2008 28
When is low too low for the dollar?
Published by MartinVarsavsky.net in General with No Comments
Dollar hit 1.52 vs the euro today. For Fon this is not tragic because our routers, the Foneras are priced in dollars and in the last 2 years the dollar has gone down over 30% and so has the cost of our routers when measured in euros. On the negative our labor costs are mostly in euros and labor costs are by far the biggest at Fon cause we are mostly a software company. But never mind Fon. When will the dollar reach a value that makes the financial world crack? When will the Arabs for example stop taking dollars cause they can´t afford their vacations in Marbella and St Tropez anymore and the US is seen as hostile anyway? When will the Chinese stop taking US debt because they get tired that the US government then blocks them on most company purchases they want to do for security reasons? And when will the US suffer serious inflation because of the high cost of imports such as oil that can be replaced? And on top of these issues there´s a bigger one and that is, can the US continue to be the world´s biggest debtor and the globala superpower at the same time?
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Gustavo L on February 29, 2008 ·
These are great points! That is why we (USA) are in “trouble”. The global currency will some day become the Euro.
*Latin American created its own Regional Bank in December getting rid of the World Bank and IMF conditional lUSA influenced loans. *Europe serves as a better barometer of global diveristy and economies.
*Middle East hates USA (for the most part)
*Canada is laughing at the USA
*Mexico is just being shy like a young girl in school. But, behind the scenes laughing.
*When will the barrel of oil use the Euro instead of the dollar.
BUT – The USA is still king of innovation! PERIOD.
killy on February 29, 2008 ·
Only the future will tell us 😉
abdel on February 29, 2008 ·
Martin,
This is by far the biggest crisis the US is facing since WW2, the dollar will be no longer be the currency of the capital market
in less then a decade.The ” arabs” will drop it for the euro and asian currencies, the chinese and the japanese will no longer
finance the US T bills. Wall street will be replaced by the ADIA ( Abu Dhabi investment Authority). SWF are the new boys
in the game.
Abdel
polac on February 29, 2008 ·
I think you may better ask: how long major foreign holders of USA treasury securities (http://www.treas.gov/tic/mfh.txt) can wait heading for the exit?? Can the U.S. continue to count on this massive amount of foreign capital to fund its overseas obligations and finance its economic growth? Till when?
Dan on February 29, 2008 ·
It should touch bottom around the fall or end of the year, I think. It can hardly go any lower after that:
*Fed interest rates will probably touch bottom in the Summer
*If the Democrats win and decide to pull of Iraq, the deficit will start (rapidly) correcting
*European Central Bank will have to yield to pressure probably no longer than summertime and start cutting rates, weakening the Euro vs the US$
Matin on February 29, 2008 ·
The model behind the USD and US banking is flawed. There is no transparency or oversight to number of Dollars the Fed prints, and the banking system increases the volume of money even more by making loans with money they don’t have. The ECB is independent from the gov’t and has much more transparency.
The USD has a long way to go before hitting the bottom. Bernanke’s rate cuts are going to increase the supply of Dollars in the market and devalue each individual Dollar.
Matin
james on March 1, 2008 ·
i am totally agree, if the conditions remains the same, the day is not far when euro will take the place of Dollar…..
Lets wait and whats going to happen in the coming future…
james
Mark Staebler on March 2, 2008 ·
All good points, friends — from MV’s initial comments through the rest.
All we can do is to try to reassure our European friends that most of us are terribly concerned about the Bush Administration’s drift into neofascism. We are doing our best to try to restore individual rights, and to stop funding wars by printing money — a practice whose ills are outlined above..
We try to get Washington to exercise an even-handed, serious policy in Palestine, but the Jewish Lobby is too strong. Only ‘Greater Israel” benefits from our disastrous foray into the Iraq-Iran issue.
If you’ve not read the Mearsheimer-Walt essay, here is a working link:
http://www.lrb.co.uk/v28/n06/mear01_.html
Please support us in our efforts to restore constitutional liberties and to stop the military-industrial machine.
If enough of us join together — and march in the streets as we did in VietNam days — we WILL make a difference.
Thank you for your solidarity.
–MS
pinobot on March 2, 2008 ·
It’s not all bad. 🙂
America loans money in dollars, if the dollar drops in value so does the value of the borrowed money and (more importantly) the value of the interest over the borrowed money. 😛
abdel attou on March 3, 2008 ·
Keep in mind it took 70 or so years for the British Pound to take over the US dollar. so it is only striking
to see that the Euro since its inception 1999 has seen its “market share” going exponentially. another thing to watch is the
OPEC decision to use the Euro as the currency for oil trade which i assume will happen in less then two years. ( iran
and venezuela already already use the EURO for their oil export). That will be the day for the dollar.
Stiglitz book “The trillion dollars war” is really a must read.
Thanks martin.
Abdel
Martín Alejandro Carmona Selva on March 6, 2008 ·
Martin, great questions!!!
I agree with you 100% [not I am agree 🙂 which is eSpanhis translated to English].
I wish we had answers for those…
Adel on May 9, 2008 ·
Abdel
Long time nice to read your threads….
Expect to hear soon on our pending discussion
Rgds
IZI_NAU on August 22, 2008 ·
I predict a catastrophic economic crash for the US. You cannot keep printing money without limits. Every dollar printed without backing is reducing the already nonexistent value of the severely deflated dollar. Banks around the US are closing as I write this. Some countries are already refusing to take or exchange US dollars. I feel so bad for the Millions of “rich” folk out there who will soon own pretty green toilet paper. It will be worth nothing and buy nothing. Go to http://www.gospelministy.org and see “How much time do we have?!”
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Brokenglish.blogspot.com on February 28, 2008 ·
It’s time for Super Obama to save the world.
brokenglish.blogspot.com