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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (14868)	11/22/2008 8:01:09 PM
From: gregor_us	4 Recommendations Read Replies (1) \| Respond to of 71469

Yes. Debasing the dollar as part of reflation will increase the power of those who are interested in avoiding a deflationary black hole, which will lead to either the BK or the government takeover of their corporations. Industrial America has always wanted a weaker currency. Strong Dollar policy has been more associated with Wall Street, and its desire to sell securities abroad. Thing is, much of Wall Street is now gone as you know. And you can't sell securities as easily if industrial America has no future. I'll wager everyone from GE to Cummins to Honeywell has been very unhappy that the USDX rallied from 70.00 to 85.00. As I have pointed out, the econ data shows a real smackdown starting in July on US exports. That's my best answer to your framing. It's not really a framing I would use, generally. I tend to avoid the "powers that be" framework in analysis. That said, I don't reject it, and think it can be useful. Strong Dollar policy was good for Wall Street under Rubin, and, on the front end, it made sure our corporations got lean and fit. However, once it got going it furthered the destruction of our manufacturing base--which was actually having a renewal this decade. Team Obama is going to knock the USD down if its not already going back down when they take office. They will either jawbone it back down, or their enormous spending plans will get it back down. For as long as I can remember, Labor has wanted a weak dollar. If you look back over US dollar history, there was a time when 85.00 on the USDX would have been considered weaker, when the USD was spending lots of time above 100.00 on that index. However, we are in a different range now. I would say that anything above 90.00 now qualifies as a strong dollar. In general, my view is that the last thing Americans need is purchasing power. They need to make stuff. Finally, I grant that the world's ability to consume could be hampered, during this reccession. G