Re: Dollar at new low against euro

good post and all too true.

"Eugene Holman" <holman@xxxxxxxxxxxxxxxxx> wrote in message
news:holman-AF6E01.13474127102007@xxxxxxxxxxxxxxxxxxx
In article <nYOdnUzz4IYwlr_anZ2dnUVZ_hCdnZ2d@xxxxxxxxxxx>,
"Henry Alminas" <halminas@xxxxxxxxxxx> wrote:

"Eugene Holman" <holman@xxxxxxxxxxxxxxxxx> wrote in message
news:holman-36BB5C.12475626102007@xxxxxxxxxxxxxxxxxxxxxxxxxx
<deletions>

****************

Woo-hoo!!

The Holmaian/Kremlin line is now
that the current US is akin to the
Weimar republic in 1919-1933
(more or less) in Germany.

You really are in a McCarthy-like frenzy today, Henry. The Kremlin,
which is in the paradoxical situation of holding close to a trillion
dollars, whose value is rapidly eroding, while watching the price of oil
ease towards the $100 a barrel level, has reason to be concerned about
the devaluation of the dollar. I, without a single dollar to my name, am
only concerned because it means that economic tectonic plates are
realigning themselves with consequences nobody can foresee.

What the hell - this is, after all,
right in line with the Holmanian/
Kremlin history lessons about the
russkie/Baltic countries situation that we
have had to read in the past.

They are in line with your selectively mendacious interpretations of
them, nothing else. Devaluing the currency and paying off debts incurred
in hard currency with debased currency is something that irresponsible
governments have been doing ever since the days of the Roman Empire.
That the US is flirting with the same idea does not make it akin to the
Weimar Republic in any other sense than the fact that the politicians
calling the shots in both cases knew their economic history and opted
for a time-tested scam.

This is "Truth" according to the Kremlin
which is what Holman *has* to type.

As I just wrote, the Kremlin is in a position that it is both concerned
about and profitting from the erosion of the international value of
the dollar. When you have close to a trillion of them, you can get
severely burned if you do not play your cards carefully.

Anybody with the slightest interest in these matters knows that the
euro/dollar exchange rate has dropped precipitously from 1.17 on January
28, 2002 to the 0.69 and falling that it is today, in other words, it
has undergone a 42% devaluation with respect to the euro and certain
other currencies. Anybody who made an investment in 2002 that was worth
only 58% of its original value six years later would think seriously
about divesting himself of that investment, all the more so if the trend
was downwards with no bottom line in sight and he had close to a
trillion such investments.

Though I would warn you - do not
discount the Holmanian BS.

The only bull*** in this is your risible prediction a few years ago
that the euro would be a flop and fall to the value of a German mark. In
fact. measured a against a neutral means of exchange such as gold, it is
the dollar that is ltattered and torn. Anybody who has ever taken
Economics 101 knows that the best way to bankrupt a national economy is
to reduce taxes while waging pointless and fruitless foreign wars, all
while living beyond your means on credit. Not everyone remembers that
the US has already been in Iraq for a time span longer than that defined
by the attack on Pearl Harbor and VJ day with very little to show for
its investment and losses there.

No sane person wants to see the dollar go the way of the German
Rentenmark, the Soviet ruble, the Yugoslav dinar, or the Zimbabwean
dollar, nor do I think that will happen. Nevertheless, there are clear
signs that the "party is over" as far as the present functioning of the
American economy is concerned. The loss of international faith in the
dollar, clear in the unprecedented erosion of its international value,
is a clear sign of this.

This prescient article is from almost three years ago. The dire
predictions it made are now coming true.

Source:
http://www.economist.com/opinion/displaystory.cfm?story_id=3446249

<quote>
The disappearing dollar

THE dollar has been the leading international currency for as long as
most people can remember. But its dominant role can no longer be taken
for granted. If America keeps on spending and borrowing at its present
pace, the dollar will eventually lose its mighty status in international
finance. And that would hurt: the privilege of being able to print the
world's reserve currency, a privilege which is now at risk, allows
America to borrow cheaply, and thus to spend much more than it earns, on
far better terms than are available to others. Imagine you could write
cheques that were accepted as payment but never cashed. That is what it
amounts to. If you had been granted that ability, you might take care to
hang on to it. America is taking no such care, and may come to regret it.

The cost of neglect

The dollar is not what it used to be. Over the past three years it has
fallen by 35% against the euro and by 24% against the yen. But its
latest slide is merely a symptom of a worse malaise: the global
financial system is under great strain. America has habits that are
inappropriate, to say the least, for the guardian of the world's main
reserve currency: rampant government borrowing, furious consumer
spending and a current-account deficit big enough to have bankrupted any
other country some time ago. This makes a dollar devaluation inevitable,
not least because it becomes a seemingly attractive option for the
leaders of a heavily indebted America. Policymakers now seem to be
talking the dollar down. Yet this is a dangerous game. Why would anybody
want to invest in a currency that will almost certainly depreciate?
A second disturbing feature of the global financial system is that it
has become a giant money press as America's easy-money policy has
spilled beyond its borders. Total global liquidity is growing faster in
real terms than ever before. Emerging economies that try to fix their
currencies against the dollar, notably in Asia, have been forced to
amplify the Fed's super-loose monetary policy: when central banks buy
dollars to hold down their currencies, they print local money to do so.
This gush of global liquidity has not pushed up inflation. Instead it
has flowed into share prices and houses around the world, inflating a
series of asset-price bubbles.

America's current-account deficit is at the heart of these global
concerns. The OECD's latest Economic Outlook predicts that the deficit
will rise to $825 billion by 2006 (6.4% of America's GDP) assuming
unchanged exchange rates. Optimists argue that foreigners will keep
financing the deficit because American assets offer high returns and a
haven from risk. In fact, private investors have already turned away
from dollar assets: the returns on investments in America have recently
been lower than in Europe or Japan (see article). And can a currency
that has been sliding against the world's next two biggest currencies
for 30 years be regarded as "safe"?

In a free market, without the massive support of Asian central banks,
the dollar would be far weaker. In any case, such support has its
limits, and the dollar now seems likely to fall further. How harmful
will the economic consequences be? Will it really undermine the dollar's
reserve-currency status?

Periods of dollar decline have often been unhappy for the world economy.
The breakdown of Bretton Woods that led to a weaker dollar in the early
1970s was painful for all, contributing to rising inflation and
recession. In the late 1980s, the falling dollar had few ill-effects on
America's economy, but it played a big role in inflating a bubble in
Japan by forcing Japanese authorities to slash interest rates.

This time round, it is a bad sign that everybody is trying to point the
finger of blame at somebody else. America says its external deficit is
mainly due to sluggish growth in Europe and Japan, and to the fact that
China is pegging its exchange rate too low. Europe, alarmed at the
"brutal" rise in the euro, says that America's high public borrowing and
low household saving are the real culprits.

There is something to both these claims. China and other Asian economies
should indeed let their currencies rise, relieving pressure on the euro.
It is also true that Asia is partly to blame for America's consumer
binge: its central banks' large purchases of Treasury bonds have
depressed bond yields, encouraging households in the United States to
take out bigger mortgages and spend the cash. And Europe needs to
accept, as it is unwilling to, that a weaker dollar will be a good thing
if it helps to shrink America's deficit and curb the risk of a future
crisis. At the same time, Europe is also right: most of the blame for
America's deficit lies at home. America needs to cut its budget deficit.
It is not a question of either do this or do that: a cheaper dollar and
higher American saving are both needed if a crunch is to be avoided.


Simple but harsh

Many American policymakers talk as though it is better to rely entirely
on a falling dollar to solve, somehow, all their problems. Conceivably,
it could happen--but such a one-sided remedy would most likely be far
more painful than they imagine. America's challenge is not just to
reduce its current-account deficit to a level which foreigners are happy
to finance by buying more dollar assets, but also to persuade existing
foreign creditors to hang on to their vast stock of dollar assets,
estimated at almost $11 trillion. A fall in the dollar sufficient to
close the current-account deficit might destroy its safe-haven status.
If the dollar falls by another 30%, as some predict, it would amount to
the biggest default in history: not a conventional default on debt
service, but default by stealth, wiping trillions off the value of
foreigners' dollar assets.

The dollar's loss of reserve-currency status would lead America's
creditors to start cashing those cheques--and what an awful lot of
cheques there are to cash. As that process gathered pace, the dollar
could tumble further and further. American bond yields (long-term
interest rates) would soar, quite likely causing a deep recession.
Americans who favour a weak dollar should be careful what they wish for.
Cutting the budget deficit looks cheap at the price.
</quote>

The above article was published on December 5, 2005., when the dollar
was worth about EUR 0.85. It is currently worth EUR 0.69 and falling,
that is to say it has lost roughly 20% of its value since then.

I reiterate the main point made in the above article:

"If the dollar falls by another 30%, as some predict, it would amount to
the biggest default in history: not a conventional default on debt
service, but default by stealth, wiping trillions off the value of
foreigners' dollar assets."

This would be the case if the value of the dollar falls to EUR 0.60,
scenario not only possible, but likely before George Bush leaves office,
and possible even by the end of this year, *if* the US government
continues with business as usual.

Source:
http://www.forbes.com/markets/feeds/afx/2007/10/26/afx4266921.html

<quote>
Forex - Dollar flounders, sets fresh record lows against euro
10.26.07, 11:07 AM ET

LONDON (Thomson Financial) - The hapless dollar set a series of fresh
record lows against the euro and was down against a host of currencies
as fears of a recession in the US began to take hold after a some weak
economic numbers over the week.

The data include an unexpected drop in durable goods orders and
higher-than-expected weekly employment numbers yesterday alongside a
continually weak housing market and rocketing oil prices.

Later today, a drop in the University of Michigan consumer sentiment
survey is expected, making it likely that the dollar will drop further.
Economists expect the University of Michigan survey to show a final
October consumer sentiment of 82.0, down from its 83.4 preliminary
reading.

Against this backdrop, markets are predicting that US rate setters will
be forced to go on a rate cutting spree in order to shore up the wider
economy.

'Increased certainty that the Fed funds rate will fall by at least 50
basis points this year to 4.25 pct means that the dollar will be treated
as a low yielding currency, specifically due to the onset of further
rate cuts in 2008,' Ashraf Laidi at CMC Markets said.


More rate cuts are expected to follow in 2008.

'It is the anticipation of further rate cuts that reinforces the
depreciation of the greenback, especially as the deepening housing
recession is expected to continue into 2008, translating into
repercussions for employment, homeowner's equity and consumer spending,'
he added.

No wonder then that the dollar is now languishing at a record low
against the euro (1.4287 usd), a 33-year low against the Canadian dollar
and a new 23-year low against the Aussie dollar. It held up better
against other low yielding currencies -- namely the yen and the Swiss
franc

The dollar's weakness against the euro was also more stark as it comes
at a time when euro zone data is starting to weaken.

It was revealed today that Euro area M3 grew 11.3 pct year-on-year in
September, down from a year-on-year growth rate of 11.6 pct in August,
and in line with the consensus forecast.

Elsewhere, the pound rose to three-month highs against the dollar,
supported by the US rate cut talk.

'The market is of the view that the Fed will act 'ahead of the curve'
thereby preventing the economy from free falling,' said analysts at BNP
Paribas (other-otc: BNPQY.PK - news - people ).

'As long as this view holds, the US dollar will continue to trade on the
back foot.'

The yen was stable against the dollar, as risk appetite remained subdued.
'Dollar/yen trades in a tight range as risk sentiment remains skittish,'
said analysts at BNP Paribas.

However, they added that risk appetite could re-merge following
Industrial and Commercial Bank (other-otc: CBDP.PK - news - people ) of
China's announcement that it will buy a 20 pct stake in South Africa's
Standard Bank -- the biggest foreign direct investment in the country
since 1994.

London 1337 GMT London 0902 GMT
</quote>

He has
frequently acted as a test-site for a
disinformation line that the Kremlin
planned to use for general "old
Europe" consumption.

Yeah, and there is a Kremlin agent sleeping under your bed.

Please understand what Holman is
and what he is all about.

Yes, I am obviously a person who reads quality media representing a
variety of opinions, trying to formulate my own by critical
consideration of different viewpoints, while you derive all your
information from Fox News, Rush Limbaugh, David Duke, and Ann Coulter.

Worst,
Eugene Holman


.