Dollar dives as US slump spreads

The Telegraph ^ | 10/19/07 | Ambrose Evans-Pritchard and Joe Moulds

[bruinbirdman]

The dollar has plummeted to all-time lows against both the euro and a basket of global currencies amid growing fears of a disorderly rout as the US property slump spreads to the broader economy.

The greenback dived after the US 'Philly' business index dropped 10.9 to 6.8 in October, with a shock fall in new orders and inventory, raising the chances of further rate cuts by the Federal Reserve this month.

The dollar has reached all-time lows
against the euro

David Page of Investec Securities also noted that sales of toys and games were high due to fears that stocks would not meet Christmas demand following Mattel's toy recalls. Shoppers seem to have shrugged off any impact of the recent market turmoil, prompting economists to speculate that the Bank of England may wait until next year to cut interest rates.

Other data lent support to this view. Bank of England figures showed that growth in the country's broad money supply, which can fuel inflation, cooled in September but stayed high at 12.8pc.

Growth in total lending by banks and building societies, known as M4 lending, appeared entirely unaffected by the credit crisis, rising from 12.3pc to 13.1pc. Vicky Redwood of Capital Economics said: "With inflationary pressures still strong and retail sales figures supporting evidence that the economy grew more strongly in the third quarter than the Monetary Policy Committee expected, interest rates look likely to stay on hold until next year."

The housing market, however, showed signs of cooling. Data from the Council of Mortgage Lenders revealed a stark 12pc decline in mortgage lending over the month, around twice the average fall in August.

Separately, the ONS released data giving a gloomy picture of the state of the public finances, in a fresh blow for new Chancellor Alistair Darling.

Public sector net borrowing, the Government's preferred measure of the public finances, rose to £7.4bn last month, the highest September borrowing on record and above expectations of £6bn.

Howard Archer of Global Insight said: "With slowing growth, a softening housing market and substantially lower City bonuses all likely to weigh down on tax revenues, the prospects for the public finances look worrying."

[Professional]

China manipulates their currency, so it doesn’t increase in value. THe South American countries did the same, to guard against the opposite, a falling value. For latin america it was an incredible success, until it got out of hand, and exploited by the likes of Soros and similar. Mexico got hammered in that, and they had to devalue their currency significantly. At least in Latin America, the loans yes, were paid back with much cheaper money. In china, they will have to pay back loans that explode to the upside in price, as soon as this scheme fails. The repurcussions from this will be talked about for a very, long, time...

[dennisw]

http://www.youtube.com/watch?v=iRzr1QU6K1o

Above is video of Richard Nixon when he slammed shut the gold window. Listen to the weasel words

Please note I’m not a Nixon hater

[dennisw]

Yeah old man Bush and Mulroney (former Canada PM) made big money with Barrick. My guess is they still own Barrick

The whole point being that “free traitors” advocate trade policies that leave us with outlandish trade deficits that bring the inevitable dollar crashes. But same “free traitors” hedge themselves against dollar crashes with gold. That primitive barbaric relic

George Bush (#41) understands the visceral attraction of gold unlike say, uh, “professional”

[dennisw]

John Maynard Keynes denounced gold as a “barbaric relic”

[NRA2BFree]

Globalism, that's the ticket.........

'Ain't it great?

It's good for everyone.............except America..........

[Professional]

Yup, Gold Fever...

I’ve admitted that gold has merit, the ultimate way to protect your money. But it doesn’t grow.

You could also say that you are protecting your money when you buy a stock. You give money, buy stock, the stock might be valued in dollars, but the stock is based in value by the profit it makes. And usually, if the currency is lower, they make more money, making the stock......go up.

So, both protect from a declining currency, but with the stock you also have the byproduct, of profit. Or at least the potential for it.

[dennisw]

Get a 10 year chart and you’ll find gold has been “growing” ever since 9 11 2001

[Professional]

Sure, I’d love to go back in time buying it, and throw in some oil stocks too, but that isn’t how it works. Both oil and gold have history of making very big moves, but then can do absolutely nothing for a long time too. If you rode the big move, good for you, nice call. Price appreciation though, not exactly growth, because it didn’t make anything, there is nothing being spun off from the big vault of gold someone owns. If you owned a stock, you’d get dividends, cd you’d get interest, real estate you’d get rent, etc.. Gold, like other physical items simply increases from the inflation or currecny adjustment. Ok, I’ll admit that an increase in say commercial need can add to that? Again, good call, nice to make money, don’t want to make you or anyone else here all mad and threaten to contact the “cops” on me, like the golf cheater said he’d do...

[Professional]

I’m not great with HTML. Care to put a chart up?

[dennisw]

Point being gold is up since 9 11 2001
Same for oil

[Professional]

If you can, show a chart of the Nasdaq from Jan 1999 to Jan 2001. The upchart here, looks virtually identical.

I pulled it up, but could not find a way to cut and paste it.

I’m not a chartist, but do follow it a wee bit. Comparing the two, you see the same volatility, then the major upspike, a correction that rallies harder....

Again, not to argue or make anyone mad, just find it interesting. I certainly don’t need any FR Gestapo agents to call my employer or anything...

[dennisw]

Again, not to argue or make anyone mad, just find it interesting. I certainly don’t need any FR Gestapo agents to call my employer or anything...
_____

Hahha
You’re OK
Just naive about gold but so what

[Freedom4US]

"I’ve admitted that gold has merit, the ultimate way to protect your money. But it doesn’t grow.

But there are a bunch of assumptions here, one being that "money" is necessarily something other than gold? Or maybe you meant "wealth"?

If it's not "money", why do bankers have (most?) of it accumulated by the ton, buried underground in vaults? Pretty strange, wouldn't you agree? Dig it up, melt it down into bars, bury it again.

The only reason it doesn't "grow" is because the government made it illegal for Americans to hold for decades, forbade contracts payable in gold (reneging on contract law?) and the US congress to declare in so many words, that using gold coins was "against public policy" - and accused the American people of "hoarding" gold. (But the supposed 8 thousand tons at Fort Knox, that's not "hoarding"??).

With all that, I agree there isn't near enough of it to have a functioning economy. But monetary inflation robs people - good, honest, hard-working people - (lets not worry about crooks and thieves here, they seem to be getting along fine) of their savings and is ultimately a broken promise - or a default on a contract if you will.

What is the benefit of differently valued and fluctuating currencies to the great masses of people who don't sit in front of a computer moniter tracking stocks and markets, who are only trying to get through the day? How do you propose that the average person (who may be more concerned with the return OF their money rather than the return ON their money) protect themselves? My answer would be "With a 12 Gauge"; but this same government has historically tried to deny them the right of self-defense. (I'm not paranoid, just paying attention)

[Travis McGee]

I’m oblivious for not getting the “zing”? With all due respect, doesn’t your explanation make my point? Gold is just an object. Yes, it is pretty, and also makes people kind of crazy. An ounce of gold generally just maintains purchasing power. But hey, I’ll admit, that for a portion of someone’s entire net worth, that is necessary/or one way of doing it?

I'll grant that you are (by your own account) a Financial Super Genius. That you have an extreme knack over the past decade or two of putting more and more digits into the electronic ledgers.

I would only humbly suggest that you study history a bit more broadly than the past decade or two, and gold's lasting value as a store of wealth may be revealed to you.

Say, 6,000 unbroken years of human history, as opposed to a couple of decades.

(Hint: There is a reason why Germany doesn't use the Weimar D-mark any more.)

Need more? How about former Fed chairman Paul Volcker? About two years abo he said that there is a 75 percent chance of a dollar crash within the next five years. (Three years to go by my crude math.)

Now, I realize that you are a lot smarter than Paul Volcker, but maybe he's not a complete moron like the rest of us non-Financial Super Geniuses here.

[Travis McGee]

You could also say that you are protecting your money when you buy a stock. You give money, buy stock, the stock might be valued in dollars, but the stock is based in value by the profit it makes. And usually, if the currency is lower, they make more money, making the stock......go up. So, both protect from a declining currency, but with the stock you also have the byproduct, of profit. Or at least the potential for it.

During steady economic times, yes. During crisis times, no. Many folks over the age of 75 have folders full of stock certs that are worth exactly the paper they are printed on, plus the ink. Their paper assets went to zero.

You may believe (based on your life experience) that stocks are literally better than gold, but don't bet on them holding their value (much less increasing) across a period of economic turmoil and dislocation. You may wind up with a stack of "Confederate War Bonds," as has happened time and again over history. (Or in the modern era, a series of zeros on your computer.)

Now, that might be beyond your experience horizon I'll grant you. You do need to read history to discover this.

Are we entering such a time? Paul Volcker is one of those you may have heard of who says yes.

Of course, you are free to just laugh it up. That is your right.

PM from Professional to Travis, yesterday.

Re: Dollar dives as US slump spreads

From Professional | 10/19/2007 8:47:34 PM PDT read

Financial genius? Wouldn’t that be you, mr. “thousand dollar gold next year” prognosticator? You’re just mad, cuz you’re a gold bug, and think that this “object” is your savior. You know, thousands of years ago people knelt for gold. Know where it got them? Let me guess, at one time, you were in the financial biz, couldn’t hack it, got fired, been pissy ever since? Go back to your bomb shelter, get your Ron Paul poster, and go to bed with it you crazy gold bug. He he he, loser.

[Travis McGee]

If it's not "money", why do bankers have (most?) of it accumulated by the ton, buried underground in vaults?

Great question! According to Professional, gold has no more inherent value than gravel, other than being more compact.

[Travis McGee]

You truly believe that gold is in the position that the nas was before it’s recent dumper? LOL, you are a riot.

[chilepepper]

inflation in the States is negligible.

incorrect. inflation in the States as selectively reported by the economic overlords who use the figures to keep wages low is negligible.

there is a *HUGE* disconnect between what the real inflation rate is and what is reported -- I've seen some estimates that the real rate of inflation is more like two or three times the reported CPI of 2.8%

[chilepepper]

The Japanese, if what you say is true, should have turned out very well after the late 80’s.

actually, it *did* turn out "very well" for some of the Japanese after the late 80's - the economic overlords in Japan were able to create a form of economic/consumer slavery which has keep wages there completely stable - the apparent continuous recession they have been in since the 1980's is just the way the Japanese financial/industrial masters want it - Japanese companies are *very* profitable. while there is a nearly 0% interest rate in Japan (!) just try to get a loan in Japan if you are a regular Japanese consumer/citizen... its very difficult.

Japan has morphed into a modern consumer slave state, and the US is headed in that direction and already has picked up some of the same characteristics - check US wage growth over the last 20 years for example...

[Professional]

Ok Travis, think you can ease up a bit fella.

From looking at your posts, thinking it over, I certainly see where you guys are coming for. If you know want to beat me bloody into submission, then I’m going to have to get a helmet.

Obviously, the price of gold over the last couple years cannot just be argued away for the sake of the USD. Someone else is buying it, and I’d guess that they have a number of reasons. Many emerging nations are running huge surplusses, wonder if that has anything to do with it?