While i’m sure that many Americans appreciate Mr. La Monica’s optimism in his numerous articles, it doesn’t change the reality that the economy is in shambles.
Millions of Americans have had their homes foreclosed or about to lose their homes. Tens of thousands have been laid off from their job and that number continues to ascend. I am an out of work business analyst with a Master’s degree and I have not secured a decent job. Many of us are on the same boat. It is a deplorable economy when the vast majority of college educated people are either out of work or underemployed.
For all you doomsdayers, one question: what is the most counterfeited currency in the world? $$$ So if you think that the Euro will suddenly be king, you need to rethink that.
I agree mostly with Shannon. Unfortunately, I don’t think we will see a .90-1:1 range with the USD:Euro for at least 10 years (based on the currency cycle.
We have peaked at the 1.61 point where a lot of resistance was met and will make a slow way down to 1:1 over the next decade.
Frankly Europe has been benefitting from the weak dollar as it has afforded them to deal with the over inflated oil prices (imagine what their price for gas at the pump would’ve been without the huge dollar weakness). With oil less of a factor, it can come down now.
BTW, many currency traders lost massive amounts of money in trading the wrong way when the dollar went to 1.58 instead of 1.61+. The small time players lost enough to be out of the game and now we will see the dollar strengthen…. but it won’t get much better than 1.35 for a while.
The dollar is not so much recovering as we are seeing teh first termors of the massive, and inevitable, Euro implosion that has been building for teh past 6 months. When you have countries like Spain and the UK demanding rate cuts and Germany riding roughshod over the interests of the rest of the EU because of its own inflation crisis, the internal stresses are clear to see. when you have the President of spain publicly calling the head of the ECB “ridiculous” and “Stupid” on national TV, it’s obvious how great these stresses are. Within teh next 6-12 months, the Euro is going to snap back to levels much closer to its original level of 80-90 cents. Anyone can see that coming.
In the short term, (a year) we may well see a continued rally in the dollar. But the long term (5 years and more) will see significant correction in the value of the dollar.
Money = labor. In a global world, the value of labor will equalize. When the value of an hour’s work by comparably skilled workers in China, Korea and Thailand matches (in terms of purchasing power) that of workers in the US, Japan and Europe, the correction is finished.
Yes, the U.S. dollar will gain against the Euro, IMO, in the run-up to the November elections.
Worldwide, economies have cooled sufficiently for commodities to begin their correction downwards. Let’s hope the economies don’t cool too much.
Whether Central Banks intended this to happen, we don’t know. But they will claim credit, if it turns out well.
If the FED soon moves short-term interest rates up by one-half of a percent, the dollar will move even higher, in an explosive manner IMO.
Oil (in U.S. dollars) will correct down even more, and I would predict that the stock market would also ‘explosively’ move higher.
The Talking Heads will say that the market is relieved that the FED thinks the economy is strong enough to withstand the rate increase, and is happy that inflation is being dealt with in a timely manner.
The markets don’t like inflation and the perception that ‘inflation is under control’ and that the FED is ‘in control at the helm’ will be reason enough for the Dow to gain perhaps 448 points on the day of the announced rate increase.
I am extremely bearish on the dollar in the long term. These little carry-trade blips and adjustments that are showing up today are not a long term indicator. On this point specifically, I am a strong supporter of Peter Schiff’s understanding of our economy. As such, I see a COLLAPSE of the US dollar against foreign currencies.
It will not take much to get there either…
1. Just a couple of nations dumping their US dollar reserves would start the stampede.
2. Oil trading in Euro’s instead of dollars would be sufficient enough reason to dump greenbacks.
3. Perhaps China/Japan/Saudi stop buying our bonds. The only way for the US to raise money via bond issues would then be by way of interest rate hikes. (Remember the 1980’s and 22% interest?)
Buy Euro’s, Buy Precious Metals, buy just about anything, but get your assets out of America ASAP.
Why should the dollar not rally, look at inflation. People are paying for the greenback’s rally in straight out of their pockets. Take a look around at the grocery store. Not only are the size of products getting smaller, the prices are increasing. Commodities are taking their cue from the oil companies and “price gouging” is runnig rampant. Remember what happened long, long ago when a blind eye was turned to the mortgage brokers and the subprime fiasco. Well, now the tide has changed and it is food (Commodities). People have to eat-right?
Any rally seen right now is on the backs of the consumer, many of whom can afford it, but unfortunately it is also hurting many who cannot.
The problem lies in the fact that half the country has been left behind. During our economic explosion high end salaries increased dramatically, while the salaries of lowe wage earners remained the same. Minimum wage was just increased last week to $6.55 hr. This is sad.
If this gap between low income and high wage salaries continues to increase there is no way that the economy can function as it did before. This should be obvious to everyone.