Dollar lets give the baht a rest

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Dollar lets give the baht a rest

Post by Bump » November 7, 2007, 2:26 pm

What I thought was interesting was the French comment. " You don't have to weak the dollar to compete" Well I happen to think this as we see it is really by design. Many things could have been done in the past two years to strengthen the currency. Certainly there are factors that would do nothing but drive it down. However there were measures that could have been taken to slow the process down, they were not used why?

From Europe the US could be a very inexpensive vacation spot this year. I don't know how many remember it but about ten years ago, I saw a news program, where in people from Europe including the UK were going to New York to shop for Christmas. Why? Thier currencies were strong the dollar was not. Therefore cheaper to fly to New York then purchase at home. So not the first time we have seen this. Wonder how many will do the same this year? The offset may be the cost of fuel we will see.

Believe it or not America still produces things, the cost of those things have went down a lot on the world market, only because of the currencies exchanges.

It would take a lot to convience me this wasn't by design

The dollar turned around then it probably will again, but until after elections would be my guess.

"
Dollar Slumps to Record on China's Plans to Diversify Reserves

By Stanley White and Kosuke Goto

Nov. 7 (Bloomberg) -- The dollar slumped to a record low against the euro after a Chinese official said the government will favor stronger currencies as it diversifies $1.43 trillion of foreign-exchange reserves.

The currency declined to the weakest versus the Canadian dollar since it started trading freely, a 26-year low against the pound and a 23-year low to the Australian dollar. ``We will favor stronger currencies over weaker ones, and will readjust accordingly,'' Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing.

``We're likely to see further pressure on the dollar,'' said Thomas Harr, senior foreign exchange strategist in Singapore at Standard Chartered Plc, a U.K. bank that makes most of its profit in Asia. ``The potential for diversification is quite big. This is a structurally negative story for the dollar.''

The U.S. currency slumped to $1.4666 per euro, the lowest since the 13-nation currency debuted in January 1999, before trading at $1.4644 at 2:56 p.m. in Tokyo from $1.4557 late yesterday. It fell to $1.0990 per Canadian dollar, the lowest since Canada's currency was floated in 1950. The dollar traded as low as 113.99 yen, the first time below 114 since Oct. 29.

The dollar may fall to $1.50 against the euro, Harr said.

The decline helped drive the price of crude oil to a record and gold to a 27-year high, encouraging investors to buy assets in commodity-producing nations. The dollar's 9.8 percent drop against the euro this year boosted the competitiveness of U.S. exports, helping shrink the nation's trade deficit to $57.6 billion in August, the smallest since January.

French President Nicolas Sarkozy yesterday brought his concerns to the U.S., saying ``you don't need too weak a dollar'' to spur growth in the world's largest economy.

China's Reserves

Chinese investors have reduced their holdings of U.S. Treasuries by 5 percent to $400 billion in the five months to August. China Investment Corp., which manages the nation's $200 billion sovereign wealth fund, said last month it may get more of the nation's reserves to invest to improve returns.

``Cheng has a history of speaking out on a range of financial market and economic developments, and his comments are not always accurate,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.

Cheng's remarks on Jan. 30 that China's stock rally was a ``bubble'' caused the benchmark index to fall the most in almost two years on Jan. 31. The Shanghai and Shenzhen 300 Index, then over 2,500 points, has since climbed above 5,300. Cheng added later today that diversification doesn't mean buying more euros.

Against the pound, the dollar declined to $2.0947, the lowest since May 1981. The currency slid against the Australian dollar to 93.81 U.S. cents, the lowest since April 1984 from 92.87 U.S. cents. The U.S. currency also fell to as low as 1.1347 against the Swiss franc, the lowest since December 2004.

``This is an asset story and shows sentiment for the dollar continues to be quite negative,'' said David Forrester, currency economist at Barclays Capital in Singapore.

Federal Reserve

The dollar slid against the Australian dollar and the Norwegian krone as losses from subprime-mortgage defaults added to pressure on the Federal Reserve to lower its target for the overnight lending rate between banks to 4.25 percent next month. It declined to 5.3403 kroner from 5.3474.

The Reserve Bank of Australia raised its benchmark borrowing cost to 6.75 percent today, while traders added to bets Norway's central bank will increase its 5 percent deposit rate.

``The interest-rate outlook is dragging down the dollar against major currencies such as the euro and the Australian dollar,'' said Seiichiro Muta, director of foreign exchange in Tokyo at UBS AG, the world's second-largest currency trader. ``I cannot see the bottom of the dollar depreciation yet.''

Central Banks

Interest-rate futures traded on the Chicago Board of Trade show a 62 percent chance of a quarter-percentage point Fed rate cut on Dec. 11, compared with 6 percent a month ago. Citigroup Inc. may write down an additional $2.7 billion worth of subprime-related assets, CreditSights Inc. said yesterday.

Australian central bank Governor Glenn Stevens, announcing today's quarter-point rate increase, said inflation will exceed his target. Norwegian forward-rate agreements, a kind of interest-rate futures contract, gained yesterday on speculation the central bank will lift borrowing costs at least once more by the end of 2008. The Norges Bank next meets Dec. 12.

New Zealand's dollar rose to 78.75 U.S. cents from 78 U.S. cents on speculation a report tomorrow will show the unemployment rate remained at a record low, boosting the chance of another increase to the country's record 8.25 percent benchmark interest rate.

Subprime Loans

``The dollar is weak against a host of currencies, including the euro, the pound and the Australian dollar,'' said Mitsuru Sahara, senior currency sales manager at Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan's biggest publicly traded lender. ``We can't tell how much money banks will loose on subprime loans. The Fed is likely to cut rates again before the end of the year.''

Gains in the euro may be limited by speculation European economic growth is peaking out, reducing the need for higher interest rates.

The European Central Bank will keep its key rate at 4 percent tomorrow, according to all 61 economists surveyed by Bloomberg News. Data yesterday showed manufacturing orders in Germany fell more than expected in September.

``There is a European industrial complex which is now suffering from the euro being at such super expensive levels,'' said Peter Pontikis, treasury strategist at Suncorp-Metway Ltd. in Melbourne. ``The data all suggest you'll get a real slowdown. I'd be against the possibility of a rate hike.''

Europe's single currency will trade at $1.43 versus the dollar by year-end, according to the median forecast of 42 analysts and brokerages surveyed by Bloomberg News.

To contact the reporter on this story: Stanley White in Tokyo at [email protected] ; Kosuke Goto in Tokyo at [email protected]

Last Updated: November 7, 2007 01:00 EST "



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Post by aznyron » November 8, 2007, 10:21 am

Ray I can not ad any thing to your post I just want to keep it going to read what others have to say

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Post by Bump » November 11, 2007, 12:05 pm

Dollar Is Battered and Bruised, Not Yet Out: Michael R. Sesit

By Michael R. Sesit


Nov. 9 (Bloomberg) -- As the dollar tumbles, concern is growing that its weakness may augur the end of the U.S. currency's 62-year reign as the world's specie of choice for trade, financial transactions and central-bank reserves.

But to paraphrase Mark Twain, reports of the dollar's death have been greatly exaggerated. The dollar owes its position as the world's premier international currency to its status as a haven during times of turmoil, the absence of a suitable rival, weak domestic demand in other countries and plain old inertia. Geopolitics also play a role.

If the dollar falls from its perch, which currency might supplant it? Some folks figure the yuan. But currently that's a non-starter. China's currency isn't even freely traded.

The most likely candidate is the euro, a widely traded currency backed by deep capital markets, a respected central bank and a large economy. The 13 countries that use the euro constitute a $10.5 trillion economic bloc.

Still, Europe's common currency has drawbacks: The U.K. isn't a member of the euro area. That deprives the region of London, which arguably rivals New York as a global financial center. Frankfurt isn't in the same league.

The euro is also identified more with the European Central Bank than any single country and doesn't command the national support other monetary units enjoy. Italian politicians have suggested exiting the club, whereas no U.S. state has seceded since the Civil War ended in 1865. Moreover, European political union isn't on the horizon. And no nation-state has ever been built on the back of a central bank. It's always the other way around.

Military Midget

What's more, next to the U.S., the euro area is a military midget, and geopolitical muscle counts. It's a major reason why oil and other commodities are priced in dollars. Sterling's loss of reserve-currency status followed the U.K.'s loss of military might, its colonial empire and economic primacy.

The U.S. is also the world's buyer of last resort, and U.S. imports are a major engine of global growth. Other countries haven't developed sufficient domestic demand and thus rely on exports for growth and employment. To keep their exports competitive, Asian countries, especially, maintain undervalued exchange rates by buying hordes of dollars.

``Conventional theory says the dollar will only lose its dominance when countries become saturated with dollar holdings'' and stop buying and even sell dollars, Thomas Palley, Washington- based head of the Economics for Democratic & Open Societies Project, wrote in a Web posting last year. But ``countries have no incentive to sell dollars, as this would kill the golden goose of export-led growth.''

Record Low

The dollar fell to a record $1.4731 to the euro two days ago, and has sunk to multiyear lows against the currencies of the U.K., Australia, Canada, Sweden and Norway.

Buffeting the dollar are traders' suspicions that the U.S. mortgage crisis will ****** U.S. growth and prompt the Federal Reserve to cut interest rates further, while other countries reduce their dollar reserves. To be sure, the dollar's decline is eroding its reputation for stability and as a store of value. Some also suspect the Bush administration is purposefully pursuing a weak-dollar policy to boost exports.

Still, dollar depreciation is nothing new: The currency plummeted in 1977-79, 1985-88 and 1993-95. From 1978 to 1980, the need to attract foreign investors prompted the Treasury to sell $6.4 billion of ``Carter bonds,'' denominated in deutsche marks and Swiss francs.

`Exorbitant Privilege'

The dollar survived these episodes with its No. 1 status intact. The dollar's share of global official reserves fell from 79 percent in 1977 to 49 percent in 1992. Now it's back up to 65 percent, with the euro a distant second at 26 percent, according to the International Monetary Fund.

Reserve-currency status allows the U.S. to enjoy low interest rates and reduced transaction costs. It enables the U.S. to borrow large sums in its own currency, which French President Charles de Gaulle criticized as America's ``exorbitant privilege.''

And being able to deal in dollars makes doing business easier for U.S. importers, exporters, lenders and borrowers, while creating opportunities for U.S. financial institutions. It also boosts the demand for U.S. financial assets, pushing up stock and bond prices and driving interest rates lower.

Then there's seigniorage, technically the interest-free loan the U.S. receives from the millions of dollar bills held offshore. ``Printing a $100 bill is almost costless to the U.S. government, but foreigners must give more than $100 of resources to get the bill,'' Palley says. ``That's a tidy profit for U.S. taxpayers.''

U.S. Consumption

Because it allows the U.S. to amass huge trade deficits, unconstrained by market sanctions that other nations must contend with, Americans can consume more than they produce. ``If the dollar loses its reserve-currency status, the U.S. would magically have to move from an $800 billion trade deficit to a trade surplus so that the U.S. could earn enough euros to pay for its imports of oil and manufactured goods,'' Paul Craig Roberts, chairman of the Institute for Political Economy in Falls Village, Connecticut, wrote in a syndicated column almost two months ago.

Part of the explanation for the dollar's continuous run as the world's dominant currency is habit. ``There is a strong inertial bias in favor of using whatever currency has been the international currency in the past,'' economists Menzie Chinn of the University of Wisconsin and Jeffrey Frankel of Harvard University wrote in a 2005 paper. Sterling, for instance, continued to be regarded as the main reserve currency long after the U.K. ceased to be the world's superpower.

Inertia is a very thin reed on which to hang dollar dominance. Meanwhile, the currency's slide isn't winning any friends.

(Michael R. Sesit is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Michael R. Sesit in Paris at at [email protected]

Last Updated: November 8, 2007 19:05 EST

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Post by cookie » November 11, 2007, 6:03 pm

But Bush and the White House keep on saying that they always and still apply:
"THE STRONG DOLLAR POLICY".
Am I missing something?? :?

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Post by Bump » November 11, 2007, 6:06 pm

No your not missing a thing they are not telling the truth

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Post by jackspratt » November 11, 2007, 6:33 pm

ray23 wrote:No your not missing a thing they are not telling the truth
Oh my God! How far does this "not telling the truth" extend?

(For the troofers - please don't look at this an an invitation).

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Post by Bump » November 11, 2007, 7:14 pm

Pretty far I do believe, be glad when the current admoisration is history

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Post by Bump » November 13, 2007, 7:53 am

Dollar's Fall Collapses the American Empire; Bring Those 737 Overseas Military Bases Home!
By PAUL CRAIG ROBERTS

The US dollar is still officially the world's reserve currency, but it cannot purchase the services of Brazilian super model Gisele Bundchen. Gisele required the $30 million she earned during the first half of this year to be paid in euros.

Gisele is not alone in her forecast of the dollar's fate. The First Post (UK) reports that Jim Rogers, a former partner of billionaire George Soros, is selling his home and all possessions in order to convert all his wealth into Chinese yuan.

Meanwhile, American economists continue to preach that offshoring is good for the US economy and that Bush's war spending is keeping the economy going. The practitioners of supply and demand have yet to figure out that the dollar's supply is sinking the dollar's price and along with it American power.

The macho super patriots who support the Bush regime still haven't caught on that US superpower status rests on the dollar being the reserve currency, not on a military unable to occupy Baghdad. If the dollar were not the world currency, the US would have to earn enough foreign currencies to pay for its 737 oversees bases, an impossibility considering America's $800 billion trade deficit.

When the dollar ceases to be the reserve currency, foreigners will cease to finance the US trade and budget deficits, and the American Empire along with its wars will disappear overnight. Perhaps Bush will be able to get a World Bank loan, or maybe one from the "Chavez bank," to bring the troops home from Iraq and Afghanistan.

Foreign leaders, observing that offshoring and war are accelerating America's relative economic decline, no longer treat the US with the deference to which Washington is accustomed. Ecuador's president, Rafael Correa, recently refused Washington's demand to renew the lease on the Manta air base in Ecuador. He told Washington that the US could have a base in Ecuador if Ecuador could have a military base in the US.

When Venezuelan president Hugo Chavez addressed the UN, he crossed himself as he stood at the podium. Referring to President Bush, Chavez said, "Yesterday the devil came here, and it smells of sulfur still today." Bush, said Chavez, was standing "right here, talking as if he owned the world."

In his state of the nation message last year, Russian president Vladimir Putin said that Bush's blathering about democracy was nothing but a cloak for the pursuit of American self-interests at the expense of other peoples. "We are aware what is going on in the world. Comrade wolf knows whom to eat, and he eats without listening, and he's clearly not going to listen to anyone." In May 2007, Putin criticized the neocon regime in Washington for "disrespect for human life" and "claims to global exclusiveness, just as it was in the time of the Third Reich."

Even America's British allies regard President Bush as a threat to world peace and the second most dangerous man alive. Bush is edged out in polls by Osama bin Laden, but is regarded as more dangerous than Iran's demonized president and North Korea's Kim Jong-il.

President Bush has achieved his dismal world standing despite spending $1.6 billion of hard-pressed Americans' tax money on public relations between 2003 and 2006.

Clearly, America's leader and America's currency are poorly regarded. Is there a solution?

Perhaps the answer lies in those 737 overseas bases. If those bases were brought home and shared among the 50 states, each state would gain 15 new military bases.
Imagine what this would mean: The end of the housing slump. A reduction in the trade deficit.

And the end of the war on terror.

Who would dare attack a country with 15 new military bases in every state in addition to the existing ones? Wherever a terrorist turned, he would find himself surrounded by soldiers.

All of the dollars currently spent abroad to support 737 overseas bases would be spent at home. Income for foreigners would become income for Americans, and the trade deficit would shrink.
The impact of the 737 military base payrolls on the US economy would end the housing crisis and bring back the 140,000 highly paid financial services jobs, the loss of which this year has cost the US $42 billion in consumer income. Foreclosures and bankruptcies would plummet.

If this isn't enough to turn the dollar around, President Bush's pledge not to appoint an Attorney General if Michael Mukasey is not confirmed offers more promise. If the Democrats will defeat Mukasey's nomination, there are other superfluous cabinet departments that can be closed down in addition to the US Department of Torture and Indefinite Detention.

The American empire is being unwound on the battlefields of Iraq and Afghanistan. The year is two months from being over, but already in 2007, despite the touted "surge," deaths of US soldiers are the highest of any year of the war.

The Taliban are the ones who are surging. They have taken control of a third district in Western Afghanistan. Turkey and the Kurds are on the verge of turning northern Iraq into a new war zone, another demonstration of American impotence.

Bush's wars have endangered America's puppet regimes. Bush's Pakistani puppet, Musharraf, is fighting for his life. By resorting to "emergency rule" and oppressive measures, Musharraf has intensified his opposition. When Musharraf falls, thanks to Bush, the Islamists will have nukes.

American generals used to say that the wars Bush started in the Middle East would take 10 years to win. On Oct. 31 General John Abizaid, former commander of US forces in the Middle East, put paid to that optimistic forecast. Speaking at Carnegie Mellon University, Gen. Abizaid said it would be 50 years before US troops can leave the Middle East.

There is no possibility of the US remaining in the Middle East for a half century. The dollar and US power are already on their last legs, unbeknownst to Democratic leaders Pelosi and Reid who are preparing yet another blank check for Bush's latest request for $200 billion in supplementary war funding.

There isn't any money with which to fund Bush's lost war. It will have to be borrowed from China.

The Romans brought on their own demise, but it took them centuries. Bush has finished America in a mere 7 years.

Even as Gisele throws off the dollar's hegemony, Brazil, Venezuela, Ecuador, Bolivia, Argentina, Uruguay, Paraguay, and Columbia are declaring independence of the IMF and World Bank, instruments of US financial hegemony, by creating their own development bank, thus bringing to an end US suzerainty over South America.

An empire that has lost its backyard is finished.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration.
He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review.
He is coauthor of The Tyranny of Good Intentions.

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Post by Bump » November 13, 2007, 7:55 am

Well I remember that time frame amd my famous statement that if gas ever went to a dollar I would ride a bicycle, I lied I also remember odd and even license plate days to buy gas, the demise of the muscle car. You know somehow we survived.

You know maybe this guy has the right idea, if we shut everything else down. Someone else could be the bad guy. Russia may be right we should have learned from thier entry into Afghanastan.

Fifty years I seriously doubt it, they have been at this for over a thousand years now, with short breaks of peace to regroup and do it agian. I did a short stint in Kuwait about three years ago. A country that we actually succesfully rescued. You would think that we would be welcome, Not the case at all. This is a unique region one that will more then likley be at war, no matter what is going on.

As I recall America was an isolationist country prior to World War one. Our soldiers actually had to use broomsticks to play war to get ready for that one. Recently a Brit made it very clear to me all though America was a help in WW II it showed up late for the party. Even some fifty years later we have no Peace treaty in Korea. Vietnam I don't know a Vet that is proud of the outcome although they have every right to be proud of thier individual actions. As a Vet it doesn't bother me that we left, it bothers me about the people we left that trusted us. Most probably dont realize this but Vietnam didn't start as an unpopular war. It became that after years of fighting and losses, for some place that we shouldn't have been in the first place, sound familiar?

Are these these things right or wrong that is way beyond my understanding, but I do know this the possiblity of not going to Vietnam could very well mean that those of us in Thailand today could be living in a Communist country. Don't think so research the history here. This region has been at war for many many years. Today people are flocking to Vietnam, was it the right thing I have no idea. But then I enjoy my visits to Laos.

Outsourcing our industries a big mistake another way for a few to become even more wealthy at the cost of the average American. That one I do say was arrogance and greed on the part of a few. Who is really paying for the sub prime mess, is it the few greedy ones or is it everyone.

South America who developed thier oil, where are they today. Anyone want to bet that we are still sending financial aid to those contries. Maybe they should be sending some to us.

So I agree time for America to step back bring it assests home and take care of Americans.

But do any of you believe that another country won't step up when that happens, will it be China or Russia. Or will it be the Islamist. That's OK then the world can condem us for not doing anything again.

But the dollar will stengthen and that would be OK by me.

The war is a big enough folly, but how about borrowing money to fund other countries who condem us. Now that is the ultimate act of stupidity in my mind.

Ok I'm off my soap box, hopefully to never get back on it again.

So what going on with the dollar

One year and counting

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Post by aznyron » November 13, 2007, 9:41 am

Ray good post - I have to laugh at some of these poster they actually believe Bush does not lie
they actually attack you for saying Bush is not forthcoming on the USD
but they all were ready to tar & feather Clinton for lying about a BJ
Ray in my opinion this illegal war is causing our dollar to fall and why did I call it illegal war because the Bush adm lied to us to get us in to war he is in competition with his daddy
the problem with baby bush is he could not wear his daddy dirty socks his dad was a combat fighter pilot some thing baby bush does not have the balls or the brains to do he wrecket every business he was in charge of and the Republican party gaves us this moron and daddy bush gaves us cheyney to help his illirate brain dead from drugs & alcohol son and the past 7 years proves it

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Post by UdonExpat » November 13, 2007, 10:21 am

We'll be rid of Bush in a little over a year, but who's going to replace him? There isn't a single person in either party that gets me excited. It all seems like a another choice of the lesser evil.

How the dollar will fare in the next administration is unknown at this point and I'm not hopeful that there will be a turnaround. The forces against the dollar are great and our debt is so large that it seems a monumental task. Not to mention the constant drain of Irag that isn't likely to go away regardless of any promises candidates make.

Partisanship will probably increase after the next election and congress may be even less productive than its current inability to do anything meaningful.

At this point I'm more confident in the baht than the dollar. With China indicating that it's going to diversify its currency reserves it's obvious that they can see the writing on the wall and are going to reduce their exposure. If the balance of trade deficit continues and the Chinese exposure to dollars gets small enough, they will figure they can handle the collapse of the dollar and that will cause a great revaluation of the dollar. I have also been reading about some nations' desire to change the currency of oil to euros.

I figure I've got a few years to get my assets out of the dollar and into other currencies. There's not much I can do about my pensions, but I hope to be able to get by even if their value is greatly reduced. Of course, my pessimism may be misplaced as I figured the whole system was going to collapse in the late 60's or early 70's, but it only hiccupped.

It may be such a case again. But regardless, the departure of Bush will be no loss.

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Post by Bump » November 14, 2007, 11:05 am

I hope they nail this lying sucker to the wall. At least the truth about Bush's position is in the article.
Paulson Becomes Boxed-in by `Strong' Dollar Chant (Update2)

By Christopher Anstey and Kevin Carmichael

Nov. 13 (Bloomberg) -- As U.S. Treasury Secretary Henry Paulson prepares to meet counterparts representing the world's biggest economies, he carries some extra baggage on the plane to Africa.

It's the 13-year-old ``strong'' dollar mantra.

Paulson, like his four predecessors, has stuck with former Treasury chief Robert E. Rubin's phrase that a ``strong'' dollar is in the U.S. interest. Officials repeated the phrase whether the dollar was rising or falling. Now, Paulson is under pressure from European policy makers to more forcefully defend the currency after it fell to a record low last week.

``It's increasingly urgent that the U.S. bolsters its rhetorical position,'' said Ernest-Antoine Seilliere, president of BusinessEurope, the European Union's employers' federation. Paulson should avoid a ``collapse of the U.S. dollar,'' he said.

One option may be to express confidence the currency will retain its dominance in central-bank reserves and, as Paulson did last week, predict stronger American growth, analysts said.

That strategy may meet with limited success because the Federal Reserve is cutting interest rates, while banks in Europe and Asia are either tightening or keeping them unchanged. Moreover, words may carry little weight in a market that's swollen to $3.2 trillion a day.

Paulson, 61, departs today for a six-day trip to Africa that features a gathering of finance ministers and central bankers from the Group of 20 near Cape Town. The G-20 groups the largest developed countries, including the U.S. and Germany, with emerging markets such as China and India.

Top of Agenda

Currencies, oil prices and inflation will top the G-20's agenda, South African central bank Governor Tito Mboweni told reporters on Nov. 8.

Japanese Prime Minister Yasuo Fukuda said in an interview with the Financial Times published today that the yen's gains aren't desirable and warned traders not to make speculative bets on the currency.

Canadian Finance Minister Jim Flaherty will tell his counterparts that Canada is bearing a disproportionate share of the drop in the dollar and will ask China and other nations to accept more of the burden, one of his aides told reporters today in Ottawa on condition of anonymity.

Message for China

European finance ministers gathered today in Brussels and telegraphed a similar message on China. Luxembourg Finance Minister Jean-Claude Juncker also said ``recent sharp moves in exchange rates are unwelcome,'' referring to the euro's climb.

European Central Bank President Jean-Claude Trichet has revived rhetoric blasting excessive moves in the euro. He said at a Frankfurt press conference last week that ``brutal'' fluctuations are ``never welcome,'' emulating language used when the euro soared in 2004.

Trichet typically reiterates comments from Group of Seven statements when asked about exchange rates. When he veers from that line, traders and counterparts can quickly grasp his message.

The euro climbed to $1.4752 on Nov. 9, the strongest since its 1999 debut. The currency has appreciated 11 percent since the start of 2007 and 45 percent in the past five years. It traded at $1.4616 at 10:14 a.m. in New York.

`Frustrated'

``The Europeans will be frustrated,'' said Peter Dixon, an economist in London at Commerzbank AG, Germany's second-biggest bank. ``European competitiveness and profitability are going to be badly damaged.''

Paulson doesn't have Trichet's flexibility to express concern at the speed of the dollar's move, analysts said. Any substantive change from the ``strong dollar'' phrase raises risks that the shift could send it plunging.

When Paul O'Neill, President George W. Bush's first Treasury secretary, told a German newspaper that ``we don't follow, as is often said, a policy of a strong dollar,'' the U.S. currency slid 1 percent versus the euro. He later clarified that he did favor a ``strong'' dollar.

O'Neill's successor, John Snow, added a phrase that the Bush administration also believes exchange rates ought to be set freely in open markets, based on fundamentals.

Paulson on two occasions last week added his own words to his support for a strong dollar and market-set exchange rates based on fundamentals. On Nov. 8, he said that the U.S. ``will continue to grow'' and expressed optimism that officials' commitment to growth will inspire ``confidence in our economy.''

A day later, he told reporters ``The dollar has been the world's reserve currency since World War II and there's a reason.''

`Marginal Change'

``It was a marginal change,'' said Sophia Drossos, a currency strategist in New York at Morgan Stanley, who used to help manage the Fed's currency reserves. ``He didn't have to point those things out if he didn't want to. It was a way to show he's not asleep at the wheel.''

While a weakening dollar has helped sustain U.S. growth through the worst housing recession since 1991, analysts said there are reasons for Americans to favor a stronger currency, similar to the time of the 1994-1995 birth of the strong-dollar policy.

Inflation

The falling currency threatens to stoke inflation at a time when the Fed has been lowering interest rates to buttress growth. Chairman Ben S. Bernanke said last week the Fed will ensure the weaker dollar doesn't feed through to broader prices. There are also questions about the dollar's status as the dominant reserve currency.

``It appears that the U.S. Treasury has consistently moved'' in the direction of resurrecting the original attributes of a strong-dollar policy, said Thomas Stolper, an economist at Goldman Sachs Group Inc. in London.

Still, any shifts in language may have limited impact on exchange rates, particularly because the dollar is losing its yield premium as the Fed cuts interest rates, analysts said.

Traders now buy and sell an average of $3.2 trillion a day in the foreign-exchange market, compared with $718 billion in 1989, Bank for International Settlements figures show.

To contact the reporter on this story: Chris Anstey at [email protected]

Last Updated: November 13, 2007 11:27 EST

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Post by Bump » November 17, 2007, 1:50 pm

I really don't know what to say at this point jump in anybody.
Paulson Signals He Expects U.S. Dollar to Rebound (Update3)

By Kevin Carmichael and John Brinsley

Nov. 16 (Bloomberg) -- Treasury Secretary Henry Paulson signaled to U.S. trading partners that the dollar will rebound from a record low, predicting it will reflect ``long-term strength'' in the American economy.

``He's trying to instill a bit of confidence in the market, in the dollar,'' said Jens Nordvig, senior global markets economist at Goldman Sachs Group Inc. in New York. ``That's the purpose of this. This is what European policy makers want to hear, Canadians as well.''

Paulson, traveling to Cape Town, South Africa, to meet with his counterparts from the world's biggest economies, today said ``our economy, like any other, goes through ups and downs.'' He told reporters traveling with him that the six-year expansion will continue and that growth will ultimately be reflected in the value of the nation's currency.

``I believe that we are going to continue to grow and that our economy is going to continue to grow,'' he said. ``Its fundamental, long-term strengths will be reflected in currency markets.''

European, Canadian and Japanese officials have blasted volatility in exchange rates that took the dollar to its weakest since it was floated in 1971. Paulson's comments may help ease tensions as finance ministers and central bankers from the Group of 20 nations gather tomorrow and President George W. Bush meets today with Japan's Prime Minister Yasuo Fukuda.

World's Reserve Currency

The dollar fell $1.4656 per euro at 3:19 p.m. New York time, from $1.4613 yesterday. The U.S. currency rose to 110.76 yen from 110.30 yen.

Paulson's efforts to strengthen his rhetoric began Nov. 8, when he said ``the U.S. has a very competitive, strong economy that's proven itself over many years.'' The next day, he told reporters in Washington ``the dollar has been the world's reserve currency since World War II and there's a reason.''

The remarks add to language advocating a ``strong dollar'' that Treasury secretaries have repeated for the past 13 years, whether the dollar was rising or falling. He repeated his support for a ``strong dollar'' today.

``Hank Paulson knows the markets pay very close attention to everything he says,'' said Callum Henderson, head of global currency strategy at Standard Chartered Bank in Singapore. ``Washington is getting the message it has to change its rhetoric.''

Before the dollar's decline accelerated a month ago, Paulson and Bush repeatedly hailed record U.S. exports as a bright spot in a slowing economy.

Surging Exports

American shipments abroad, fueled partly by a weaker currency, climbed 14 percent to a record $140.1 billion in September, narrowing the trade deficit to the smallest gap since May 2005.

Other Bush administration officials are paying heed to the shrinking trade gap and declining investment in the U.S. ``As long as such reversals are gradual, most economists believe that the adjustment is not problematic and potentially even healthy,'' Edward Lazear, chairman of the White House's Council of Economic Advisers, said in a speech in Chicago today.

The shift in trade patterns threatened to slow growth in Europe, Canada and Japan, and their governments responded.

Fukuda said the yen's gains aren't desirable and warned against speculative currency bets in an interview with the Financial Times published three days ago.

`Brutal'

European Central Bank President Jean-Claude Trichet last week said ``brutal'' currency moves are ``never welcome,'' reprising language he used when the euro climbed in 2004. French President Nicolas Sarkozy told American lawmakers Nov. 7 that the U.S. must support the dollar or risk triggering a trade war.

In Canada, where a drop in exports caused the nation's trade surplus to dwindle to its smallest since 1998 in September, Finance Minister Jim Flaherty said last week that he was ``concerned'' about the soaring Canadian dollar. Bank of Canada Senior Deputy Governor Paul Jenkins said Nov. 14 that the U.S. currency's drop threatens ``rising protectionist sentiment.''

Paulson, who is on a six-day tour of Africa, said yesterday he expected to discuss exchange rates at the Nov. 17-18 meeting of the G-20, which includes the largest developed nations and emerging markets such as China and India.

The U.S. currency has dropped about 11 percent so far this year, based on the Federal Reserve's U.S. Trade-Weighted Major Currency Index. It fell this month to its weakest against the euro since the European currency's debut in 1999, the lowest against Canada's dollar since it was floated in 1950 and to a 26-year low versus the pound.

G-20 Talks

``I have followed the markets,'' Paulson said. ``I follow the press. I've heard what people are saying. I would expect that currencies will be one of the areas discussed.''

Still, analysts said shifts in language aren't likely to cause lasting movements in the $3.2 trillion a day foreign- exchange market.

Bush's previous Treasury secretaries, veteran chief executive officers of industrial companies, were sometimes associated with weaker endorsements of the ``strong'' dollar policy.

John Snow, Paulson's predecessor, told reporters May 17, 2003, that ``what you want to be strong is you want people to have confidence in your currency.'' That means it's accepted as a store of value and is hard to counterfeit, he said.

Paul O'Neill, Bush's first Treasury chief, sent the dollar down in February 2001 when he told a German newspaper that ``we don't follow, as is often said, a policy of a strong dollar.'' Treasury officials later clarified that he did favor a ``strong'' dollar.

Paulson is a former CEO of Goldman Sachs, like Robert E. Rubin, credited with fixing the ``strong'' dollar mantra as a chant for his successors.

Paulson ``is saying you have to take care of the fundamentals and the currency will'' follow, said Bradley Shairson, head of currency and derivatives at Union Bank of California in Los Angeles. ``I don't see how his counterparts could be upset.''

To contact the reporter on this story: Kevin Carmichael in Cape Town at [email protected]

Last Updated: November 16, 2007 15:24 EST

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Post by Bump » December 10, 2007, 12:38 pm

The dollar has been easing up quietly, us dollar holders can only hope the Fed doesn't cut rates again.
We will know if a few days.
Fed's Inflation Measure Says Rates Can't Fall as Traders Expect

By Liz Capo McCormick and Sandra Hernandez

Dec. 10 (Bloomberg) -- The key to whether the Federal Reserve continues to cut interest rates after this week may hang on the wall behind economist Brian Sack's desk in Washington.

Sack, head of monetary and financial market analysis at the Fed in 2003 and 2004, uses a chart that plots forward rates measuring investor expectations for inflation in five years. The gauge is so accurate that Sack and his colleagues persuaded the central bank to use it to help set policy. The chart is autographed by former Fed Chairman Alan Greenspan.

Right now, it shows current Fed Chairman Ben S. Bernanke may have less room to lower borrowing costs than investors in Treasuries anticipate, potentially setting bondholders up for a fall. The expected inflation rate, which Sack says replicates what Fed officials use, reached 2.91 percent last week, the highest since 2004, when the central bank began the first of an unprecedented 17 rate increases. The measure was at 2.79 percent on Nov. 1.

``One of the defining features of the Bernanke Fed to date is its emphasis on measures of longer-term inflation expectations,'' said Sack, whose partners at Macroeconomic Advisors include former Fed Governor Laurence Meyer. ``The Fed is willing to tolerate short-run movements in inflation, but only as long as those movements don't appear to be dislodging long-run inflation expectations.''

Any evidence that accelerating inflation is becoming entrenched may heighten the Fed's debate as policy makers consider cutting rates to keep the worst housing market in 16 years and mounting losses in securities related to subprime mortgages from tipping the economy into recession.

`Inflationary Pressures'

Futures on the Chicago Board of Trade show a 100 percent chance the Fed will lower its target for the overnight lending rate between banks by at least a quarter-percentage point to 4.25 percent, the third cut since September. The chances are at least 50 percent that the Fed will cut again at its next two meetings, on Jan. 30 and March 18, to as low as 3.5 percent.

The gauge used by Sack, dubbed the five-year five-year forward breakeven inflation rate, suggests bets on lower Fed funds rates may be too bold. The fact that the rate stayed steady for much of the past two months as pessimism about the economy grew bolsters that view, said Michael Pond, an interest- rate strategist in New York at Barclays Capital Inc., one of the 20 primary dealers of U.S. government securities that trade with the Fed. A cooling economy typically tempers inflation concerns.

``The market, by keeping the same inflation expectations while lowering growth expectations, is implying there are inflationary pressures,'' Pond said. He held to that view even as the forward rate fell last week.

Breakeven Rate

Bond investors are demanding about 1 percentage point more in yield to own Treasuries maturing in 10 years than due in two years to compensate for the risk that consumer prices will accelerate. There was no difference as recently as June.

Sack and other analysts derive the measure of inflation expectations from yields on five- and 10-year Treasury Inflation Protected Securities and Treasuries.

Five-year TIPS yield 2.15 percentage points less than five- year notes. This so-called breakeven rate is the average inflation rate investors expect over the next five years. The forward rate projects what the breakeven will be in five years, smoothing blips in inflation expectations from swings in oil prices or other events.

The five-year TIPS' breakeven rate rose to a six-month high of 2.47 percent Nov. 27, the week after oil climbed to a record $99.29 a barrel, from about 1.9 percent on Aug. 31. As crude fell to a six-week low on Dec. 6, the breakeven rate declined and Sack's measure dropped to 2.85 percent.

Fed's `Playbook'

Investors seeking a haven from subprime-related losses have looked past signs of inflation, driving the yield on the benchmark 3 1/8 percent note maturing in November 2009 to 2.79 percent on Dec. 4, the lowest since 2004.

Bonds fell last week as President George W. Bush and Treasury Secretary Henry Paulson unveiled a plan to freeze interest rates on some subprime mortgages to prevent thousands of Americans from facing foreclosure on their homes.

The two-year note yield, which is more sensitive to changes in Fed policy than longer-term securities, rose 9 basis points to 3.1 percent as its price fell 6/32, or $1.88 per $1,000 face amount, to 100 1/32. The yield on the benchmark 10-year note climbed 16 basis points to 4.11 percent. A basis point is 0.01 percentage point.

``The Fed has recently had to change its playbook slightly to address stability,'' said John Brynjolfsson, who runs the $11.3 billion Real Return Fund at Pacific Investment Management Co. in Newport Beach, California. ``I don't think the Fed has a choice because the gravity of the situation domestically is clear.''

Dwindling Bets

Bill Gross, who manages the world's largest bond fund as Pimco's chief investment officer, said last week the Fed may drop its target below 3 percent to support growth.

The five-year forward rate is among the Fed's ``weapons'' in modeling the economy, alongside measures of output and productivity, Brynjolfsson said.

Bernanke mentioned the forward rate in a 2004 speech. Simon Kwan, a vice president at the San Francisco Fed, singled out the measure in a 2005 report, saying it ``captures the market's assessment of how well the Federal Reserve promotes price stability in the long run.''

Bets on a half-point Fed cut tomorrow dwindled last week after the Labor Department in Washington said payrolls rose by 94,000 in November. Economists had forecast a rise of 80,000, according to the median of 82 estimates in a Bloomberg survey.

Gaining Steam

Most analysts expect the economy to gain steam through 2008. Growth will slow to 1.5 percent this quarter from a 4.9 percent annual rate last quarter, and rise to 2.6 percent by 2009, according to the median forecast in a Bloomberg survey from Nov. 1 to Nov. 8.

The dollar, which is poised to depreciate against the euro for a second straight year, is also fueling inflation concerns. The currency's drop and oil's climb pushed import prices up 1.8 percent in October, the most in 17 months.

The government may say this week that consumer prices, which set TIPS rates, increased 4.1 percent last month from this year's low of 2 percent in August and the biggest rise since July 2006, according to the median estimate of 19 economists. Food, imports and energy prices may raise inflation expectations, Bernanke said in a Nov. 30 speech in Charlotte, North Carolina.

Not Going Away

``Inflation will not go away as an underlying concern for the Fed, and that is one reason we are expecting a 25-basis- point cut, rather than 50 basis points,'' said Sarah Hewin, a senior economist in London at American Express Bank Ltd., a unit of credit-card company American Express Co. ``For now, growth takes priority.''

A Commerce Department index tied to spending patterns that excludes food and energy costs, the Fed's preferred measure, increased 1.9 percent in October from a year earlier. That matched the upper end of the 1.7 percent to 1.9 percent range the Fed projects for the next two years, according to estimates released last month.

The current level of the five-year five-year breakeven inflation rate has the Fed ``on yellow alert,'' Sack said. ``It is on their radar screen.''

To contact the reporter on this story: Liz Capo McCormick in New York at [email protected] ; Sandra Hernandez in New York at [email protected] .

Last Updated: December 9, 2007 10:58 EST

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Post by Bump » December 12, 2007, 12:44 pm

BREAKING NEWS

Well it could have been a lot worse and obviously the markets wanted the government to bail then out big time didn't happen. You know there are prices to be paid and the soone we pay them the sooner we will have a recovery

We are not going to change history bussiness or the economy can not have growth every year forever. There has always been downward adhustments.

Now lets see what a 1/4 % does to the dollar?
US Fed lowers US interest rates

Washington (dpa) - The Federal Reserve lowered its benchmark interest rate Tuesday to 4.25 per cent from 4.50 per cent, seeking to ease fallout from the subprime mortgage crisis and avoid a recession.


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Post by aznyron » December 12, 2007, 12:58 pm

jackspratt you and a quite a few others in here voted for Bush only because there was a R at the end of his name.
and now you want to defend him on all his mistakes because you can not admit you made a wrong choice in voting for him. just like a typical republican always pointing the finger else were it his or her fault. you bring up Hillary health care that failed when she was first lady but none of you look to see why it failed and who was behind getting it failed it was your banks & insurance co. and the AMA which none of them has your best interest only theres so you all go voting the R ticket and get hammered in the end and cry it the D. fault because now they have control in congress
well Bush had full control for 6 years and look what he done he failed in every thing 100%
he and his VP should have been thrown out on the butts in 2004 and Kerry should have been President but once again your party stooped to the dirtiest politics ever by calling Kerry war record a out right lie when you all knew it was true he did earn every one of his medals

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Post by Bump » December 12, 2007, 9:58 pm

SCB 33.52

Pretty good hit for a 1/4 % glad it wasn't more.

But there are a lot of wild cards out there they are now allowing $ 20 K cash to be brought wihtout declaring it. Thats twice as much a before. Wonder why?

Inflation is starting show it's ugly head here. How long can the hold price controls on essentials and continue letting food producers absorb the costs.

Will the election solve the political uncertainty the Thai's don't seem to think so.

From what I read imports are getting to expensive in the states, so how much longer will the people there keep buying. What happens when the worlds largest economy tightens belt.

The world wants a stronger dollar this is not helping them either.

Certainly interesting times we live in

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Post by jackspratt » December 12, 2007, 10:49 pm

aznyron wrote:jackspratt you and a quite a few others in here voted for Bush only because there was a R at the end of his name.
and now you want to defend him on all his mistakes because you can not admit you made a wrong choice in voting for him. just like a typical republican always pointing the finger else were it his or her fault. you bring up Hillary health care that failed when she was first lady but none of you look to see why it failed and who was behind getting it failed it was your banks & insurance co. and the AMA which none of them has your best interest only theres so you all go voting the R ticket and get hammered in the end and cry it the D. fault because now they have control in congress
well Bush had full control for 6 years and look what he done he failed in every thing 100%
he and his VP should have been thrown out on the butts in 2004 and Kerry should have been President but once again your party stooped to the dirtiest politics ever by calling Kerry war record a out right lie when you all knew it was true he did earn every one of his medals
Ronnie, I think you are starting to lose the plot a bit. You surely have mistaken me for someone else.

Firstly, I am Australian, so voting for Bush, or anyone else in the presidential election, is not an option for me.

Secondly, as many of my good friends on this forum eg Ricohoc, ray, Stan etc, can testify, I am one of the great Bush "haters" of this world.

I have been accused of many terrible things before in my life, but nothing as bad as having voted for Bush. Can you please send me your full name and address by PM so I can consult my lawyers about commencing a libel action against you :D

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Post by aznyron » December 13, 2007, 11:36 am

sorry Jack what can I say I just turned 70 I guess the old alzheimer is setting in
my statement stays just the name is changed LOL

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Post by Bump » December 13, 2007, 11:45 am

Sorry can't remeber what we were talking about :oops: :lol: :lol: :lol:

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