Let the good times roll: IMF deeply concerned about falling US$

[DaShi]

Originally posted by Urban Ranger


Some country would go to the US and say, "We want to buy this gitzmo." But the US would say, "Hey, you are on this list of countries we don't sell gitzmo to. Want some widgets instead?"

So the problem now isn't supply?

[KrazyHorse]

Originally posted by Edan


With the dollar declining, that answer might change...

(Don't we export a lot of food?)

Yeah, cause you subsidize it up the wazoo

[DaShi]

Originally posted by Urban Ranger


How much do you think the RMB is going to rise? 50%?

Even if that's the case companies will simply move their factories to cheaper countries, say, Ethopia.

They'll probably be moving to India soon anyway. But there will still be trade with China. At least then it will be fair trade.

[Whoha]

Originally posted by Edan


With the dollar declining, that answer might change...

(Don't we export a lot of food?)

America is a net importer of food.

[DanS]

I don't think a further 10% fall against the Euro is anything to be worried about from this side of the pond. Certainly not a meltdown.

We'll just be consuming a little less of overseas products for a little while. Little harm in that. It's about time to adjust to the imbalances anyway.

[Lorizael]

Originally posted by Whoha


America is a net importer of food.

That's a deceptive statement.

[DanS]

Besides, this is a complicated set of factors. That article was published yesterday, while the following article was published today by the FT...

Financial markets suffer fresh instability
>By Steve Johnson, Robert Orr, Gillian Tett and Tony Tassell in London
>Published: May 15 2006 20:04 | Last updated: May 15 2006 20:04
>>

Global financial markets were buffeted by another day of instability on Monday as traders fled from higher-risk investments, baling out of commodities and emerging markets.

Amid steep declines in commodity prices and emerging markets, equities, copper, aluminium and zinc recorded sharp falls. US oil prices dropped 3 per cent to below $70 in spite of bellicose remarks by Hugo Chávez, the Venezuelan leader, about rest-ricting supply.

Heavy falls hit Asian and European stock markets although losses were trimmed after Wall Street steadied in early trade.

In London the FTSE-100 fell to 5,841.3 after its worst two-day run for 3½ years. It has now fallen for four sessions in a row, losing 4.3 per cent in that period.

The dollar recovered from recent weakness, firming about 0.7 per cent against the euro to $1.2840, as investors retreated to safe haven assets and offloaded riskier investments. US Treasuries rallied for the same reason.

Rising volatility in currency markets and growing worries over increasing global inflation and interest rates have spurred investors to pare some of the big bets they have taken in the past three years on everything from the price of copper to Indian shares. “This has further to go. There will be a lot more blood on the carpet,” said David Bloom, currency analyst at HSBC.

Among the hardest hit currencies against the dollar, the Turkish lira slumped 6.1 per cent, the South African rand dropped 3 per cent and the Indonesian rupiah 3.7 per cent.

In equities, emerging markets were headed for their worst one- day drop for two years. Among share markets suffering the steepest falls, Indonesia dropped 6.3 per cent, Russia 5.1 per cent and Turkey 4.1 per cent.

European equities initially fell by as much as 2 per cent but later rallied as Wall Street opened firmer. The FTSE Euro-first 300 index closed down 1.3 per cent.

Commodity prices, which have enjoyed a vertiginous run to a series of highs in recent months, suffered heavy profit-taking. Copper prices fell by up to 9 per cent before losses were scaled back to about 3 per cent. Gold fell 5 per cent to $680.50 a troy ounce.

In signs of rising risk aversion in the credit markets, the price of safe haven instruments such as European government bonds rose while the price of emerging market bonds and risky corporate credit instruments fell.

Jim O’Neill, head of global economic research at Goldman Sachs, said the markets had been spooked by fears that rising US inflationary pressures would force the Federal Reserve to keep raising interest rates and hit by a lack of confidence in Ben Bernanke, the Fed chairman.

Albert Edwards, global strategist at Dresdner Kleinwort Wasserstein, said the long-predicted correction in equity markets had become a reality.

[Vesayen]

Originally posted by DaShi


I agree. The US is entirely to blame for its own downfall. However, it's not too late for it. The US, and many other countries as well, have gone through far worse and come out of it in the past.

The U.S. is not "doomed" to be destroyed or even to turn into a third world country, but we are "doomed" in the way that we will lose our most powerful nation in the world status and not regain it. Our massive, crippling debt will catch up with us in 10 or 20 years, at which time I hope the populace will round up every economist in the country and stone them publicly.

"DEBT IS NOT BAD FOR THE ECONOMY!"


.....money owed, is money owed. We may not owe it today, but we'll owe it next week. Joe Moron Economist, your right, TODAY we are fine, tommorow, we won't be unless the debt incurred is offset with increased income in the mean time which offsets the debt(and its interest) which is not the case.

[Zkribbler]

Originally posted by Vesayen
Is he? What the hell do we export which can't be done overseas for less money?

Good movies??

[Agathon]

And the reason for this is that the current administration aren't fit to manage the finances of a child's piggy bank, let alone the world's largest economy.

But I hate America, so good on them.

[DaShi]

So you want the majority of Americans to suffer while the wealthy and elite, who are most responsible for any atrocities caused by the USA, still remain in financial security in their isolated compounds?

[Imran Siddiqui]

You know, if China does go to a floating currency, that may be just as bad for the US if not worse in the short term. IIUC, China is buying up a lot of dollars because its own currency is based upon it. Without that tie (I think they just switched to pegging it to a basket of currencies), there is no incentive to do so.

[Urban Ranger]

Originally posted by Imran Siddiqui
...(I think they just switched to pegging it to a basket of currencies)...

Yup, they did.

[DaShi]

All the better, the US will then be forced to take fiscal responsibility or the wealthy, themselves, may be affected.

[Odin]

Originally posted by Vesayen

I hope the populace will round up every economist in the country and stone them publicly.