The Exchange Rate Could Get Worse

[SirMoby]

http://online.wsj.com/public/article...l?mod=rss_free

I've been worried about this since Dubya was elected but more concerned since about 2002. I think this will show up hard against the US dollar around 2010.

[Surfn]

Why worry about things you can't control?

[SirMoby]

Originally Posted by Surfn

Why worry about things you can't control?

I can't control it but I can have some influence by raising awareness and voting. Granted the influence is slightly more then my influence over the lottery but it's still better then doing nothing.

On the other hand if everyone that read this post made a comment here and shared it with others then perhaps the influence would be a bit better.

[Surfn]

The secret to my longevity is not to stress over the things I can't control. Once upon a time in the 1960's I was very proactive. I learned it was more effective to affect change from the inside...

Good Luck

[SirMoby]

Originally Posted by Surfn

The secret to my longevity is not to stress over the things I can't control. Once upon a time in the 1960's I was very proactive. I learned it was more effective to affect change from the inside...

Good Luck

I love you man I just can't figure out why you're trying to change my attitude about active outward change when you've learned to change from the inside?

[Surfn]

Originally Posted by SirMoby

I love you man I just can't figure out why you're trying to change my attitude about active outward change when you've learned to change from the inside?

I'm NOT trying to change your mind. Although one on one is a good way to effect change

I'm just giving my humble opinion. Take it for what it's worth

[Jim]

You really can't do anything but blame the Republicans Hopefully our next President will have an iq greater than a worm.

[Surfn]

Originally Posted by Jim

You really can't do anything but blame the Republicans Hopefully our next President will have an iq greater than a worm.

I blame you

[Jim]

I actually live in a Republican County. Where I live is very small and I really can't say poor but if you are making, $8 or more/hour, you are doing well.

I had to laugh at a letter to the editor in last night's newspaper. It was from a guy I know that lives in a 30 year old trailer and drives a 25 year old car most times pulling a trailer made from an old truck collecting junk. He complained about people around here backing away from our roots and people bitching about the President. Sometimes, I am sure I live in a county where the most stupid residents reside.

[SirMoby]

Originally Posted by Jim

He complained about people around here backing away from our roots and people bitching about the President. Sometimes, I am sure I live in a county where the most stupid residents reside.

He forgets that the only thing that makes democracy work is speaking about our politicians while trying to get them to better our country.

More innocents are being killed in Iraq now then when Saddam was in charge. Fewer people children are in school. Fewer people have potable water, electricity, jobs and feel secure. by every standard they are in worse shape then before but when you read the blogs they speak highly about the freedom to voice their thoughts.

The most un-American thing to do is not speak about our political leaders and that is really the only thing that we can bring to the rest of the world.

[RawAlex]

SirMoby, what americans don't seem to realize is that short term, a dropping dollar helps to prop up your internal economy by making is possible to manufacture things in country that you use to get from other places. It creates a bunch of bottom feeder assembly line jobs.

Except: China wisely pinned it's exchange rate hard to the US dollar, so no matter what happens, the cost of chinese produced goods remains the same. They will always have a manpower cost advantage (and few OHSA style rules), so there is less job shift.

As a result: The costs of many imported goods goes up over time, creating an undertow of inflation, all the while the internal economy is creating nothing but cheap ass bottom feeder minimum wage jobs, so the actual average buying power in the economy goes down, as does the realtive standard of living when compared to other countries. The value of all american assets (housing, business, whatever) drops in relative terms.

5 years ago, 100,000 US would get you about 165,000 canadian. Now 100,000 US gets you 109,000 canadian. If you took US dollars and invested in Canadian value stocks, you have made a huge net return (on the intial 100k, you would be holding over 150k us right now not including any growth or interest... 10% shift per year average in 5 years).

Combine that with a decent investment strategy, and you could be up net 100% in 5 years without a blink. Meanwhile, net net, you US based property has dropped probably 30% in relative value... the gap is something like 130-150% in five years.

That kind of shift of value and net worth is a significant indicator of what will happen in the next 5 years. Some are talking 2 us dollars for a Euro.

Alex

[Jim]

Originally Posted by SirMoby

He forgets that the only thing that makes democracy work is speaking about our politicians while trying to get them to better our country.

More innocents are being killed in Iraq now then when Saddam was in charge. Fewer people children are in school. Fewer people have potable water, electricity, jobs and feel secure. by every standard they are in worse shape then before but when you read the blogs they speak highly about the freedom to voice their thoughts.

The most un-American thing to do is not speak about our political leaders and that is really the only thing that we can bring to the rest of the world.

You know you are singing to the choir

[Capt. 'rold]

Originally Posted by SirMoby

He forgets that the only thing that makes democracy work is speaking about our politicians while trying to get them to better our country.

Oh man, freedom of speech is the cornerstone to Democracy. I know I'm preaching to the choir, but anyone who doesn't recognize or accept that principle when others exercise it has truly lost their sense of freedom.

[juggernaut]

Originally Posted by SirMoby

The most un-American thing to do is not speak about our political leaders and that is really the only thing that we can bring to the rest of the world.

Not true. We have brought Mc Donalds, and TV. Combine both of those and you have a winning combo.

[DJilla]

Originally Posted by SirMoby

I love you man I just can't figure out why you're trying to change my attitude about active outward change when you've learned to change from the inside?

I'm sure there is some Zen like meaning here but I'll be damned if I can figure it out.

[stuveltje]

i think i will start to hate the dollar soon again, i know when i started this bizz it was 100 dollars gave me 120 euros, then after some time it was 100 dollars give me 65 euros, hell that was bad, lately i was pretty happy with the dollar, trade 122 dollars to get 100 euro, today i paid 133 dollars per 100 euros.and that sucks and i think the dollar will get very low again which will make me probably again switch to euro paying sponsors for my bizz.

[DJilla]

Originally Posted by RawAlex

As a result: The costs of many imported goods goes up over time, creating an undertow of inflation, all the while the internal economy is creating nothing but cheap ass bottom feeder minimum wage jobs, so the actual average buying power in the economy goes down, as does the realtive standard of living when compared to other countries. The value of all american assets (housing, business, whatever) drops in relative terms.

I don't read papers so I'm out of the loop on a lot of things but a simple confirmation of your general thrust (pun) was delivered to me at about 3:30am this morning when I walked into a White Hen and was blown away by the finance headline in a paper on the counter. Gold is at $745 and change. All precious commodities are up big time and in some cases almost double a few years ago like zinc. FYI, copper is $4 a pound for delivery in July. It takes 114 copper pennies (the old ones not the new) to make a pound. Do the math and see what your local smelter is paying and if you're not making any cash in porn one might see this as an opportunity in spare change .

Back to the point, gold at 745 and rising AND the market at 11,000 is INSANE, its a financial non sequitar. Basically what its telling you is that the brightest financial minds are in agreement that inflation and the value of paper finanical instruments (including mortgages which no longer reflect the underlying value of the asset in most metro areas) are in for one big helping of whoop ass. IMHO

[RawAlex]

DJilla, actually the price of gold and the dow 11,000 are a match for the low US dollar, as both have ties to the exchange rate. You get back into equivilancies and such... let me explain:

As the US dollar drops, all things priced in US dollars in theory should start to cost more because their initial currency is going up compared to the greenback. What you bought from europe for $100US 2 years ago now costs you $135 or so. On that adjustment along, gold went from $400 to $540 or so... so the increase in value of gold is only from $540 to $745... still a huge jump, but not as much as it appears because the currecy shift is fudging the values as expressed in US dollars.

The high dow is about as easy to explain. When US companies do business overseas right now and make a profit, that profit is exaggerated when it is converted to US dollars. 5 years ago it would have taken 1.2 or 1.3 million euros to make a 1 million dollar profit on european operations. Now that same 1.2 million Euros makes almost 1.68 million profit for the US company, a bottom line improvement of 68% without a single change in the company's situation. These improved results ripple through the companies, which show nice profits... but in many cases, they are exchange rate gains and not actual improvements in operations.

For the US government, the upside of this is increased tax revenue from these boosted profits, which helps to offset the massive losses from exchange rate drops.

It is a weird old situation, that is for sure.

Alex

[Ramster]

Originally Posted by RawAlex

5 years ago, 100,000 US would get you about 165,000 canadian. Now 100,000 US gets you 109,000 canadian.

Alex

That MISSING $59,000 makes me cry.
Even one year ago the $100,000 US was worth $125,000 so today that is $16,000 missing in 1 single year.

[SirMoby]

Wait until the CA$ is worth more then the US$

[RawAlex]

Sir Moby, there is a point in there somewhere that I would likely sell pretty much everything I have in Canadian and move to hold items in US$, because that sort of shift is not normal or very logical, and exists only due to extreme circumstances, most of which as caused by the boy king in the whitehouse.

Once he is gone, changes in foreign policy and clearing up of trade issues will likely rebalance a system that is very, very tilted.

Alex

[picXX]

Originally Posted by Jim

Sometimes, I am sure I live in a county where the most stupid residents reside.

I totally agree Jim