Newsweek story about the strengthening dollar:
http://current.newsweek.com/budgettravel/2008/10/improbably_the_us_dollar_stren.html
The euro is $1.37, as of this morning. That's down from $1.44 when I was in Munich about a month ago and from record highs of around $1.60 earlier this year.
Mexico is the cheapest it's been since 1993 with the peso at .08 cents (roughly 12 pesos to $1).
The Canadian dollar, which crept above $1 in 2007, is back at 91 cents. The British pound is $1.76, and the Australia dollar has plummeted to 73 cents, just in time for spring down under.
Among major currencies, only the Japanese yen has bucked the trend and strengthened against the dollar.
16 years
More commentary here on Arthur Frommer's blog:
...the Aussie dollar has fallen to a dramatically low level against our currency. One U.S. dollar now buys $1.40 Australian, and to the U.S. visitor, everything in Australia has suddenly become 40% cheaper (just a few weeks ago, the two currencies were selling at near-parity).
XE.com is now saying $1 USD = $1.49 AUD.
16 years
Newsweek story about the strengthening dollar:
http://current.newsweek.com/budgettravel/2008/10/improbably_the_us_dollar_stren.html
IMHO, it's a self generating process again, as some mega-investors are speculating for the dollar due the government's $700B injection.... Will see how the exchange rate will look like when we receive the quarterly reports about the US economy! (however it might interfere with the election results and the new president's economy policy!) Japanese yen strongly depends on USD...
Also I rather think that the whole thing depends on just a bunch of people with loads of money in their hand... As soon the hedge funds collapsed, they took out their money from there and invested into oil... as soon as the oil bubble burst they invested into some currencies, now they exchange it to dollar which makes itself even stronger... Very smart moves but what makes me worried, the world's economy will suffer deeply while few people want to make extra profits...
16 years
More commentary here on Arthur Frommer's blog:
XE.com is now saying $1 USD = $1.49 AUD.
finally! it seems that every time i move currency to or from australia the dollar is going in the wrong direction. get to europe and the dollar is worthless, send money home and the dollar rises.
sending £s back to aus is finally worth it! goodbye credit card debt!
16 years
IMHO, it's a self generating process again, as some mega-investors are speculating for the dollar due the government's $700B injection....
I think this is weird because common sense tells you the Dollar should go down if so much extra money is pumped into the economy! :confused:
Also I rather think that the whole thing depends on just a bunch of people with loads of money in their hand... As soon the hedge funds collapsed, they took out their money from there and invested into oil... as soon as the oil bubble burst they invested into some currencies, now they exchange it to dollar which makes itself even stronger... Very smart moves but what makes me worried, the world's economy will suffer deeply while few people want to make extra profits...
I think a big part of the problem are all the pension funds. When the whole population puts money aside for their retirement, those funds have large amounts they must invest somewhere.
The way this is done in Germany and Austria avoids this problem. One big state-owned pension fund collects pension contributions from the working population and directly pays the retirees. That funds never has a lot of money to stash away somewhere, apart from rather small reserves.
16 years
I think this is weird because common sense tells you the Dollar should go down if so much extra money is pumped into the economy!
it is and in the longer run the dollar will continue to fall - but this bailout may have inspired a little more faith in a few people who had been clearing themselves of US dollar assets recently. they were cutting their losses and short selling but now may be expecting some of their assets to maintain value, so they buy back up again. if the bailout works (and it wont) then the dollars value will maintain for a while. at the end of the day, its all about faith/trust; moreso in these exceptional circumstances.
16 years
at the end of the day, its all about faith/trust; moreso in these exceptional circumstances.
True but in fact even weirder. Let´s hand over Wall Street to the Vatican, they are in the faith business since 2000 years. :confused:
16 years
True but in fact even weirder. Let´s hand over Wall Street to the Vatican, they are in the faith business since 2000 years. :confused:
not such a good idea - i think more than a few people have lost their faith in the catholic church :eek:
cant think why...
16 years
I think this is weird because common sense tells you the Dollar should go down if so much extra money is pumped into the economy! :confused:
No, rather the pump stops further falling and the total collapse of the financial market.
Think Marx: There is no capitalism without credit. Without this injection, economy stops, causing a third world crisis. That's why even EU wanted to bail out the US. (Except for Angela but she is a strict German! ;) )
However, this gov bailout is only the tip of an iceberg. The rest is a global bailout from those investors who have assets RTW. There are also speculations which will blow it away in a long term if it's overheated but so far these investors are taking away their money and spend it on the US market, if not paying their debts off if possible.
It's simple to understand if you think about the behaviour of the forex market. USD becomes stronger if investors buy more USDs, weaker if they sell it.
What happens now, investors sell their assets abroad (those currencies and stocks going weaker) and buy dollars (which becomes stronger) to spend it on the US market. It makes USD stronger so more people will buy it (speculators), especially those who have some losses already.
It will become a bubble due speculation and finally burst, just like everything else so far, because those investors keep forgetting about other players like China or Russia has more USD reserves than any of them. The same thing has happened with the oil prices, it went up as high as was worth for everyone producing it and when the non-speculators started selling more oil (prices couldn't go any higher), the bubble burst when the prices started falling and everyone wanted to sell right away. This is how the real economy regulates the financial market.
Today's US financial economy behaves like a 90 year old man in the hospital: his kidney stops, then when doctors save it, his liver, then his pancreas, his immune system then finally goes to the heart... This is because those speculators don't know where to put that virtual money they have now, so they speculate wherever it's possible.
I wonder how come the big qualifying firms like Fitch or others didn't give a downgrade (IMHO, deserves CCC) to US so far... hm... let me think: Because they are American? :rolleyes:
I think a big part of the problem are all the pension funds. When the whole population puts money aside for their retirement, those funds have large amounts they must invest somewhere.
I think it goes over pension funds. It is rather that US has been doped up for so long, it is addicted to it. That's one more result to thank to GWB who has rather played golf than setting up a real economical policy. Whoever wins the elections next month, he will get the worst situation anyone ever had. And if that person solves the problems, he will be in the history books as the great savior of the nation...
16 years
No, rather the pump stops further falling and the total collapse of the financial market.
Think Marx: There is no capitalism without credit. Without this injection, economy stops, causing a third world crisis. That's why even EU wanted to bail out the US. (Except for Angela but she is a strict German! ;) )
Angela´s mantra was: "This is an American problem. It hardly affects us. We told them to regulate the credit market, like we did with Basel II, but they didn´t. They can´t expect our help now."
Her goals were:
- Reinforce "faith" in our financial markets. Tell people the fire is on the other side of the Atlantic, we are safe, hoping this would become a self-fulfilling prophecy.
- Let the motherf*ckers over there burn. In the long run, it´ll be only good for Germany and Europe. She has a superb instinct how to gain and obtain power. If she hadn´t that, she wouldn´t be chancellor. Remember, she was the one who disposed of Helmut Kohl in her party, no less!
Apparently, this strategy failed. I have the impression Gordon Brown is leading the European pack now. This crisis may well save him his job - he was considered a dead man walking until very recently.
However, this gov bailout is only the tip of an iceberg. The rest is a global bailout from those investors who have assets RTW. There are also speculations which will blow it away in a long term if it's overheated but so far these investors are taking away their money and spend it on the US market, if not paying their debts off if possible.
It's simple to understand if you think about the behaviour of the forex market. USD becomes stronger if investors buy more USDs, weaker if they sell it.
What happens now, investors sell their assets abroad (those currencies and stocks going weaker) and buy dollars (which becomes stronger) to spend it on the US market. It makes USD stronger so more people will buy it (speculators), especially those who have some losses already.
You seem to assume that only American assets abroad are sold and the money is invested at home instead. This graph shows the amount of foreign money invested in the US almost equals the amount of US money invested abroad.
I don´t pretend to understand all that, but it seems to me what´s happening now is this: everybody sells assets everywhere because the credit market has dried up. So - this goes in both directions and doesn´t explain why the Dollar goes up. But then, I also think there is no rational explanation at all for fluctuations like that now.
I think it goes over pension funds.
Yes of course. It´s only a part of the problem IMHO. I think pension savings shouldn´t be invested at all in risky stuff like stocks, but that is exactly what happened. Pension funds are among the biggest investors though, so they have contributed to the doping-up of the markets. It´s not only the funds - I have two close relatives who are addicted to stock gambling. They can´t talk about anything else any more. These are both 60-year-old men who have hardly ever left Lower Bavaria. What are they supposed to know about Wall Street and global economy, with all due respect? I´m sure they have lost half of their money this year.
16 years
US dollar still getting stronger:
Good for European hostels? Bad for US hostels? Or will backpackers travel either way?
Related Pages
Log in to join discussion