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."

[Freedom4US]

What is the benefit (other than to speculator types and arbitrageurs) to differently valued and fluctuating currencies?

[Professional]

Where do they now make those goods?

You think the US complains about losing “good jobs to foreigners” what you think the Japs say??

[kcar]

Dems are not behind the destruction of the dollar, Republicans are. Of course Dems could have and would have made its plight far more poignant, but due to their earlier non-majority status that dubious distinction is entirely owned by Republicans. Of course the Dems cheer news of disaster like a mortician with excess capacity. No they are not likely in cahoots with the Fed, even though Dems would love recession speak prior to general election.

[eyedigress]

It’s not bad news, It’s the market. Play it. (It’s Global now by the way)

[rb22982]

So instead of 70% lower from its inflation adjusted high it will be 63% lower. Whooptydo.

Commodities are turning into the next bubble at any rate. Dotcoms then real estate now commodities.

[eyedigress]

:^)

[Travis McGee]

Extend gold up to $765 and the dollar off the page down to 77.5 to update it to today.

[rb22982]

I’m up 140% in the last 4 years and do not invest in currency whatsover or any other speculative investments...Only large mutual funds with at least 10 years of history.

[Professional]

That is almost exactly the same answer i got in 1999 when I screamed and yelled at folks that the bridge was out, and that tech stocks would kill them. They were pretty smug about how much money they were making....

Good going, you’ve made money. Not a bad thing at all, it is just that the game is pretty much over, the bubble is about ready to burst. Same thing with foreign stocks, and especially Chinese.

[eyedigress]

I’m way up and wonder when to bail! Any Suggestions?

[Professional]

Since Oct 2003, you own mutual funds that are up 140%? Really, what funds are they?

[JasonC]

Err, most of the article, including that line, is discussing economic conditions in England, not the US. Only the first bit is about the dollar.

[eyedigress]

I feel the same anxiety! I’ll pose the same question, Do you have a silent indicator that says jump? (one FReeper to another) :^)

[Tarpon]

dittos, and then what will the Chinese do?

[Professional]

Saved by the Cowboy! Thank goodness, getting lots of arrows shot my way...

The bond thing is important...

[JasonC]

The stock market hit new records just last week. Some "fleeing". I agree the dollar is a problem, the low US savings rate is a problem. But the hyperbole is out of place here.

[RockinRight]

What are we supposed to do? Hold a gun to the heads of foreign countries and MAKE them buy stuff from us that they can get elsewhere for half price?

Economic simpletons amuse me.

[dennisw]

I bought gold in 1978 and it was 198$
Today that would translate into 631$ so gold is still reasonable

http://data.bls.gov/cgi-bin/cpicalc.pl

Bet on natural resources commodities and gold

Weiss reports here

http://www.emailpreferencecenter.com/epcLogin.asp

[eyedigress]

My mutual is hanging on (17%) but I went private on the dollar creation without backing and hedged. It paid off. I know it won’t last but want to get out near the top. Any help from the pro’s would help.

[RockinRight]

I have it on good authority that it will be called the Illuminato Council Unit.