Dollar's Dive Deepens as Oil Soars---Power of Greenback Faces Severe Test

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.

Thanks! I was just MikeUSAF before 2002 but my account was banned long ago for reasons still unknown to me. I pleaded with Jim and others to have my old screen name back and even tried bribery but they refused. :) I came back as MikeWUSAF where “W” is the first letter of my last name.

I grew up a fairly poor kid in a blue collar family. My father worked hard but there was four of us children, my mother and grandmother. I joined the Air Force to help pay for college and honorably separated after 10 years of service. I achieved my college degree, have rewarding professional career and no student loans at 31! Probability and statistics was not a friend to me in college. :)

I believe in the tried and true method of hard work and sacrifice. To that end, it infuriates me to hear politicians talk about levelling the playing field or making sure that everyone has the same opportunities. If you live in America you have the same opportunities as every other American. Some just have more advantages than others but we all have the same opportunities.

And now after all of this hard work and sacrifice I am told that I should feel bad for the income that I have obtained and should be taxed to death to pay for others who did not have the same opportunities. So much for the American dream...

“I grew up a fairly poor kid in a blue collar family. My father worked hard but there was four of us children, my mother and grandmother. I joined the Air Force to help pay for college and honorably separated after 10 years of service. I achieved my college degree, have rewarding professional career and no student loans at 31! Probability and statistics was not a friend to me in college. :)”

It sure has become a different country in a hurry hasn’t it? I have a couple of Army friends just recently retired. They would not join up again under the current political system of government. That is indeed sad to hear. Don’t sweat about probability 101, it was several years before I was able to connect all the dots and I was about your age when I started. You’re insights demonstrate you are off to a great start and better insights then me at your age.

“I believe in the tried and true method of hard work and sacrifice. To that end, it infuriates me to hear politicians talk about levelling the playing field or making sure that everyone has the same opportunities. If you live in America you have the same opportunities as every other American. Some just have more advantages than others but we all have the same opportunities.

Sigh...how true and how sad. Liberalism and communism are one and the same ideaologies, except liberals will more actively participate in trade. We are more like the Russian federation of Socialist government nowadays then the America we knew 10 years ago. Liberals run the nation and until that changes, we are in for some really rough times.

I was at a NH district court to see YET another liberal female marital master the other day. I had several years of custody battles with my ex-wife whom is an LPN that refused to pay a dime of support and owes $16,000 in arrears(State of NH only pursues MEN for support).

My ex would attempt to regain custody by making outrageous and false claims of abuse of our son. The ‘sensitive’ marital masters would hear the case, assign temporary custody to my ex and then force me to pay support and also pay for my own investigation (guardian ad litum).

I always would win and demonstrated purjory from the ex in the process but it would erase 50% or so of the arrears she owed me by the time it was done, because of the child support NH regulations of my income range and it taking four months to resolve the case and while she was assigned temporary custody.

Of course she never thought about the fact that the our son’s college savings I put aside for him was also erased in legal fees. She would just quit her job and the liberal marital master would note a ‘huge disparity’ of household income. This last case was very recent where I gave 50/50 shared custody to my ex so my son whom is almost 15 could come and go as he pleased and I speculated he would be emotionally healed from all these court battles. My ex finally agreed to do what was right for our son and on paper submitted to the court at that.

Yet another liberal marital master noted the ‘huge disparity’ of household income. I noted to the marital master that the court did not follow procedure in approving the physical custody stipulation before the Uniform Support Agreement was reviewed in court (me and ex agreed to no support but I would continue to buy son luxury items, clothing, food and healthcare). The marital master blurted out how I would never get my son back to avoid paying child support and then proceeded to ask if my wife worked. I asked the marital master if I should report to the court if my 12 year old son’s income of mowing lawns should be included on my financial affidavit for a justification of how I could pay for direct support and what regulation provided such line of questioning. The marital master told me she would hold me in contempt if I said another comment like that. I responded by saying that I changed my mind on the physical stipulation agreement since it was authorized unlawfully by the court. When the marital master realized I had her number, she then just asked if I could pay $50 a wekk to my ex for clothing and the food items I had already agreed to provide on our written agreement submitted to the court. This liberal behavior and attitude permeates America!!!!

You and about two others are the only people in the world that would want that stuff.

You know pretty much zero about who uses that stuff. The machines that GM/Toyota/et. al. uses to make Air bags are built in Clifton NJ. While you seem to think there is no manufacturing left, you're blithely ignoring manufacturing that does exist. Heavy industry stuff, built from scratch, here in the US. Why would any company make a coffee pot, to earn 25 cents on it?

I deal with companies all the time in manufacturing and I deal with production delays because they are so busy! Last year I ordered data matrix readers from a company and We had to wait 3 months to get a production slot. All made in the US! Try to find a machine shop willing to make a part for you? They're all so busy making things for medical and other industry stuff, you practically have to beg. We're busy, very busy and very competitive at what we do. You're just simply mis-informed about the state of Manufacturing.

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