US economy:

quote:

No, the 21st Century will be the American century, just like the 20th Century. Americans may have to tighten their belts a bit after all the sins of Alan Greenspan and the Clinton-Bush debt generation. But the dollar will still be the world's reserve currency long after the euro has disappeared and the yen has been forgotten...

[nadinbrzezinski]

7. Well, I can search for historical data

on how the Sterling was never going to collapse either

I know how it waxes and I know how wrong this is historically

[Speck Tater]

8. Exactly! The US is NOT exempt from decline and fall. (nt)

[ProfessorGAC]

12. Sorry. But, You're Thinking About This All Wrong

The dollar is irrelevant. At this point in history, individual macroeconomies are irrelevant. Everything is so interconnected now, that the collapse of one big economy collapses everything. There is no danger of collapse of anybody significant, because the rest of the world cannot sustain their own economic health if some big player collapses.

This whole argument is moot. Nobody of any significane is going to experience collapse.

The economy does not work that way anymore.
GAC

[CountAllVotes]

13. right you are ProfessorGAC

:hi: and yes, we are living in a GLOBAL ECONOMY these days.

If the USA goes, so goes the rest of the world. Like a house of cards it will collapse. I do not see this happening.

:kick:

[Deja Q]

16. Count my voice in too.

[hunter]

17. There's a gentleman's agreement to prop up the dollar.

And the gentleman will do that until they don't.

[Alcibiades]

11. One of the posters in the comments blasts this guy to smithereens

one Johan de Meulemeester pretty much discredits him right here:

"The brief entry on Wikipedia tells us that Mr. Ambrose Evans-Pritchard was previously the Telegraph's Washington bureau chief.

"Evans-Pritchard became known for his stories about President Clinton, the 1993 death of Vincent Foster, and the 1995 Oklahoma City bombing. He is the author of The Secret Life of Bill Clinton (1997) Before joining the Telegraph, he wrote about Central America for The Economist."

He's not an economist, but, sure, he is a journalist who did write for the Economist.

He fails to address seriously the addiction to debt this nation's economy is facing. With Bush's spending on his ideologically driven apocalypse in Iraq, our public and private debt, the Chinese simply own us, his "argument" that China is aging notwithstanding. Once the Chinese (and the Saudis et. al. but that's another story) determine that they can no longer sustain our binge, or it's not in their interest, the party is over. Not tomorrow, not next week, but someday.

The funny thing is, this guy's a brit. You'd think he'd be aware of the weaknesses of Empire, both military and financial. Some of his remarks even here reflect that his "analysis" is based on an ideological attachment to the US and the dollar, which I find strange--certainly, American capitalism itself has no strong ideological attachment to the dollar, or any currency, so long as it is readily convertible.

I did enjoy how the comments section devolves into name-calling between continental Europeans and UK nationalists.

[KamaAina]

15. Yup, Evans-Pritchard is a far-right nutjob

his stories were often parroted by ABC Radio news* right after the Monica thing broke.

The book "The Secret Life of Bill Clinton" comes to us from uber-right Regnery Publishing. 'Nuf ced.

edit: caps

[Javaman]

14. Well, I got a new wallet just incase...

[Xithras]

18. There's an upside to economic collapse.

When we're all making a $1000 worthless bucks an hour to afford $900 a gallon gasoline and a $1500 pack of hotdogs for dinner, paying off our $2000 a month, $500k mortgages won't seem like such a big deal! Fixed debt will lose value just as quickly as the dollar.

Assuming we still HAVE jobs, of course.