"I told you guys, I've been saying this since 1974"...
Posted on 02/29/2008 6:59:04 AM PST by dennisw
Beaten down by fears of a U.S. recession, the dollar is falling with new speed -- creating severe challenges not just for the U.S., but also for sugar traders in Brazil, central bankers in the Persian Gulf and a host of others.
Thursday, the dollar sank to new record low against euro, deepening a six-year slide in which it has fallen more than 40% versus the European currency and more than 20% against a broader basket of currencies. In late trading in New York, one euro fetched about $1.52, just two days after it surged through the symbolically important level of $1.50.
The latest impetus: economic data in the past three days showing a softening U.S. labor market, deepening turmoil in housing, and growth in 2007 slowing to the worst pace in five years. Federal Reserve Chairman Bernanke put more pressure on the dollar during testimony before Congress yesterday, emphasizing gloomy prospects for the economy while pointing to the weak dollar as rare bright spot helping exports, jobs and trade deficit.
The greenback's biggest detractors -- a small but growing group -- say the currency is in danger of eventually losing its place as world's dominant currency. Jim Rogers, a well-known commodity investor and a former partner of famed currency trader George Soros, has a particularly bleak assessment: "The dollar is a terribly flawed currency and its days are numbered," he said in a recent interview. He cited the U.S.'s huge foreign-held debt as biggest cause.
Yet for all of the gloom, the world is unready to let go of America's unloved dollar. Akin to the way Microsoft's often-criticized Windows operating system remains indispensable to the majority of computer users, the dollar remains the common language of finance, the medium of exchange in everything from sugar to wheat to oil.
(Excerpt) Read more at online.wsj.com ...
YOUR POST IS SPOT ON!
That statement is flat out false, untrue and not factual. American manufacturing is at an all-time high level. This is a complex enough topic without injecting falsehoods into it.
Quant5, it looks like we are basically in agreement, except you are the optimist, and I am the pessimist.
In the past we had great leaders waiting in the wings to rescue us from existential threats - Lincoln, Roosevelt, Reagan, because we had a populace decently educated, respectful of its culture, and embued with a sense of shared sacrifice.
Among the first guys who went down to the recruiting station after Pearl Harbor were America’s elites - Bush, Kennedy, Bob Feller, Jimmy Stewart. Those people don’t exist anymore, replaced by Obamas and Gates and Trumps who wouldn’t think of soiling themselves in such a way.
Go to the capital of any Third World hellhole - Lima, Nairobi, Jakarta - and you will find enclaves where the ruling elites live - beautiful homes, secured streets, modern conveniences. These people don’t give a damn what is happening out in the rest of their countries - they got theirs.
That is now happening here. Our elites are immunized from the disaster that is about to happen. In fact, they will accrue even greater wealth.
This election is theirs.
The next one will be ours.
I respect your opinion, but would ask you to back it up.
Here’s my proof, and it doesn’t require you to do massive research.
Make a list of ten things you might buy over the course of the next year. Like these, although yours may be different:
A sweater
Pots and pans
A toy for your kid
A TV set
Sheets and spreads for your bed
Window blinds
A coffee pot
A digital camera
A woman’s purse
A pair of shoes
Now go to the store - any store - from WalMart and Costco to Nordstroms and Bloomingdales and anywhere in between. Chose the product you want, then check the label.
If you can find just two items from that list not made overseas you win. If you can’t I win.
BTW, we tried it. Nada.
We went online, googling “American made” and found a bedspread under the manufacturer’s heading “Made in the USA!!!”
We bought it. We used it. The cat barfed on it so we had to clean it. We checked the label for cleaning instructions. It said “Made in China”.
I win.
You know, there’s nothing more mysterious than currency exchange rates. Rates make huge rises and falls for no explainable reason.
Everyone in the world hates the Dollar now, and they are alljust antipcipating the downfall of the American economy, something that I don’t believe is going to happen. You can see the bottom now that stores are opening up in New York exclusively for Europeans to fly to America buy cheap goods.
US exports are just a little lower that the European Union's exports, and with the strong Euro, that may well change.
Our exports are also slightly lower that China's exports, but not by much.
The United States does have a trade deficit, and our manufacturing in particular is hurting badly, but don't by into the BS that America doesn't export anything.
China imports around $917 billion worth of goods. They export $1.221 trillion worth of goods. However, unlike the US most of what they are importing are raw materials and parts for the products they manufacture. Their earnings are based on taking goods from elsewhere and using their cheap labor to add value, and then exporting them.
In the US we produce a lot more goods that don't require a lot of raw materials. That means a much higher percentage of those exports represent net earnings rather than being a markup for labor on assembling imported goods.
The reason that our manufacturing industry is doing badly is because it involves a lot of low skilled labor, and Americans demand to get paid more than the market will support for such work, and use unions to force manufacturers to pay more. The result, is that those jobs end up going elsewhere.
However, America is a huge exporter, just with different kinds of products.
"I told you guys, I've been saying this since 1974"...
Look to Post #24.
I challenge you to take the same test.
You are confusing exports with manufactured items. Unless you are going to buy a Boeing jet or an F-18, or a hedge fund, there is little to buy with a Made in the USA label. Corn and soybeans and lumber and Alaska oil (a lot goes overseas) don’t come out of factories.
And even farm production is going south, literally. Your lettuce comes from Mexico, your pineapples from Central America, your apple juice (almost ALL of it) from China, as well as your wheat gluten - ask any cat).
Oh - also north - your movies and TV shows and cars are made in Canada.
In a few years the only jobs in America, outside the government, politics, and the media, will be selling stuff to each other. And we’re not even educated enough to make change.
And what the hell was that opening paragraph all about?
No I'm not. Did you actually read my post?
I said that our manufacturing industry was struggling.
You were the one that made the comment that "There is no American manufacturing or exporting left.", and I was pointing out the flaws in that statement.
It's definitely true that most mass produced goods are produced where labor is cheaper than in the US.
Unless you are going to buy a Boeing jet or an F-18, or a hedge fund, there is little to buy with a Made in the USA label.
Ever buy a house? How about a car. Obviously not all the parts that go into either are made in America, maybe less than 50%, but much of it is made in America.
In that list of items in post 24, where where those clothes designed? What about the toy?
Where was the intellectual property that went into that television and digital camera developed? Who do you think makes more money from those, the company that designs and develops those products and the components that go in them, or the company that assembles the parts?
If a product is designed in the US, using us technologies, and then that product is then manufactured under license in China, it's is considered made in China, despite the fact that the vast majority of the value of that product was produced in the United States, and that most of the earnings from the sale of that products will go to US companies.
The made in wherever sticker represents only the value of that product resulting from assembling it from it's components, and as technology advances that is less and less of the overall value of products.
Manufacturing is a small part of our economy, but as long as manufacturing represents a small part of the value of products that are produced, that doesn't have a lot of bearing on the strength of our economy.
The fact that manufacturing remains a main focus of the political debate regarding the economy is a testament to power of organized labor, which represents a small special interest group among American workers.
Manufacturing of most products requires little skill these days. Most (not all) of the tasks that required truly skilled trades have been automated.
If we want to bring manufacturing back to the US we have two choices. We can have Americans do manufacturing jobs at true market rates, which would mean those workers living in poverty, or we can institute heavy protectionism.
Protectionism would greatly increase the price everyone pays for goods so that a small portion of the workforce could make good wages doing their jobs. Strong protectionism is unfair to the majority, and overall it is bad for the economy. You can justify protectionism to some extent because of national security implications of not being able to produce goods domestically, but it isn't justified economically.
Nice try on the Economics 101 - but toatlly off the mark.
In 20 years when the conflict with China gets real rather than problematic, don’t be surprised when that Arsenal of Democracy is no longer an option.
We won WWII because the American automotive plants could be turned over to airplanes and tanks, the shipyards could make carriers and destroyers, the radio makers could change over to Norden bombsights, the petroleum refineries and Goodyear make synthetic tires, and the dress companies make uniforms and combat gear.
Ask your Economics professors who’s going to do that next time around - the factories in China?
As I said in my post. You can make an argument for some protectionism because of national security concerns.
However, this isn't the 1940s. We don't fight wars by huge force deployments with lots of equipment anymore.
Yes we would need to be able to manufacture lots of bombs and equipment to fight a war with China, but not nearly on the order we did back in the days of WWII.
Our more recent conflicts have shown that you can't hold territory without lots of boots on the ground, but they also proved that we can devastate other standing armies with air power, superior technology, and smaller but better trained forces.
The Chinese have more factories with which to produce equipment in an extended conflict, but how long do you think those factories will remain standing when attacked by our superior air power?
We do need to maintain some domestic manufacturing industry. However, you might also want to think about why NAFTA helps us in such a situation?
NAFTA guarantees us access to Canadian oil. It helps keep manufacturing capacity nearby even when we can't economically keep it in the United States.
Yes it would be better if we could do everything better and cheaper than the rest of the world. Unfortunately, we can't. So we need to face reality, and do what we can to remain as productive as possible, keep our economy as strong as possible, and form alliances to our best advantage.
There is an economic philosophy that uses strong protectionism, and keeps manufacturing domestic, and forces workers to accept what wages the economy can bear and still produce products domestically.
The Soviet Union tried that. It didn't work out so well for them. If you want to make it so that most goods are made in the United States, huge sacrifices would have to be made. The money to pay unskilled workers high wages is going to come from somewhere. The regulation to force more products to be produced here will have harsh effects on our economy. We will all have to pay significantly more for the goods we buy. Reduced competition will result in reduced productivity as well.
There are a number of examples of countries that have tried strong protectionism to address economic problems, none of them have been successful. There are no worker's paradises among them despite what Hollywood tells us.
I bought something that is made in the US. It is a Taylor guitar.
Oddly enough, I took it to England.
Lovely thing.
I’m in the process of moving my investments as far from US dollar denominated assets as possible.
Congress should rein in the Fed immediately and open up their proceedings to Congressional scrutiny. I’m tired of subsidizing Wall Street through the inflation tax. Our fiat money system has no foundation in free markets or capitalism.
If you want to buy an appreciating domestic asset, consider loading up on ammunition. Price of brass has gone through the roof and will continue to do so.
Is it too late for you to get into the Republican primary?
Anyone think this is done on purpose?
North American Union, Amero anyone?
I like your screen name. Thanks for serving in the armed forces. I almost became a Marine when I was 19. I was a bodybuilding and scored outragously high on the ASVAB (sp?). I wished I had done it now but at the time I had an abusive, domineering Dad and was a bit inimidated that another dude would be barking out orders to me.
My real passion is human nature. Once this is fully understood, it becomes a lot easier to predict outcomes. My approach is based on statistical probability models of other country’s collective personality traits and trying to compare this to other historic events. It doesn’t mean I am always 100% right but for my family and friends it seems to work just fine :)
We’re in total agreement but let’s examine why I feel optimistic for the long-term.
You’re correct about the WWII generation and subsequent good, American leadership for close to 50 years that we enjoyed.
The bad ones of course during this time were liberals and often conspired to work with communists or 5th columns of foreigners with their own agendas and consider both groups/philosophies are almost identical.
Now how was this great WWII generation created? Through the greed and excess of the Roaring Twenties! By tribulation by fire!
The Great Depression is what forced Americans by pain to watch one another’s backs as it was life or death.
No sooner had that generation begun recovering from the horrific economy, they then faced the horrors for survival during WWII.
What will occur in America in the short-term? Pain from greed and excesses of the immoral and lazy generation X and encouraged from the liberals of the 60’s who now run our nation.
War usually follows deep recessions or depressions, at least in the last 100 years and this may turn into global warfare with awful effects.
However, in 2030 Americans will be looking back at our generation calling us the 2nd Best Generation of People whom ever lived on our globe. Through trial and fire we shall unite and be unstoppable once again.
Personally, I prefer to not have to go through this excercise but human nature does as human nature is. As one man I may get it but as a collective, it took mankind 10,000 years just to invent the wheel :)
“We won WWII because the American automotive plants could be turned over to airplanes and tanks, the shipyards could make carriers and destroyers, the radio makers could change over to Norden bombsights, the petroleum refineries and Goodyear make synthetic tires, and the dress companies make uniforms and combat gear.
Ask your Economics professors who’s going to do that next time around - the factories in China?”
I have thought of this also Bill. I believe you are right that China will move from economic competition with us to a military confrontation. The good news is that todays home computers and existing US robotics allow us to build manufacturing molds for anything and retrofit any manufacturing plant for weapons manufacturing in a matter of weeks rather then a year it took during WWII. Did you see next year’s defense budget? Obviously some people at the DOD and even our dim whitted Congress have an idea our country is spread thin militarily. Now if we can clean house in intelligence and traitors in the Senate whom leaks our advanced secrets out the door, we can then have a field day with any adversary. Remember, we have robots exploring and testing soil sample on Mars while China has just shot it’s first guy past the stratosphere and barely into space.
Thank you for your kind comment. I’ll also say boldly that if I have advanced wisdom, I have prayed for it along with humility before God and men and have developed a fantastic relationship with the Lord Jesus Christ. He indeed never left us as promised and reaches out to every person on earth. Those that invite Him in, get the gifts and power of our Creator, to assist in the wonderful will of God which is the restoration of all mankind now and eternal fellowship exploring His dimensions of Heaven and multiple physical universes. It is simple beyond belief but religions do tend to get in the way of true understanding ;)
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