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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: longnshort who wrote (754893)	11/23/2006 1:01:17 PM
From: pompsander	Read Replies (1) \| Respond to of 769670

China doesn't own all our debt. If we were at war with China we would probably do what we have done in the past...freeze assets in country and suspend (not cancel) payments to them...but what about Japan? Germany? Saudi Arabia? and the dozens of countries and millions of people who own American debt? We don't get to choose to repudiate some debt owned by one country....sometimes it is even hard to figure out who owns what security with all the front men.... The shock wave of not paying promised debt would destroy the value of the dollar, send our rates through the roof...and then we couldn't pay for your war with China! Why not balance the budget now and avoid the problem down the road? You don't need that bridge to nowhere, do you? <g> By the way, in the 1930s and 1940s America was a debt lender, not a net borrower. Big difference. I would bet no more than 5% of our debt was foreign owned back then.

To: longnshort who wrote (754893)	11/24/2006 9:48:15 PM
From: DuckTapeSunroof	Read Replies (2) \| Respond to of 769670

Dollar plunges to 19-month low against Euro The Associated Press Published: November 24, 2006 iht.com NEW YORK: Growing pessimism over the dollar facilitated a sell-off Friday that plunged the greenback to a 19-month low versus the euro and a nearly two-year low against the U.K. pound. The session was thinly traded following Thursday's Thanksgiving holiday, which allowed speculative dollar-selling to affect currency levels more than it would in normal market conditions, analysts said. At its peak Friday, the euro reached $1.3110, a level not seen since April 2005. The U.K. pound attained $1.9351, unseen since December 2004. But even when corporate and institutional currency investors are back in the office Monday, the dollar's downward trend "is unlikely to end ... as the fundamentals and market flows are increasingly stacked up against the U.S. currency," said Ashraf Laidi, chief foreign exchange analyst at CMC Capital Markets. Late Friday, the euro stood at $1.3100 from $1.2950 late Thursday, while the dollar was trading at 115.78 yen from Y116.20 late Thursday. The euro was at 151.63 yen from Y150.45 late Thursday. The dollar stood at 1.2093 Swiss francs from 1.2248 while the U.K. sterling was at $1.9333 from $1.9154 late Thursday. The dollar's sharp fall was blamed for declines in other asset markets as equities closed lower in a shortened session. The Dow Jones Industrial Average, the Nasdaq Composite Index and the Standard & Poor's 500 Index all finished in negative territory Friday. European stocks also dropped sharply Friday on the dollar's fall. The pan-European Dow Jones Stoxx 600 lost 1.1 percent at 354.72. Meanwhile, the dollar sell-off pushed gold and silver prices to multimonth highs. What surprised some analysts was that the dollar's slide came without important economic data such as inflation or economic growth to act as catalysts for big swings in exchange rates. "The trigger for the overnight (euro versus dollar) surge through $1.30 was not based on any data," noted Dustin Reid, currency strategist at ABN Amro in Chicago. Instead, analysts had to go back a day to the Thursday release of a sometimes disregarded German IFO business confidence survey. The data came in well above expectations at a 15-year high, and was the likely spark for the euro rally against the dollar that snowballed Friday, they said. A key to the market's readiness to go negative on the dollar is the growing belief that the Federal Reserve's next policy move will be an interest rate cut in an effort to spur economic growth. Interest rate cuts by the Fed generally hurt the dollar as it is a clear sign that central bankers are worried about slow economic growth. It also can cause investors to shift their dollar-based assets into higher-yielding currencies. The Fed's benchmark rate currently stands at 5.25 percent. Meantime, the European Central Bank appears set to hike its key rate once again before the end of this year to stem inflation and excessive growth, which is also weighing on the dollar. There is also mounting concerns that central banks around the globe might begin to aggressively diversify their foreign reserves into euros and away from dollars, the long-standing reserve currency of choice. On Friday, China warned other countries that holding excessive dollar reserves may not be a good idea. Wu Xiaoling, a senior People's Bank of China official, said Friday that continued weakness in the U.S. dollar poses a risk for East Asia's foreign-exchange reserves, Market News International reported. One could argue that China, which itself holds a huge amount of dollar reserves, is shooting itself in the foot by saying this because of its dollar-negative effects. But Chris Turner, head of foreign exchange research at ING Financial Markets, said the official's comments show that reserve diversification is "still is a theme in the market," and thus worked against the dollar. Despite worries about diversification, most analysts believe that most central banks are only diversifying with new reserves. This opposed to selling held dollar reserves to replace them with euros or other currencies. Turner said the dollar's dip Friday is likely to serve as a wake-up call for many corporate and institutional investors that he said have grown "complacent," assuming the dollar's value would remain steady. The decline Friday, he said, demonstrates that "the dollar has some serious problems going into 2007," pointing to growing talk of diversification of reserves by central banks around the globe and the widening U.S. trade deficit. Dan Molinski is a correspondent of Dow Jones Newswires.