U.S., allies reach compromise on dollar (Salon)

[plurality]

http://www.salon.com/news/wire/2004/02/07/dollar/index.html

Feb. 7, 2004 | BOCA RATON, Fla. (AP) -- The United States and its allies softened differences Saturday over whether to let the dollar fall freely under market pressures or prop it up with government intervention. A joint statement allowed all sides to claim at least partial victory.

The Bush administration won support for retention of language supporting "more flexibility" in exchange markets, a phrase first used by the Group of Seven wealthy countries last September.

The G-7 endorsement of flexibility has been interpreted by currency traders as giving them a green light to push the exchange value of the dollar lower without fear that the United States or other members of the G-7 would try to fight the moves with massive government intervention to brake the dollar's decline.

The administration is counting on a declining value of the dollar to boost U.S. exports by making them cheaper on foreign markets. Stronger export sales are expected to lift the fortunes of America's battered manufacturing companies, who have been forced to lay off 2.8 million workers over the past 3 1/2 years.

Keep selling those dollars folks. Soon all you'll be able to use 'em for is to wipe your ass.

[UpInArms]

1. better hang on to your hats, folks

it looks like it's going to be a wild ride.

[teryang]

2. Papering over the cracks in the edifice

America's battered manufacturing companies have been forced to lay off 2.8 million workers? Where do they come up with this garbarge? Outsourcing jobs and building factories in Malaysia, China and other wage slave states is a deliberate national policy choice. Don't they listen to Lou Dobbs? Even that die hard sees the light. Corporate exploiters don't give a shit about the country or its citizens. He's been beating this drum quite a bit for those who don't read. Everyone in America should know it by now.

Snow is full of it isn't he? They expect Argentina to screw its people twice? The American "recovery" is due strictly to a huge bolus of military spending based on the spindly legs of debt and social security revenues being converted to military use.

Looks like the green light is on for a weaker dollar. I'll be interested in the price of gold when the Asian markets open. I don't read this statement as any consensus. Japan and the US will continue their dance, while the Europeans try to figure out their next move.

[UpInArms]

3. I would assume that the Europeans

and the Russians and every other country that has a choice, will begin untying the currencies from the dollar in the very near future.

China and Japan may become our only trading partners.

VooDoo Economics round two -

now you see it - now you don't.

[teryang]

4. I thought they might try some other reverse psych

...instead of worrying that the fall of the dollar is too steep and disadvantageous to them on world markets. Embrace the fall and the instability, take on the derivatives markets, begin buying gold like crazy and sell off dollars. Cause a panic in US equity and currency markets and make American interest rate increases an imminent reality. In other words topple shithead from power.

[UpInArms]

5. I find that it's hard to

panic sheep if they are all sleeping.

[bemildred]

6. There does seems to be an element of "chicken" in how it

is being handled. It reminds me of the last time we went
through this 10 or 15 years ago, although there are many
differences, and the outcome is likely to be quite different
this time around.

I have been assuming that they (Asia) would not crash the US economy
unless shithead is re-selected, but it is hard to be sure whether
they will be able to wait until after the re-selection in November,
if current trends continue. If the dollar were to lose another 40% of
its value there will be little to gain by propping up the US economy
anyway, and no doubt much satisfaction to be had in slapping Uncle
Sugar around.

[indepat]

7. Snow is extremely full of it teryang and you have hit many nails squarely

on their heads. Military spending (and those big tax cuts) are coming first from the mythical lock box and a whole generation of Americans, far too many who support this Administration's every policy and action, are going to get royally screwed by his majesty's doings.