The dollar is on a free fall. It used to take 85c of a dollar to buy a euro. Now Americans have to cough up 1.45 dollars to buy one euro. For Europeans USA now is a bargain. For Americans coming to Europe is becoming horrendously expensive, especially London, America´s favorite foreign city with the pound at an all time high as well. At this point I think it´s fair to ask how can USA be a global super power when its citizens can´t afford leaving their home? While many in USA think that devaluation is good because it helps exporters my view is that if you can make a decent living with a very strong currency you are in a much better position than if you need a weak one because your companies are more competitive, more automated, more productive, and you can afford buying other companies around the world. To seek protection behind a weak currency is not the strategy of a super power, if anything it is the strategy of a wannabe power like China.

Having said this USA is USA, the number one economy in the world. When George W Bush announced that he was going to invade Iraq I thought that this go alone foreign policy was going to bring tremendous economic hardship to America and sold my dollars, moving my savings into Euros. Now however, as a Clinton victory seems to be on the horizon I think that the collapse of the dollar maybe coming to an end. For the US to have a decent currency again the country needs to go back to the balanced budgets of the Clinton era. Should that happen the dollar should recover to close to parity with the euro again. Military adventurism and absurd overreaction to minor international threats have made of America the world´s largest debtor by far. Spending half of the world´s military expenditures and go around the world begging (or printing papers and hoping that others will take them) is a foolish strategy that has to come to an end. The good news for the depressed dollar is that the Bush era is coming to an end.

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Francisco on November 2, 2007  · 

Maybe china is in a process of Americanisation… and the USA in the process of Chinasitation… 🙂

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Luca on November 3, 2007  · 

But how can Clinton reduce deficit through military expenditure if problems in Irak and Iran are becoming worse? and withdraw troops in this scenario wont be easy at all.

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Allen Gelberg on November 3, 2007  · 

The writing was on the wall, given Bush’s performance in Texas. At the White House he merely had more zero’s in the budget.

Perhaps the adage of a strong President = a strong currency might be true after all.

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cometo on November 3, 2007  · 

martin absolutely great post… we hope that the clinton victory is at the horizon… but we never now… looks like everything would be better then the current situation..

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Gustavo L on November 4, 2007  · 

Very good observation. From a business stand point what I find interesting is that NOT many Euro companies having been acquiring USA based companies…. this currently represents a great opportunity to use the high currency to acquire USA based companies.

– Of course assuming that the Dollar strengthens and gains closer to 1:1 ratio. Though with the Fed lowering the rate another 25 basis points last week this “probability” seems to be further out now.

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Hasan Diwan on November 5, 2007  · 

HRC may not become the next president of this country. Indeed, no one can help humanity if she does. And she won’t bring back the days of balanced budgets — she wants to start a war with Iran.

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Martin Varsavsky on November 5, 2007  · 

This is what readers from the Huffington Post think about this issue.

Martin Varsavsky on November 8, 2007  · 


I think Hillary talks like a Hawk, because of the right wing nature of the US electorate, who continues to idolize its military and support that the US spend half of what the whole world spends in the military.

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