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What a weak dollar means to the US...and you

Discussion in 'Economics and Financials' started by padre31, Oct 9, 2009.

  1. padre31

    padre31 Premium Member Luxury Box

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    http://online.wsj.com/article/SB10001424052748703298004574458923186941870.html

    A good summation of what current economic policies will lead to, and it is not a good place, especially if Intl Trade Agreements are left as is.
     
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  2. 2socks

    2socks Rebuilding Since 1973

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  3. padre31

    padre31 Premium Member Luxury Box

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    Well, perhaps, I do believe Economics is a Science that intersects with politics when winners and losers can be predetermined and access and favors paid for.

    That said, I do also think that what will happen is a series of muffled, wet, firecracker attempts by the Fed and the Obama Admin to revive the economy, which sadly will not have much of an impact as the change to Consumerism is too deep to simply change it in a short period of time.

    With Consumers holding onto their wallets, and tax increases coming, the Consumer Economy is about to be hammered for quite some time.
     
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  4. 2socks

    2socks Rebuilding Since 1973

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    9 Months and counting, 800 billion down

    9 trillion added to the debt in the next 10 years, gotta pay for it somehow :cry:
     
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  5. padre31

    padre31 Premium Member Luxury Box

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    Don't underestimate the ingenuity of Americans to avoid such a fate 2socks, the US is about to see a boom in the underground, cash and barter economy, the key is to avoid debt, stay liquid and to traffic in that which is inflation/depression proof like Gas and Booze and Toilet Paper...

    I'm half joking about the TP...
     
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  6. 2socks

    2socks Rebuilding Since 1973

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    funny about the TP:lol: Interestingly enough I read an article that said our TP was going to become scratchy and that the soft "Charmin" type TP's were gonna become a thing of the past because it takes old growth trees to make it (something with the pulp and the softness). So part of the "green" movement will be scratchy a$$'$.

    Anyway back on topic. I have already seen a change in the way business is being conducted. I originally had 75 employees, running a new construction electrical business. Of course we all know what happened to that market. Unfortunately I got killed financially when the bottom fell out of it and I had to use my entire life savings ($600,000+) to pay off debts of the company that were personally guaranteed by me in order to avoid bankruptcy. I fell short by about $50,000.00. So I am in several lawsuits, playing lawyer to try and save money. So far I have done pretty well. It's amazing how these lawyers are. I have been unsuccessful in finding someone, anyone, who would be willing to guide me in defending myself without the $300.00 an hour bill. Mean while all the companies that didn't pay me basically got away with it because of lack of funds to hire Lawyers to sue them. Corporations must have lawyers, individuals do not.

    So know that back ground has been given, I am spending about $250.00 a week to generate about 6-7000 a month in business. In the last 2 months I have seen my calls go from about 40-50 a week to 5-10 a week. It has been a dramatic down turn and lots of people are price shopping $40.00 an hour. When I was at my peak I was charging $80 just to show up. Guys are actually advertising for $18.00 hr in the paper. I was shocked and dismayed when I saw that the other day. The economy is slowing and people are pulling back. Anyone who says anything else is not out in the field.

    I have also noticed an across the board price increases of about 10- 15 % at home depot on just about everything. There are some items that they have on sale but for the most part shopping there everyday I have definitely noticed it. So, I pass it on to the customers I get. I guess because I do what I do know (handyman), I see a little of everything which gives me a good indication of where the economy is headed and IMO it's not improving, it getting worse!!!!
     
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  7. padre31

    padre31 Premium Member Luxury Box

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    And there is the real deal, the Federal Government has basically announced that there will be no inflation for at least two years, but that is not reality, virtually everything from pasta to the electric bill has shot upwards in price and I expect that prices will continue to rise on everyday items that the .Gov's claim are "too volatile" to reliably track price increases on, which is absurd, exclude food, fuel and utility bills, what exactly are they keeping track of?

    As for the TP...don't laugh, paper supply houses have the best deals, 200 rolls for 40 bucks, maybe the current Administration will have Toilet Paper Czar?

    :lol:
     
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  8. 2socks

    2socks Rebuilding Since 1973

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    That toilet paper Czar already exists

    You and I know it as the US Treasury,

    keep going at the pace we are and that's all our money's gonna be worth.............TP, and scratchy TP at that:up:
     
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  9. Ludacris

    Ludacris Season Ticket Holder Club Member

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    A weak USD is not all that bad though. It will improve US exports making them cheaper. Improving exports is a good way of bringing the US back on track. It's better for company profits and hence employment and it's goes somewhat into paying off some national debt.
     
  10. texasPHINSfan

    texasPHINSfan New Member

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    "spending restraint" is the key to this entire issue.

    good luck selling that to the administration, however.
     
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  11. KB21

    KB21 Almost Never Wrong Club Member

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    At the risk of this dwindling into a political discussion, the value of the dollar is going to continue to decrease as long as the federal government and wall street tries to control the economy.
     
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  12. padre31

    padre31 Premium Member Luxury Box

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    [​IMG]

    More or less, .Gov intervention into markets has poor results, then again if the Wall Street types had not relied on .Gov insurance A) the crisis never would have grown as large B)the Banksters would have stayed with a traditional 3 dollars in loans for every 1 dollar in deposits instead of the 13 to 1 they convinced regulators to approve.
     
  13. KB21

    KB21 Almost Never Wrong Club Member

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    I don't think this is something that has just happened either. This has been building over long period of time. Many of the entitlement programs the federal government started, for the simple purpose of getting more and more people to rely upon the government (socialism), are finally taking their toll. I could go back to FDR's New Deal to see the possible start of this, but if I did enough research, I could probably take this all the way back to the US's first socialist president, Abraham Lincoln, and 1865. Even before 1865, we started seeing the federal government overreach the limitations that was placed upon them by the constitution. That's probably more for the history section than this section. Overall though, I think you can directly tie the weakened US dollar to a few things the federal government pushed through that are unconstitutional, IMO: The Federal Reserve (needs to be abolished), Entitlement Programs, and Unnecessary Wars.
     
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  14. texasPHINSfan

    texasPHINSfan New Member

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    the problem with that chart is it shows a limited timeline starting from the highest point the dollar has been in like ten years, thus skewing any conclusions you could draw from it. if you go back two years you'll see that all the dollar is doing right now is correcting - remember the dollar is cyclical just like most everything else. ;)

    i've attached to this post a chart from the same source (stockcharts.com) of the same thing, but going back two years. you'll see the ramp-up of the dollar at the end of 2008 - this was the "flight to safety" to the dollar by the entire world, which shows that the dollar isn't usurped from being the preferred world currency just yet.

    EDIT: the "attachment" feature of this site is not working. had to go to flickr.
    [​IMG]

    :up:
     
  15. 2socks

    2socks Rebuilding Since 1973

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    US exports will become more expensive not cheaper as we will demand more $ to manufacture and compensate for the loss in value. This makes our products less desirable and less competitive in the world economy. Over time this will cause the greenback to depreciate even further.:up: Company profits will decline and more people will loose their jobs. More people will pull back on spending causing further decline in over all GDP and sales tax collection. Less tax collection means less services and a possible increase in taxes.

    Stop the cycle and you improve the economy. Unfortunately the current administration doesn't have a clue how to do this. Their answer is to artificially increase spending by the stimulus bill which artificially increases taxes collected....which creates a artificial economy. Doesn't fix anything....just prolongs the inevitable.

    The economy must be left alone....to repair itself. Question is, once the Obama administration is done fooling around the time to heal will be longer and more severe then it would have been had they just let it do it's thing. The interference will be even more damaging to the general public's psyche and we will pull back even further (not to be sucked up in the new round of damage) then before.
     
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  16. 2socks

    2socks Rebuilding Since 1973

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    Padre,

    What have we really fixed..............I submit to you absolutely nothing.

    When 3 banks control 1 of every 3 dollars on deposit we are still primed for disaster. The world knows this and until we change this our dollar will continue to drop. All this money is on deposit in 1 of the big 3:

    Bank of America
    Chase
    Wachovia/Wells Fargo

    These banks must be broke up ASAP. Allowed to continue solves nothing but setting the stage for a future crises. Allowing them to continue creates little to no market place competition. We all know competition is good.

    It is the very reason Bank of America absorbed Myrill Lynch and Countrywide. Nothing to loose. They got billions and billions in assets and we footed the bill for the mergers. At no time in the history of this country was there a better time to risk free, buy and absorb such large companies basically free of charge because BOA is too big to fail. Most people don't even realize that WE the tax payer footed the bill for those acquisitions.

    WE are still footing the bill as BOA is still insolvent to this very day. Funny part is they are gonna use our money to strengthen then stick it to us every chance they get down the road:yes:

    Only in America
     
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  17. Ludacris

    Ludacris Season Ticket Holder Club Member

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    US exports have become cheaper. In fact US exports grew 10% over the last 2 quarters on the back of 3.4% GDP growth. Where as imports grew 2% over the last 2 quarters. The key is to maintain export growth since imports are rising due to oil.

    Import costs on manufacturing components will rise but this means US domestic manufacturing components should be more competitive relatively speaking. It means a greater demand on domestic inputs in manufacturing and thus growth in domestic profits and jobs.

    I think we will see a greater increase in US exports mainly in auto and computers. Ford, GM, Hewitt Packard, Intel and AMD are examples. The cash for clunkers induces auto demand but car companies need to re-invest their renenues back into domestic capital to help growth.

    I find Obama capitalistic. I think the Government has bought GM dirt cheap and will sell it for a song. Just like any opportunistic private equity firm. The Government will make a tonne from the venture.

    I don't see how letting the economy do its thing is going to repair anything. If there's no confidence for banks to lend, there's no growth.
     
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  18. Ludacris

    Ludacris Season Ticket Holder Club Member

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    But there is competition. Those banks need to be big enough to compete against the HSBCs, Bank of Scotland, BNP, Deutsche and the UBSs of the world for funds. Global corporate deposit and lending is signifcant to their business. The larger bank deposit and liquidity are the lower your mortgage rates will be. The goal here is lessen the credit squeeze.
     
  19. Ludacris

    Ludacris Season Ticket Holder Club Member

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    The USD chart just shows how dependant America is on oil. If you run this chart overlaping a crude oil price chart you will see as America imports oil the USD falls prior to mid '08. Oil price sky rockets at this time. China buys more oil raising global inflation. Investors turn to gold and the USD suffers more. After the mid 08 and the GFC, oil prices fall, America buys less oil and the USD recovers. The oil price has risen again (since start of 2009) to $80 a barrel now. Investors are going to gold again and the USD is suffering.
     
  20. texasPHINSfan

    texasPHINSfan New Member

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    you're pointing out a known correlation. ;)
     
  21. vt_dolfan

    vt_dolfan Season Ticket Holder Club Member

    Yes....just look at IBM.

    http://www.huffingtonpost.com/2008/01/14/ibm-weak-dollar-pushed-pr_n_81330.html

    Large corporations with a global touch are benifitting from a weak dollar. Wonder how many of those have a seat on the ole Wall?
     
  22. padre31

    padre31 Premium Member Luxury Box

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  23. hammerbillsfan

    hammerbillsfan Suffering Bills Fan

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    It means cheaper trips to the US for me. :)
     
  24. my 2 cents

    my 2 cents Well-Known Member

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    too much currency unrest in Europe and temp jobs in USA along with some fairly significant gold buys from India/China/UAE after saying they would cool the gold purchases.............just mho........

    IMO the dollar is going to stabilize maybe even bounce for a short period.....and inflation may be a bit delayed....but worse later when poop meets fan..........we better pray for the commercial real estate to hang in for another year or so or we are in for....The perfect storm the sequel........
     
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