Dollar expected to fall amid China's rumoured selling

Financial Times ^ | Nov. 7, 2004 | Steve Johnson in London and Andrew Balls in Washington

[Nachum]

No problem. It makes American products cheaper and European and Chinese more expensive...

[liberallarry]

What do you make of this?

[Jaysun]

Let it drop - I'll cheer!

[Archangelsk]

It makes American products cheaper

Go to any Wal-Mart, pick up any toy, read the label on the back, chances are it says "Made in China." We no longer produce the consumer goods the world wants.

[joesnuffy]

Rather have a recesson with Bush at the helm
than a depression with Kerry at the helm

[liberallarry]

No problem

Who's going to buy U.S. treasuries in the face of a falling dollar?
To counter that won't interest rates have to be raised?
If interest rates are raised won't we risk a real estate collapse? A slow-down in investment?

[clee1]

And that is mostly because the unions demand $15/hr. for a job thats worth $5.25/hr.

[bowzer313]

"to any Wal-Mart, pick up any toy, read the label on the back, chances are it says "Made in China." We no longer produce the consumer goods the world wants."

Perhaps we will when the cost of Chinese goods begins to rise to a realistic level.

[TheForceOfOne]

Looks like the outsourcing Dems cry about and the trade deficit they also cry about just got a big boost! I find this to be good news.

[SoDak]

I don't think it's good news or bad news. It just depends on how we react to it and adjust our way of doing business to it. I think this country, for the most part, is quite adept and fluid at adjusting business methods to the market conditions, therefore I'd say it's ok news.

[Southack]

What do I make of it?!

China would no sooner *want* to make its exports artificially more expensive than luddites would want to learn genetic programming techniques.

The more that the Dollar falls, the more Dollars it takes to buy the same product from an exporting country such as China.

The more Dollars that it takes to buy that product, the more expensive that product becomes.

If the Dollar is trading at 8 Yuan per greenback, then that flashlight at Wal-Mart is going to cost you $2.

But if the Dollar drops to only 4 Yuan per buck, then that flashlight suddenly costs you $4.

Same flashlight.

Thus, a falling U.S. Dollar is Trouble for exporting economies. They have to prop up the Dollar just to maintain their current levels of exports to us. Should the Dollar fall, then we won't be buying as many imported products. That would crush the economies of most exporting nations almost overnight.

It's simple math. Just simple math.

[The Old Hoosier]

This will keep oil prices high, adding pressure to exploit domestic resources.

Meanwhile, we pass legislation to start building new refineries and eliminate "regional blends" of gasoline.

[John Valentine]

Boost?

No, quite the opposite. Foeign labor will become more expensive in US Dollar terms. Also, the trade deficit will ballon in the short term, but longer term, it should decline as foreign goods become more expensive and are replaced with domestic ones.

Or so the theory goes.

[Post Toasties]

I'm in a position where I won't have to buy much of anything from the Far East or Europe for a while (except for maybe a plasma TV, but I'll wait for a while anyway to let prices drop), so a falling US dollar won't affect me much.

[liberallarry]

So I thought too. But China is selling dollars.

[Asclepius]

The feds should immediately cancel all student loan debt.

This would probably not address the currency issue but it would help me out a little bit.

[endthematrix]

Or when America's standard of living falls....

[endthematrix]

LOL! You have ten years to pay that back and at what less than 6 percent!?

[NordP]

It's interesting reading all your posts.

I was thinking about another angle...George Soros had to rush back to Europe after the election. I'm GLAD, don't get me wrong, but it seems wherever he goes these day, trouble follows.