Does lower confidence in the dollar mean that investors see the US as less stable?

[Kidlicious]

Rethinking the dollar

Is the weak dollar only a result of US economic policy or do investors fear that the US govt is less stable now? I think that terrorism against the US is starting to weaken the dollar. What do you guys think?

[chequita guevara]

I doubt anyone fears the USG is less stable, even if it is run by morons.

[Spec]

Stupid poll.

An unstable economie does not automaticly leed to a fall down....

Yes the investors are afraid of investing in the US but it wont colapse because of that....I takes a lot more than that.

Do you know what a recession is? It happens every now and then but countries (in general, unlike argentina and Mexico) get out of it.

Spec.

[Kidlicious]

Originally posted by Spec
Stupid poll.

An unstable economie does not automaticly leed to a fall down....

No, but it certainly increases the risk.

Originally posted by Spec
Yes the investors are afraid of investing in the US but it wont colapse because of that....I takes a lot more than that.

The question really is only that if they are afraid of investing in the US, not whether or not that fear will cause a colapse, but it might do that.

Originally posted by Spec
Do you know what a recession is? It happens every now and then but countries (in general, unlike argentina and Mexico) get out of it.


Spec.

The question is has the risk of economic colapse in the US increased, and if so is that increased risk causing investors to lose confidence in the dollar.

[Dis]

as much as you would like the U.S. economy to fail. It isn't going to happen.

[Case]

I don't see why a terrorist attack in Istanbul would logically cause the value of the $US to fall. But then again, the inetnational money markets are little more then speculation.

If you want to assume that some logic is involved, then I *guess* that you could look at the September 11 attacks accelerating the then decline into recession causing fears that further attacks would either tip the US back into reccession, or cause the US government to increase spending, and it's deficit, but even more.

A really scary explination is that this behaviour reflects a lack of long term confidence in the US's finances. This argument is butressed by the steady increase in the price of gold in the last few months, sugesting that gold is taking over from $US as a the place to stick money during bad times. The fact that conservative publications like The Economist are predicting a major debt crisis for the US in the next few decades has probably lead to a reluctance to park money in US stocks and bonds.

[POTUS]

A weak dollar just means that the US economy is weak, not our entire nation.

[Bosh]

Please please please let the US dollar get weaker, the weaker it is the more dollar I get paid

[Dis]

you see, it disgusts me that these commies want the U.S. to fail. They want to see starving people on the streets, just so they can say. "See, this wouldn't happen under communism."

Some of these people are the same people who wish for more death and mayhem in the middle east just to prevent Bush from being re-elected.

[Ted Striker]

no

[DAVOUT]

Weak dollar ??? How is that ?

The dollar is almost exactly at the level it had when the Euro was created, and we did not hear then that the dollar was weak.

When the dollar will fall at 1.64 (currently 1.19), as it has already done in the past, then we could talk about a weak dollar.

On the other hand, it is true that the twin deficits can be seen as a potential threat on the dollar strength, but Alan Greenspan two days ago explained quite convincingly that we are now in an era where unbalances are smoothly corrected. US citizens are likely to participate in sharing the burden of the smooth correction.

[Pekka]

I wouldn't worry about it. It's still strong, and furthermore it's stable. Euro has risen a bit, slowly and steadily, but then again that was to be expected as it dropped so down at some point. Doesn't mean anything.

Besides, this is better for me, because now I can afford to spend more dollars in the US! . So I'll buy more.
Dollar is not collapsing.. it's strong like always.

But, some folks might invest in currency other than dollar for a while, if there are investors at this current moment investing in currencies. Nothing dramatic.

[DanS]

For a country with the largest economy worldwide and a persistent 5-6% current account deficit, the dollar is very strong. This indicates that the US still is perceived as a relatively more lucrative place to invest than other major economies, such as Japan and the EU.

[Tingkai]

Re: Does lower confidence in the dollar mean that investors see the US as less stable?

Originally posted by Kidicious
Rethinking the dollar

Is the weak dollar only a result of US economic policy or do investors fear that the US govt is less stable now? I think that terrorism against the US is starting to weaken the dollar. What do you guys think?

The dollar is weak because the US gov't has to largely borrow money and most of the money it borrows is from other countries. So it has to sell the US dollar and that pushes the price of the US dollar down.

The money the US gov't borrows from US citizens means less money available for spending and investment. That weakens the econmy.

So the low dollar is very much the result of the Republicans spending money like there is no tomorrow.

The Iraqi freedom fighers/Terrorists/banditos also push the dollar down. Everytime they attack, the US is forced to spend more money to fight them. That means the US has to borrow more money.

[Tingkai]

Originally posted by Dissident
you see, it disgusts me that these commies want the U.S. to fail. They want to see starving people on the streets, just so they can say. "See, this wouldn't happen under communism."

Some of these people are the same people who wish for more death and mayhem in the middle east just to prevent Bush from being re-elected.

Nah, I'm just being a good ol' American capitalist. The more attacks on the US, the more I can make money off of betting against the US economy. And the guys who are really making money off the US are the Saudis. The price of oil has shot up after a bunch of Saudi terrorist attacked the US and the Saudis are laughing at the US all the way to the bank.