Less bang for a buck-Greenback's decline has more people considering foreign investments, currencies

The Union Tribune ^ | 30 Mar 2008 | Dean Calbreath

[rb22982]

The next shoe to drop in the credit crises will be the housing deflation in Europe imo.

[Toddsterpatriot]

You can imagine that a 5% drop versus the Euro is equal to a 5% inflation rate, but you'd be wrong.

[Toddsterpatriot]

I added them together because inflation and the value of the dollar against the trade weighted index are two different things that effect your buying power.

Unless you're buying something denominated in Euros, looking at the exchange rate is silly.

A European investor who converted Euros to buy the Dow has lost money, when converted back into Euros. An American who used dollars to buy the Dow has a decent profit, even after taking inflation into account.

It’s clear, the confusion is on your end.

LOL!

[be4everfree]

You have no clue.

good bye

[Toddsterpatriot]

Check it out. I bought the Dow in 2003 at 8,500

I sold it in 2008 at 12,500.

Looks like a 47% gain to me.

[be4everfree]

last chance for you.

Your $10,000 in 2003 bought you $12,400 worth of stuff that was made in other countries.

Your 47% gain in 2008 equals $14,700 which buys you $10,437 worth of stuff that was made in other countries.

That is a 15% reduction in buying power.

[M. Espinola]

There was a time when diesel fuel was cheaper then all the grades of gas, now it the highest, like your saying by almost a dollar more. Something does not add up, no matter Big Oil’s explanations. The bottom line is excessive transportation costs are being passed along to the consumer.

[Toddsterpatriot]

Your $10,000 in 2003 bought you $12,400 worth of stuff that was made in other countries.

No, $10,000 bought $10,000 worth of stuff.

Your 47% gain in 2008 equals $14,700 which buys you $10,437 worth of stuff that was made in other countries.

No, $14,700 bought $14,700 worth of stuff.

Let's use Euros, it's easier than using a trade weighted index.

$10,000 in 2003 would buy about 9260 Euros worth of stuff ($10,000/1.08).

$14,700 now would buy about 9320 Euros worth of stuff.($14,700/1.5772)

We can do this with other currencies if you'd like. Some may show losses, some may show gains. But if you bought with dollars and will spend the proceeds as dollars, you have a 47% gain.

If you want to say that a weaker dollar makes purchases from Europe more expensive, well of course. If you want to say that European investors who bought US investments in 2003 could have done better, well yeah.

If you think Americans buy 100% of their goods and services from overseas, instead of about 14%, you're wrong.

[ex-Texan]

Time for Some Humor on Free Republic !

Music Video: "With Every Breath Bernanke Takes" . . . Enjoy !

I first posted this video right after I located it in late 2006. Seems very prophetic now, doesn't it__________ ?

This guy ought to be the head of the Federal Reserve. He predicted everything that was about to take place in song! for God's sake ! Makes Bernanke look stupid and predictable today.

Oh, well . . . Stupid is as stupid does. Nothing to see here. Time to move on. Yada, Yada . . . 'Nuff said.

[dennisw]

ToddClown——>>>

US trade deficit widens
The US trade deficit widened to $62.3bn (€39bn, £31.3bn) in February, as a jump in imports offset the latest strong showing by exporters, James Politi reports from Washington.

The figures ran contrary to economists’ expectations of a narrowing of the trade deficit from $59bn to $57.5bn, as the weak dollar drove exports and a slowing domestic economy had an impact on demand for imports.

[ovrtaxt]

The dollar could very well be at a bottom, I closed my EUR/USD long position after the Bear Sterns mess. If there are more shoes to drop in this credit crisis the bottom has yet to be seen.

That's the question. There are optimists out there saying it's finished, yet disturbing signs remain. Good aricle on that here.

ECB still hasn't cut their rates. When they do, it's time to go short EUR/USD. Some suspect it will happen during the summer.

[AndyJackson]

Unless you're buying something denominated in Euros, looking at the exchange rate is silly.

Oh wise master, how insightful of you. Now how about all the stuff that we do buy that is priced in Euros? Like wine and cheese and moosemeat.

[Toddsterpatriot]

Oh wise master, how insightful of you.

Thank you.

Now how about all the stuff that we do buy that is priced in Euros? Like wine and cheese and moosemeat.

What about it? If 10% of your purchases are priced in Euros and the Euro goes up 5%, your inflation rate is 0.5%, not 5%.

Anything else I can help you with?

[Toddsterpatriot]

The US trade deficit widened to $62.3bn

Now the trade deficit equals inflation? LOL!

[Freedom_Is_Not_Free]

Um... How did the discussion change suddenly to gasoline? I only gave that as ONE example of an imported product that has skyrocketed in price mostly due to a crashing US dollar, and tied that to increased trade deficits. Why are you now talking about gasoline instead of addressing the central issue we were discussing — the trade deficit.

How I hate the internet. Communication in this medium is frustrating and inefficient. It has to be one of the worst forms of communication there is. You get access to this huge number of people, and then they just read whatever the hell they want to read, say whatever, and NOTHING has NOTHING to do with NOTHING. Very futile trying to communicate on the internet. Very futile.

[RSmithOpt]

BINGO...and oil is one big ticket item. From freight costs, plastics costs, agricultural fuel, fertilizer, cost of going to and from work, electric power generating costs, etc., etc.

Yeah, right.

A weak dollar is good for our country that has now run a global trade deficit for how long???