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http://www.washingtontimes.com/apps/...111080086/1001

China roiled financial markets around the globe yesterday when it asserted that the dollar is losing its luster as the world's reserve currency and that Beijing will swap some of its $1.4 trillion in reserves out of U.S. dollars and into stronger currencies like the euro and Canadian dollar.

Looks like some rough times for the USD up ahead.

My initial thought: Wait for the bottom and buy in to USD. Over the long haul (5+years), I see it going back to previous levels.

Your thoughts?

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u-Bob

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SinisterStudios

The US dollar is not going anywhere, the US is still the largest economy in the world and americans spend freely (too freely and thats what got us into all this shit) The low dollar actually helps US exports alot and will help to drop our huge deficit. We havent seen the bottom yet, but when we do it should be a good investment. Once Bush is out of office there should be rebound.

Its a normal cycle with currency, its happened before and it will continue to happen. Does anyone remember when the Japense Yen was out of control back in the early 90's, the dollar was in the dumps then too and it rebounded.

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Brad Gosse

http://www.nationmaster.com/graph/ec...ccount-balance

I think it will spiral the dollar even further down when they do this. Americans don't seem to care about their own dollar because the effects have not yet been realized.

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koalat

Haha dude, that sounds like pure wishful thinking.

See, America doesn't export anything anymore (besides produce) because it was so much cheaper to make in China etc... Every day that the dollar slides buying back all the that stuff was outsourced overseas is only going to get more and more expensive...

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Snake Doctor

The Chinese official who made that statement recanted it later in the day.

Also remember, China has their currency pegged to ours, so a run on the dollar is the same as a run on the yuan for them.

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StuartD

Currency around the world used to be based on England's currency in 1900. It changed... it can change again.

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polish_aristocrat

what do you mean by previous levels?

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dready

US Dollar hegemony will end, it's just a matter of sooner or later.

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infecto

Ummm look again and then come back. The US exports billions of dollars worth of output. Its not wishful thinking but elementary economics.

sltr

u.s. had a neg trade balance of -725 billion just in 2006 alone

Snake Doctor

*Yawn*
And what does that have to do with the price of tea in China? (literally)

They have their currency pegged to ours, it's something we've been trying to get them to change for years. If they let their currency trade freely they will lose the huge trade advantage they have with us, their biggest customer.

They would literally be cutting of their nose to spite their face.

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sltr

also, china has a monetary policy that keeps its currency weak in relation to the dollar, by design.

that will change

Snake Doctor

Quoting our trade deficit during a discussion of the falling dollar is like quoting that smoking rates have dropped when discussing runaway health care costs.

A falling dollar actually HELPS our negative trade balance.

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Snake Doctor

If it does, China's imports to the US will drop substantially. There are alot of people over here who want to see that happen.

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buzzy

People who think the USA will go back up in a few years are surley mistaken, it is not going up, not anytime soon - not ever.

sltr

i was commenting in regards to the post previous to mine, not the overall topic.

Eman - PG

It was some official's opinion, not a decision of the Chinese goverment. Also, to whom exactly will they sell 1T worth of USD? China is something like the biggest or 2nd biggest holder of US treasury in their reseves next to Japan. Also why would they "buy" other assets at their 'peak'? That's certainly not the best strategy.

Snake Doctor

Ever notice how all the "experts" on the U.S. economy and U.S. dollar aren't U.S. citizens?
AND notice how they're constantly predicting the demise of our economy and standard of living?

I know a lot about economics, I've read volumes on the subject, but I don't know jack shit about England's economy, or Germany's, or Brazil's, or anyone else's other than the one I live in.

How is it that all of these foreigners are so "knowledgeable" about another countries' economy, and are so certain that it's going to collapse?

My guess is that they're just pissed off that they're getting less euros for their dollars and since they're hurting, they're "praying" that people in the U.S. will feel the same pain.

Guess what folks, you're the ones who made the decision to start a business where you sell things primarily to people in another country who use another currency. You were getting nice and fat when the dollar was strong, so now you gotta live with the lean times too.
If you don't like it then start a business that sells things primarily to people in Europe.

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infecto

The reply still makes no sense. Trade deficit yes but we have a huge amount of exports. Our exports are not 0 like someone was trying to imply earlier. I was supporting that economic theory states that with a depreciating currency exports become cheaper therefore foreign countries buy more which boosts the exports of that nation.

buzzy

lol. I earn my money in pounds which is good for me since I can buy whatever I want from the USA for half the price, trust me I'm not mad, the situation is just too predictable. I'm not being anti american or just saying that - hopefully some people will actually listen and get rid of all their USD right now before it's too late and they lose alot of money.

sltr

i was simply mentioning our trade deficit, not debating anything, not challenging anyone's professional economic expertise. simply stating a fact as a posting in the thread.

i do not claim to be an economist and am not here to debate anything of sense.

RegUser

HERE is another anti american predicting serious slowdown
http://news.yahoo.com/s/ap/20071108/...rnanke_economy

axelez

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GreyWolf

Obviously an economist at heart Never knew anyone could read volumes about economics and know "jack shit" about anything other than "US economics" - that's an achievement.

That must have been the volumes entitled - "The Evolution of Economics For Non-Foreigners"

StuartD

Then you don't know a lot about economics.

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Mr.White

i told you before.. was just a matter of time till this topic was brought up!

Enemator

Ah..so is that why the dollar has been plummeting uncontrolably?

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Brad

Who in the top tier doesn't export billions of dollars of goods and services? It's not like people are trying to compare the US to the 3rd world here.

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_Richard_

man that's bad news

JP-pornshooter

US exports is not considered any significance, yes it is there and yes it is going strong right now, but it is still much much less than what we import.
perhaps we should sell some american made porn in china to get our hands on those dollars over there...

JP-pornshooter

i believe they were merely trying to make a point that despite the high exports volume, there is still a huge deficit, which was mentioned in a reply above quote:
"The low dollar actually helps US exports alot and will help to drop our huge deficit." end quote
so in fact despite strong export, there is still deficit.
a revaluation of the chinese currency would help the situation or americans should think twice before buying chinese made goods.

quantum-x

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RAINBOW PONIES


Most stupid post in gfy history, right there.
The Asian crash in the 90s is entirely different. This is the calculated suicide of the dollar.

If you don't know what the impact of this move can produce, strap in. Australia's dollar was boosted from the .54 > .74 over the last 3 years SOLEY on mining companies investing in AUD to offset costs of inflation later.

If china really drops this, it'll be intense.

AlienQ - BANNED FOR LIFE

Fucking Tards

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infecto

Read the context of my post. You have no clue but thanks for trying. Go back home idiot.

yahoo-xxx-girls.com

The Chinese yuan is not very stable, from what I understand and I feel a bit bad if the Chinese dumps their US dollars... I'm no expert in finance, however it can't be good for the US!

.

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Heheheh I get it

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xmas13

Oil prices are rising, and Chinese currency is pegged to the dollar.

Trade deficit reduction might have more to do with the housing crisis, it affected consumption.

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Good graphic.

One other disturbing dimension regarding the dollar's drop: the US enjoys lower inflation since many countries hoard dollars instead of sending them back to the US to circulate. This has the effect of lowering inflation in the US due to less greenbacks in circulation. However, if the countries hoarding start circulating it back to the US, this inflation lowering effect is gone. With inflation being stoked by higher fuel and commodity prices, the US can't afford yet another cause of inflation.

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ADL Colin

Bernanke forecast a slower two quarters but also said "We think that by the spring of early next year, as these credit problems resolve and as, we hope, the housing market begins to find a bottom ... the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace".

For what it is worth.

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sltr

doesn't it have everything to do with the housing market?

xmas13

Greenspan and former/current Fed officials should be shot on spot, and we should end their monopoly over US currency.

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Clinton-era levels or close to it. US financial markets are still the most developed in the world. That's indisputable. However, this advantage may not last long as global finance markets continue to consolidate. Regardless, when the US economy snaps out of its current financial crisis, I see it improving. However, there's a limit to this.... there's still the impending crisis of SOCIAL SECURITY and other mammoth government entitlement programs that have to be dealt with as the Baby Boomers retire later in this decade and the following years.

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GreyWolf

It's called Fedspeak - the same "words" you hear from a banker who has no desire to upset the company he just loaned $100 mill to last week. It's for the ears of the shareholders to keep them from panicking and to create confidence - kinda like the Iraqi Information Minister

JP-pornshooter

greenspan and actually even clinton administration were partly to blame for this overheating of the us economy. the interest rates were just kept too low too long and many peeps took out money out of their homes or made huge profits on the housing boom, which again was spent on import goods (cars and electronics etc..). greenspan tried to do the impossible, to keep the bubble just short of bursting..

pocketkangaroo

I can only imagine that those that are happy about the dollar falling are not making a lot of money in this industry. A weak dollar is bad news for everyone overseas on this forum.

quantum-x

Here's the thing: If China dumps 1.4trillion USD, the currency is going to take a fucking HUGE hit. That's the summary. Yes, if you live in the USD, 1$ == 1$, but when imports start costing more and inflation sets in, the $1 from 2007 will not each $1 in 2009

GreyWolf

Can't see *anyone* being exactly happy about it PK - it's yet another pain in the butt for everyone, - don't matter where they are man.

The sooner net transactions are presented in local currencies and at a rate which take current under/over values into account the better. A few people have been doing this already (including us) and it sure cushions the effects of more extreme changes.

Can you imagine any other multi-national tolerating global signups in a depreciating currency? Nope - they already have their regional websites and "cash registers" pre-coded to allow for local currency and other factors.
It may be the US at the moment, but there is always more to gain in currency transacting even if there are minor changes - and the whole industry will gain more stability in revenue, and, most likely, better revenues. At the moment transactions in adult are about as sophisticated as a street-market trader.

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On the upside, US exports will cost less. Also, if China dumps the USD then unpegging the Yuan from the USD probably won't be too far behind. This will result in the Yuan appreciating faster and US export goods, again, becoming cheaper.

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GreyWolf

Doubt China would "dump" as such - they have good biz sense and there are other ways of "dumping" without causing so much damage.

Who knows, but also doubt they are thinking short-term either - there is nothing so far to think China is planning short-term. They are still laying down the infrastructure to enhance their exports globally and investing heavily in this - everything from the Panama Canal to "gifts" to other nations to construct/speedup construction of roads from dock areas (for their product of course )

The economic thing is prob more along the lines of just gradually balancing their currency reserves - makes sense, tho there could be fractional hits on the dollar despite that.