US dollar value now sinking more than acceptable
- Thread starter normbc9
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If commodities/oil market start heading south I think our market could be in for a real shaker. I'm going to start converting to more greenback investments as well. It reminds me too much of the technology bubble.
As long as the US economy keeps going, they can handle the current level of debt. Measuring public debt as a % of GDP, the US is still in better shape than Canada and about 30 other countries.
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
The problem is the trend. Canada is paying off its debt. The US is growing it.
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
The problem is the trend. Canada is paying off its debt. The US is growing it.
Has there been any relation to the growth of US debt and the stock market? They both grew under Reagan. The market isn't completely rational. The GWB discount has been in effect, Iraq, sub prime etc. If this turns around there could be a lot of upside potential. If we ever have a decline in the CDN dollar on top of a boost in the US market there could be some good coin made. Who knows, but it might be worth some speculation.
Absolutely.
I don't think most people understand what is going on.
What is happening, at least in part, is that large hedge funds that invest by computer technology are pushing the prices of many assets simply because they are going up, and vice-versa. Thus, the Canadian dollar, China stocks, agriculture stocks, oil, gold, silver, Google, Research in Motion, the Brazilian real, the euro, and so on are being driven by computer programs which enter buy (sell) orders based mainly if not solely on if the asset is going up (down). This works until it doesn't, and when it stops, the effects can be mind-boggling, like they were in the summer.
I hate this market and have begun to liquidate positions. I believe what we saw in March was the first warning shot, in July/August a cannon shot across the bow, and risks are very high right now for a dislocation, probably occurring in the Spring of next year, though when, I don't know.
This is a structural reason why the Canadian dollar should be higher than it was in years past. However, it doesn't explain why it is at $1.07. The purchasing power parity - i.e. the equilibrium value between the currencies where a basket of goods in both countries are equal - is about $0.80-$0.85. Also, interest rates are about the same, though the market expects the Fed to cut because of problems in the financial and housing markets.
Parts of the US market have already begun to unravel, particularly financial and consumer discretionary stocks. Those two account for nearly 30% of the market's capitalization. The rest of the market is being driven by rising commodity prices (energy, materials) or a weakening dollar (industrials, consumer staples, technology) or specific company reasons (Apple, Google, Research in Motion). If the dollar trade unwinds - and it will - it will knock a leg out of the companies that benefit from a lower currency. So you will probably have the effect of a rising dollar and a falling market. My bet to play the US dollar if you are a Canadian would be to buy a US dollar fixed income or TIPS fund.
I have to disagree with everyone here who thinks that the current state of the U.S. dollar is a bad thing. Well, it is a bad thing. It's just not a bad thing for the United States.
Oh, and other countries won't "bail out" the greenback. Quite to the contrary actually. Other countries will bail out themselves by eventually strengthening the U.S. greenback.
Again, to disagree with you folks, the U.S. is not headed for a recession. Quite to the contrary, they're headed for an economic boom that will eventually slow when it becomes in the world's best interest to strengthen the greenback. The U.S. will not see a recession for at least the next decade... And that's as far as my crystal ball goes.
The U.S. is still the wealthiest country on the planet. They are a nation of roughly 300 million greedy bastards. That means that the U.S. is the single largest consumer of goods on the planet. Every country in the world that produces goods, produces goods for the U.S. market.
Oddly enough, the United States is also the single largest producer of goods on the planet. Do the math!
Course, economics is hardly my area of expertise, so I could be totally wrong. Who knows?
It's a shame about that 9/11 thing. Cuz with the lower U.S. dollar, the U.S. could have really seen a surge in tourism. But the war on terrorism has pretty much put the kibosh on that.
Oh, and other countries won't "bail out" the greenback. Quite to the contrary actually. Other countries will bail out themselves by eventually strengthening the U.S. greenback.
Again, to disagree with you folks, the U.S. is not headed for a recession. Quite to the contrary, they're headed for an economic boom that will eventually slow when it becomes in the world's best interest to strengthen the greenback. The U.S. will not see a recession for at least the next decade... And that's as far as my crystal ball goes.
The U.S. is still the wealthiest country on the planet. They are a nation of roughly 300 million greedy bastards. That means that the U.S. is the single largest consumer of goods on the planet. Every country in the world that produces goods, produces goods for the U.S. market.
Oddly enough, the United States is also the single largest producer of goods on the planet. Do the math!
Course, economics is hardly my area of expertise, so I could be totally wrong. Who knows?
It's a shame about that 9/11 thing. Cuz with the lower U.S. dollar, the U.S. could have really seen a surge in tourism. But the war on terrorism has pretty much put the kibosh on that.
Don't forget the TWIT Brown of the Uk he will always put a hand around the shoulder of Bush, trying to drag us down as well, for if you look at Brown see promises and promises broken, twisted, and forgotten you can see we have to dive as well.
I imagine most of the rest of the world is divided as far as how they feel and what they will do.
The US dollar will not fall as the primary reserve currency, though it will become less important. The US economy is still too big and too important, and the financial markets are too deep and liquid for the dollar to not be the primary currency. Despite the current problems in the economy - and they are real - it has been worse before in America. Plus, all the problems people ascribe to the American economy and the dollar are prevalent in Europe and the euro, just on a lesser scale. But, Europe grows at a structurally slower pace than America, and there are several countries in Europe which are far more fiscally irresponsible than the United States, i.e. Italy, Greece, etc.
Having said that, there is a structural shift away from dollars towards euros in central bank reserves that will continue for many years. However, to say that the dollar is going to collapse or not be the primary reserve currency for many years to come is overly dramatic.
Having said that, there is a structural shift away from dollars towards euros in central bank reserves that will continue for many years. However, to say that the dollar is going to collapse or not be the primary reserve currency for many years to come is overly dramatic.
The whole thing seems to be unraveling, and I have less and less understaning of why and what it means for the short term when it gets to complicated people like me buy pack animals and fifty pound bags of beans. I've already built and erected a wind turbine that provides limited light and radio,but twenty five watts saved in an old car battery dosen't accumulate at a rate that will satisfy my opulent requirements, never the less the capitalist in me is tickled pink, the thing makes money hand over fist. I need capital aaaahhhhhhhhh what am I doing I'm infected I've gone capitalist gods going to burn me I live in sin.
. It's name, BLOW ME20.0 is painted on it's little tail.:lol:
. It's name, BLOW ME20.0 is painted on it's little tail.:lol:
It's a pain in the arse, I kept hold of my dollars after my summer job for ages, and it never rose, so I just cashed em in....bugger!!
Daz
DazMaybe you just need a hobby. I hear that stamp collecting can be quite rewarding. Of course, gardening can be fun too. But yeah, definitely get a hobby. :roll:
warrior_one You have just given me an idea which could be called a hobby for dark beaver, with all that exra power you are generating dark beaver, why not use on lighting up the garden at night on various plants or lights on your drive, which is putting you in the garden (call it a combined hobby) cos then with the garden lit up you can add those extra plants even when its dark
Don't be pessimists don't think of the dollar going down! think sideways:- the other currencies are shooting ahead.
I agree boiler!
It's just that U.S. economy is sliding* down with it and it ain't good for the rest of humble nations! Including Mr. Dragon...
It's just that U.S. economy is sliding* down with it and it ain't good for the rest of humble nations! Including Mr. Dragon...