Dollar plunges to all-time low against euro

[Ugnmoose]

The question in my mind is how long can our government play the charade? They know that it is the low interest rates that have been keeping the economy afloat, and yet our reckless out of control spending is precipitating foreigners to dump our dollar. I think this is a train wreck waiting to happen.

http://news.independent.co.uk/business/news/story.jsp?story=468307

<snip>
The dollar tumbled across the board yesterday, hitting an all-time low against the euro amid fears that Wall Street was betting against the US currency. The euro traded as high as $1.2018 - above $1.20 for the first time - as the dollar slid to new multi-year lows against sterling and the Canadian dollar and a six-month low against the Swiss franc.

With American markets shut for Thanksgiving, traders focused on a string of negative news on the dollar. including yesterday's report in The Independent that the leading financiers George Soros and Warren Buffett had taken "short positions".

Chris Furness, senior currency strategist at the online analysts 4CAST, said the move was "more psychological than anything else, and related at least a small extent to early US traders reading the story that both Soros and Buffett are betting on a dollar collapse".

Yesterday's fall added to the massive selling of the world's largest currency, which has tumbled by 14 per cent against the euro so far this year. The financial markets are growing increasingly concerned that the US will not be able to attract enough investment to fund its burgeoning current account deficit, which is running at record levels

[Code_Name_D]

1. Agreed

This is very worrysom. Both the economics down in the economics room, and the market watchers in the Latest Braking News foruem, have been watching this very closly.

This dose have the posibility of ending US's economic hygeminey.

[cthrumatrix]

12. key words: trade deficit, federal deficit and spending...this is very bad

the trend of our deficits and trade imbalances are causing others to avoid the dollar...as in "sell it"....that's hwo it get's weaker...the tredn will continue becuase the United stated balance sheet is awful

under three years of this presidency he has served over wreckless spending (not one veto)...pork barrel politics and using "terra" to rewrite our future

[Nederland]

2. Good and Bad

Like most things in economics, there are both good and bad sides to this. While you mention the bad side, the good side is that this makes US goods cheaper abroad, helping export growth and therefore reducing the US trade deficit.

[lastliberalintexas]

3. That would be true

if we still had goods to export. But the only thing we've exported lately is jobs, and that doesn't look like it will be changing with Shrub at the helm.

And btw, the dollar has been very low against the Euro for some time now. If we were going to see the export bump, we probably already would have.

[Nederland]

11. So I Guess

...that the 693 billion dollars in exports the US generated in 2002 doesn't count? Sorry, while the line "the only thing we export is jobs" may be a cute debate line for Democrats, it doesn't stand up in an intelligent discussion. My comments stand.

[brainshrub]

4. We have nothing to export. So this is all bad.

I powerful dollar is the only thing keeping the American economy afloat. This is very, very, very, very bad.

[Warpy]

7. Not quite

In the short term, yes, this is bad. Everything will become more expensive. However, this is how it should be. Imported goods should always be more expensive than domestically produced goods. Only the exalted position of the almighty dollar on foreign currency markets has turned this truism on its head.

As the US worker becomes more attractive to employers through a normalization of exchange rates against foreign currency, the jobs that have been "outsourced" will begin to come back onshore. In the interim, be prepared for a round of inflation and some higher interest rates.

[Code_Name_D]

9. Unfortuanly, US labor is obsolite.

So goes the thinking of the high end economists. Indeed, the vary notion of manufacturing in the US has been obsolite for some time. And manufacturing in the US seems to be more of a mediea stunt.

Plus, salve labor is just so darn cheep. The only way we can domesicly compeat with Korya and Indiea (at least under the CEO's terms) is to undergo drastic reductions in quality of life here in the US. And you can kiss the middle class good buy.

[ozone_man]

10. Except that the yuan tracks the dollar,

and Japan won't let the dollar sink much lower. The U.S. isn't getting quite the desired effect with the weak dollar.

I suspect that there is a limit to how low the dollar can go before the world dumps their dollar holdings, but I'm no expert.

[lastliberalintexas]

5. Pre-invasion

I saw much speculation that the strength of the Euro and the EU was one of the motivating factors for this administration in taking Iraq. There has apparently been a great deal of fear that the oil producing states of the world will/may switch from the dollar to the Euro. But if we control Iraq and its oil, we at least are saved from complete ruin if the switch actually happens, since we then have our brand new supply of oil from our very own conquered nation.

Also, the fear that Britain was set to drop the pound and go with the Euro. Discredit the main proponent of same (Blair and the Liberals), get the pro-pound Conservatives back in power, and the dollar is saved. I certainly don't know if any of this is true, but it sure sounded plausible. :shrug:

[Lefty48197]

6. The dollar keeps getting WEAKER and WEAKER

No wonder people are buying up so much gold.

[sweetheart]

8. Financial hardball

The US is getting a tiny taste of its own medicine... and i agree that it will break the economic hegemony. Once that is broken, it is only a matter of time until the military overreach costs too much and the military hegemony breaks also.

Here's a great link i first saw sometime back from codenamed - "http://wizardsofmoney.org" This explains how currency attacks have been used by the US to destroy other countries... and now the world turns.