Posted on 12/04/2006 8:24:00 AM PST by GodGunsGuts
Plunging dollar will set world markets reeling
Heather Stewart, economics correspondent Sunday December 3, 2006 The Observer
The slowdown in the US economy, which has sent the dollar into freefall over the past fortnight, will have devastating knock-on effects in markets around the world, analysts warn.
As the US slows, and consumers in the world's biggest economy feel the buying power of the dollar in their pocket declining, global growth will be hit hard, economists say. The greenback took yet another turn for the worse on Friday, after a survey of the US manufacturing sector showed output declining for the first time in more than three years.
Wall Street is now betting that Federal Reserve chairman Ben Bernanke will slash interest rates to stave off a recession. The dollar ended the week at $1.98 against the pound, and $1.32 to the euro, but analysts say there is further weakness to come. 'I think the dollar's going to hell in a handbag,' said David Bloom, currency strategist at HSBC. 'The market is starting to think that the US is going from a soft landing to a hard landing.'
(Excerpt) Read more at observer.guardian.co.uk ...
Maybe Airbus will have to file for bankruptcy!
It'll help our trade deficit. Economics runs in cycles. The sky is not falling.
"The slowdown in the US economy, which has sent the dollar into freefall..."
That's ridiculous. These Europeans don't understand basic economics. If anything, the US slowdown will cause the dollar to rise, not fall. What's causing the dollar to fall is the trillions of dollars that have flowed out of the US due to high oil prices.
Typically anti-American, amateurish financial reportage from the Gruniad.
Most US multinational companies show a better bottom line when the dollar is down.
So....what do they care? We're just war mongers anyway....
Good rule of thumb: if the Guardian is simultaneously hysterical and hopeful about something then nothing remotely unusual is going on.
This is what I have never understood about the Euroweenie perspective: they wail against the power of America, yet seem to have no clue that our economic power is the engine that drives the entire global economy, including their economies.
IOW, all the while they are itching to drop us down a notch or two, they have no clue that we can absorb quite a few shocks to our economy, but if our little ole dollar even drops a bit, they are in deep, deep trouble.
However, this also means that US goods are cheaper in foreign markets.
It's Nancy's fault...
And it's all Pelosi's fault!
No-one wants to face the truth as to why the US Dollar is falling in value -
Over production of printed money, debt, the incoming Democrat controlled congress... what else can we add.... oh, still out of control government spending (just print more money - hey!).
Carolyn
Fortnight? Freefall? Sounds like talk from the back row during freshman physics.
Exports cheap, imports expensive?
"Eurozone finance ministers have expressed alarm at the strength of the euro against the dollar, fearing that their exporters will suffer;"
THIS is what they are concerned about.
As I have been saying for months now, the Fed had better get its act together and drop rates now (not next spring) if it wants to avoid an economic collapse.
We can no longer afford a high dollar. Just let the dollar go and laugh at the Chicoms when their $1 trillion kitty is decimated.
BUMP
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