The dollar, the punching bag of global currencies, took another pounding in Asian currency markets today. It is not, as Vladimir Putin would have it, a sign of American eclipse. But don't be afraid to take a hint, either. If all your money is in investments tied to the dollar, let this be your motivation to start getting a little cosmopolitan.
From an American point of view, the mugging of the buck has been the dark side of the global recovery. One reason for the dollar's weakness is that the rebound is shaping up to be weaker in the U.S. than in other economies, especially those in Asia and those tied to commodity exports, like Canada and Australia. This morning, for example, we learned that half a million U.S. workers filed for unemployment last week. Yesterday, we clocked the seventh consecutive month of shrinking consumer debt (that means American consumers are not buying; and if we're not buying, we're not recovering). Australia, by contrast, added 40,600 new jobs and the Aussie central bank is raising interest rates out of concern that housing prices are rising too fast. (Wouldn't you love to have that problem again?!)
Just to put it in perspective, an Aussie dollar cost 60 cents back in November. Now it fetches 89 cents, a more than 30% climb against the greenback.
The strong consensus right now is that the dollar's skid will continue. But who knows? As Conrad de Aenlle argues in his MoneyWatch.com column, Against the Grain, the near universal pessimism may be reason to expect the opposite in the short run. He's right: I wouldn't place any big bets against the dollar right now. Markets are great at confounding the majority opinion.
Taking the long view, though, you can't ignore some well-entrenched reasons for concern about the dollar's position:
Continue reading on CBSMoneyWatch.com
Follow Eric Schurenberg on Twitter: www.twitter.com/EditorBNET
It’s not just the country’s future that’s on the line…the US sets the tone for much of the world and Brand America is inextricably tied to the USD brand. Therefore, it is not just an economic problem, but a brand problem: we have a battered reputation, no trust in our leadership, erosion of our market share, pummeled profits, crippled projected revenues, dwindling customer loyalty and a severed stock price.
So will (our brand champion) Obama seek to obviate the dollar’s fall from grace and its global role as the world's reserve currency or does he acquiesce (too much) to domestic pressure and persist in bailing out everything from too big to fail businesses, banks hoarding their lucre, relief to credit crunched Americans and investors desires for increased corporate profits? Or is it just too late? See The Almighty Dollar on www.punchandkiss.wordpress.com.
Will oil nations ditch the dollar? Gulf states deny claims of ...
Big oil producing nations denied a report today that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a ...
dailymail.co.uk/news/worldnews/article-1218548/...
Your choices are either taking away what people already have or taking away their incentives to be productive in the future. There are better answers, like stop spending so much. Bring all our troops home from where ever they are in the world. No more foreign aid. No more pet projects for congressmen. Slim down the beaurocracies. Spending less would also make the dollar stronger.
No sensible businessman in any other country is going to continue indefinitely to be beholden to a currency that is being so brazenly manipulated. How can you "earn" a million US Dollars in a business transaction when the Government of the United States "conjures" an equivalent amount of money several times over in the brief amount of time it took you to read and moderate this message?
the world has said it is done with the dollar. their only concern is that the diversification is orderly. it never is.
the stock market will go up in value as the value of the dollar declines because the companies don't lose their intrinsic value. they just reflect that it takes more dollars to buy the same value.
there will be a dramatic devaluation of the dollar in the near future(sooner rather than later) because that is simply what happens in these situations.. during the zimbawe anargentina currency devaluation the price of gold skyrocketed in terms of the currency. the same will happen to the price of gold in dollar terms, as will commodities including food.
this is not difficult to forecast but apparently it is to the same people who missed the realestate bubble.
It's wealth extraction in this country, not creation. The speculators are useless parasites. We don't need Wall St to have an economy.