The falling dollar

[nadinbrzezinski]

The Economy and Account Deficits

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Well, well, over the last 24 hours there have been a series of articles, in places like the Finantial Times, adressing our current account deficit and the falling dollar. Heck today China made an incredible (ten years ago nobody would have expected it) statement, they intend to own 50 of the largest 500 companies in ten years, but here is the zinger... they also no longer consider the US Dollar a stable currency. (Those of us who have been following this over the last three years are anything but surprised, and know why the big boys are now looking for greener pastures, for the US Markets are no longer safe)

So it looks as people in corporate boardrooms are starting to get worried. New Hooverism is actually taking them down a very similar route, as the original did... so we will see how this affects the markets.

Oh and by the way, if we take another two or three trillion in debt to destroy the social secuirity system, will be beyond disastrous.

Look on the bright side... history will not let the current chief executive miss his meeting with history... and it will be very similar to that of Hoover.... or worst. In fact if he only were to be judged as bad as Hoover he will be lucky.

[mhr]

1. I Am Convinced By What We Already Know That History

Will remember Bush as the worst President in US History.

One wonders about what we don't know and that truly is frightening.

[lachattefolle]

2. At least Hoover didn't start a war!

[Emboldened Chimp]

10. If he had a second term, maybe he would have...

[ayeshahaqqiqa]

3. the falling dollar and faltering markets

are good arguments NOT to privatize SS. Hope Sen. Lincoln and others defending SS use this information.

[katinmn]

4. no longer considered a stable economy

Where the hell are those people in U.S. corporate boardrooms? Are they just going to move to Europe after the rape of the US economy is finished? Will they relocate to China?

We have really hit bottom on all fronts now.

[Renew Deal]

5. Will we see the markets move in a big way.

Especially in the short term. I'm trying to understand the immediate damage.

[Old and In the Way]

6. There will be a time in the future when the phrase "Bush things up"

and "Bushed up" will be the polite form equivalent saying to the cruder, well known vernacular.

[KittyWampus]

7. Can Someone Explain What China Said At The Economic Forum

I know China owes a lot of our debt.... and that the US is allowing its dollar to devaluate and in essence short those we owe money to...

But i don't understand what's going on.

Maybe Paul Krugman will write about it.

[mhr]

11. As I Understand Things - The Chinese Have Signaled That They

Won't be buying as much of our debt as they have in the past.

They said they would diversify their holdings of foreign currency. In other words, their treasury has a limited amount of money for buying foreign currencies which means less will go to buying our debt.

One impact will be higher interest rates as the Federal Reserve will have to raise rates to persuade more foreign investors to buy our debt.

The second impact will be the continued increase in prices as foreign goods cost ever more due to the dollars devaluation.

[merbex]

8. Hoover gets the rap for the last one;THIS time let's START

with B* and then enshrine all the other criminals in this latest disaster - Norquist,Club for Growth, corporate media all lockstep repug legislators

[Francis]

9. This is Good for US

It means (I think) that the Chinese are getting ready to loosen their tie to the dollar which will allow the yuan to float higher.
The problem at present is that with the yuan tied to the dollar every point the dollar drops so does the yuan. We want the yuan to trade higher against the dollar making chinese exports more expensive and US exports cheaper

[LSdemocrat]

12. Except that the US economy is highly dependent on foreign goods

Almost nothing is purely US made. Even products "Made in the USA" often have foreign components.

If China moves away from the dollar, the dollar will CRASH. In the short term that will cause prices to skyrocket and the standard of living to plummet.

I think it would cause an economic meltdown to rival the Great Depression.

[pscot]

14. Is our standard of living really based on

the crap on sale at Walmart? I think we need a new paradigm for what constitutes "the good life".

[LSdemocrat]

15. Undeniably Americans wouldn't be able to buy as much stuff

Even most mid-high range goods have significant foreign components.

[ClintonTyree]

13. This is why Social Security MUST be tied to the Market...........

or at least that's the POV from the neo-cons. All of that money from the young and hip who KNOW they can turn their $$ into millions in the market for their retirement have a rude awakening coming.
The neo-cons want to let the gangsters in the market steal it from them to keep the market propped up.
The dollar's tanking, and if the economic policies of this maladministration aren't changed, soon every penny the government takes in will be needed to pay THE INTEREST on the deficit. There won't be any headway made on lowering the deficit.
The economy is on a razor's edge right now, and I only hope the REAL Conservatives realize this and side with the Dems to kill nay of bush's grandiose schemes to Social Security "reforms". I never thought I'd ever see the day when Conservatives and Democrats join together to benefit the security of our economy, but it's going to happen I think. It HAS to happen, or this country is toast!