Investors Continue to Digest the Dollar

I think you left out China. Back around August, China announced a surgical 5 times equidistant planned rate cut into 2009. I'm always puzzled when people sell China rate changes as news though, they said they were going to do this, and being the first time in some time, indeed, they are serious. I don't see the dollar alone, or the euro or yen alone, or any Bretton Woods II alone. They are all interrelated, and further, you can examine the relationship between the two and or three AS the value - the slide, or however you want to look at it.

I'm glad that all foreign nations "flight to satety" is sraight to the "Greenback"(although it looks like a rainbow every other day they print new money). What concerns me Brian is that the United States is not necessarily the most powerful country anymore,nor is the financial system the envy of the world. Unfortunately,we are so thinnly spread thru-out the world militarily that a two-front major confrontation with any super-power,ie.)Russia,China,Europe?etc.(Japan?)could just about bankrupt this once great country(similarities to the Roman Empire)!Please don't mis-understand me Brian,but I believe the "Dollar's" best days are gone.(P.S. Our leader's memories are weak,and very corrupt.The same mindsets have been in office from cradle to grave,thus we can only fail with this arcane political system ,we call "Democracy"!

This is a perplexing as the inverse yield curve of 2007 when long term money was earning less than short term. With the Fed printing massive amounts of money--Oh yea they don't print it any more it is created with the click. "Well Sha-Zam! Look at this extra $7.4 trillion let us start bailing..."

One problem I see ? China's decision - again, announced months ago to surgically cut interest rates 5 times into 2009 ? Will FORCE the dollar up. This will be the worst news for a declining US manufacturing base. China's rate cuts will be a blow to US exports, if I recall Paulson was over begging the Chinese not to do this weeks ago. I guess he missed the announcement... Then would have been the time to act. Tricky too- because for some time US has been pressuring China to do this very thing, except now is the worst possible time for the US. A strong dollar though in this opera of Bretton II currencies will push the Pound down in my view. So, a weak Yen makes for a stronger dollar which makes for a weaker Pound which gives the Euro a bonus against the Pound for the time being as a bonus. I don't blame it all on the Chinese. But so long as China pushes down on their Yen, US Dollar buoyancy will rise. The US is China when it comes to US : UK in my view. So, China pushes down, US pops up, which pushes down the Pound, which will pop up the Euro. So, I'd say eventually we should come full circle here and we'll be back to a stronger Euro against the dollar, to this ? I say depending on how the Euro's relationship to the Yen goes ? Who knows, we're at 1.35x today, I swear the world was going to end when we hit 1.59x. heh. I think the Euro to the Yen relationship will determine the Dollar to the Yen's final outcome. Anyone following Euro and Yen ?

comment by earle is correct except one thing he left out. We The Peoples memories are also short. We keep putting these same thieves,crooks and cradle to gravers back in office. We the people need to wake up and put these people out on the street. If a coach fails his team and owners he is out, most companies and I say most when the head honcho fails,he is out, if most of us whether employed or self employed do not live up to our commitments , were out. Wake up America. Its time to kick these guys out. All of them, even the honest ones, If there are any honest ones left. And as far as not being the most powerful nation anymore that is also true, but we can take it back if everyone gets on the same page and does what is right for the country instead of whats right for a few.But now I am only wishful thinking.

Just to avoid any misunderstanding, the yen (JPY) is the currency of Japan. The currency of the People's Republic of China is called the renminbi (RMB), or the yuan (CNY). The Japanese yen, incidentally, is at near historical highs versus the US dollar (USD). The dollar has strengthened a little bit in the last few days, but the USD is still at about 93 yen to the dollar as of today (January 5th) The "endaka," as it is known in Japan, is making Japnanese exports relatively more expensive when valued in USD terms. If you are Japanese, or a foreign expat living in Japan and you are being paid in yen, your purchasing power has significantly increased relative to the USD. On the other hand, if you are paid in US dollars, you really have to be more dilligent about budgeting. Heaven help the poor sod who has to pay his bills in yen but is paid in dollars and didn't get a raise or cost-of-living increase last year. Most folks living in the States pay currency exchange rates scant attention, but living overseas, exchange rates are as important a part of the daily news as the weather. On the other side of the spectrum, the South Korean won has recently taken a real pounding relative to the US dollar. The Euro has been devalued versus the Japanese yen in the last year or so, but has staged a mild comeback. Just my random $0.02 (or 1.84 yen) Thanks.

The last line in my previous post should be "my random USD $0.02 = 1.86 yen @ 1.00 USD/93 JPY." Thanks.

I think there is more to potential for durable goods - in the US as to restoring a manufacturing base. Take all the silly corn used for ethanol - still 100 years and the 'blowed up real good Eugeeeene ' (John Candy) engine. Currently technology exists for plastics from corn. This does NOT paste the atmosphere with detriments to children's health, pulmonary - you name it. US could find THAT niche - it doesn't exist - but hey I'd pay premium for that too. See folks (says Mark Twain's ghost) All comes down to this... Chinee can't grow corn. Twain adopted a shorthand that never took off - rather cryptic. If Twain were alive I bet he'd say to credit issues "Sounds to me like someone sold off a large portion of real estate - the land of America, as if it was worth more than it is, and now we're payin' fir it" FIR on phonetics, no disrespect - then again Twain had that whacko shorthand, I say 'fir' is legit. If you look back on it ? Land - THE land was really sold off at crazy Larry's discount rates while crazy mary - the home price evaluator - and her brother in law - Phil who worked at Moody's to triple A it all - made sure to say - yes, this 150k property is worth 270k this week.

I do like a good idea when I conceive it - and spelling conceive right too. I say- take the corn used for crippled ethanol - and move to that new corn based plastic, I saw some program on it, can make 2 liters from corn, ALL kinds of plastics, no harm in making them, and they degrade JUST as you'd probably LIKE plastics to fade anyway. Why not. The US could STEAL China's toy manufacturing base. No kidding, I think Europeans would import toys, - MABYE not by christmat 2009, but hey, 2010 for sure. This would be SERIOUS jobs too. I KNOW it sounds ludicrous, but it makes a better use of our corn base. All in all ? China has won in SO many ways through plastics. The US could take this, it's THE healthy way to make plastics, and watching Bill Nye ? this AM ? I see our plastics have some things BANNED in Europes children's toys. See my point ? Europe would IMPORT toys from the US. AND plastics. In fact, take the Toys idea as a seed for moving to a US based plastics manufacturing base - Imagine cars - with plastics made from corn. Forget making ethanol - we can derive electronic resources PLENTY of ways - wind, geothermal - helium 3 nuclear fusion - Odd, head of China's space agency says - China is going into space and to the moon for Helium 3, it IS our future. India, Russia and Japan - ALL THREE, but Fox presents China's interest not in what will replace petro for sure, but as 'to potentially send missiles to the US ? in space wars ? ' GIVE me a break -

Regardless of what the dollar is doing today; the rest of the major world players seem to be following suit. US lowers interest rates; so do the rest. US puts billions and trillions in bailouts and stimulus packages and the rest of the major players also follow suit. US has a 50 Billion $ ponsi scheme; so does Europe and how many others. (wait till you see the derivatives markets coming soon... big surprises in store then) US auto sales off more than 30%, Chrysler off more than 50%... survival of the fittest? Even Toyota off 37%... blame the credit markets. Yet, BIG LOANS given on 1/3 less sales to the auto companies to continue business as usual! Oil bouncing up and down.... Oregon now wants to tax MILES driven not gas by the gallon... Obama wants to have Universal Health care .. look at Hawaii.. bankrupt in 7 months.. now we head down that path. US begging, borrowing, stealing, printing and producing an additional $7.4 TRILLION dollars into the economy... from where? And what did they buy.. shares.. how much or many; banks receive billions of tax dollars with NO accountability. Where did the money go? Global economy shrinking... US discusses tariffs on products to compete; only if they want to have retaliation tariffs. Dems say, "let the Bush tax cuts expire"... In all that is happening and compared to the Great Depression caused by Government Intervention... Where is the GOOD NEWS?

I can not stop laughing long enough to write this. The US could STEAL China’s toy manufacturing base. It is the American way! STEAL, fraud, embezzlement, money laundering, patent infringement; and we could buy some slave children from Cambodia to build those Toys. What happen to America's housing market? We look the other way as our children are forced to rent homes and apartments with meth disclosiers on the deeds. We turn a blind eye to what really needs to be done. STEAL China’s toy manufacturing base. Oh that is funny!

Good News: FORMER BANK MANAGER SENTENCED TO OVER 6 YEARS IN PRISON IN D.C. PROPERTY TAX REFUND FRAUD SCHEME Deposited Almost $18 Million in Fraudulently Obtained D.C. Government Checks and Received Over $366,000 in Cash for His Assistanc INVESTMENT ADVISOR ARRAIGNED ON SECURITIES FRAUD CHARGES Atlanta, GA - FREDERICK J. BARTON, 48, of Atlanta, Georgia, was arraigned today before United States Magistrate Judge C. Christopher Hagy on federal charges of wire fraud, mail fraud, and securities fraud. BARTON was indicted by a federal grand jury on December 2, 2008. “This indictment charges a former stockbroker and investment advisor with diverting client money to himself, including $1 million from an elderly woman suffering from Alzheimer’s disease." Good News is the FBI seems to be working overtime!