<Let's talk about current economic state, transitions, processes - thrill me>
I'll let your wife or girlfriend "thrill" you.
But I will elaborate further:
In global terms, it does Wall Street no good at all to smile at the world because the Dow recently got back to 10500, a level which hasn't been seen since April/May 2002.
The reason for this is that a Dow of 10500 now and 10500 then have quite different global valuations of the US currency attached. On January 5, 2004, the Dow closed at 10544. The $US index closed the same day at 86.35. The Dow's Jan. 5 close was the highest since March 19, 2002 when the index closed at 10635. On March 19, 2002, the $US index closed at 117.94.
Nominally, the Dow was only 91 points below its March 19, 2002 close of 10635 on January 5, 2004. But in terms of the $US index, it would have taken a Dow level of 14525 on January 5, 2004 to equal the Dow's 10635 on March 19, 2002 - GIVEN THE FALL OF THE US DOLLAR IN THE INTERIM. By the way, in nominal terms, the Dow's all time high close was 11722.98 set on January 14, 2000.
When a nation's currency is falling in international exchange terms, that process falsifies the nation's internal perception of the "value" of its financial assets. American's think the Dow is at nearly two year highs. In fact, it is down almost 27%, the amount the $US index has fallen since March 2002. The Dow has regained its levels of March 2002, the US Dollar is down substantially from its March 2002 levels.
It is right here where the situation turns drastically nasty. If one uses Warren Buffett's estimate last year that the value of all American assets stood around $US 50 TRILLION, then in terms of the Euro, Americans have lost many $US TRILLIONS of that wealth over the year as measured in Euro terms. The more the US Dollar falls over the months ahead, the higher US "assets" must climb just to break even in international terms. Ahead, it could require that the values of these American assets must climb even higher than this. If they don't, then Americans are indeed staring at REAL economic losses.
<how come it does not work like that in the real world?>
What world do you live in? |
