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

To: gregor_us who wrote (14869)	11/22/2008 9:35:35 PM
From: Don Earl	2 Recommendations Read Replies (3) \| Respond to of 71474

I've never been quite able to buy the argument a weak dollar is good for manufacturers, especially considering how many outfits do their manufacturing off shore. Take an outfit like Intel, for example, where most of their chips are made in factories they own in Asia. A weak dollar just jacks up their labor costs. For companies that import parts or raw materials, a weak dollar jacks up their costs of production. And, it shouldn't be necessary to mention what a weak dollar does to energy costs. With two thirds of the US economy dependent on consumer spending, a weak dollar means consumers necessarily have to spend less. If anything, the problem is more with the stability of the USD, rather with it being strong or weak. How does one engage in foreign trade when one doesn't know from one hour to the next what the damn money is worth? Maybe the volatility is good for speculators, but is sure isn't good for business. On top of everything else, companies are basically forced to engage in expensive hedging transactions in order to lock in currency rates long enough to complete a sale. Saying, "Industrial America has always wanted a weaker currency.", doesn't make sense. Why would anyone want to sell something in exchange for a currency that isn't worth anything at home? I also don't think, "Strong Dollar policy has been more associated with Wall Street", is quite accurate either. Wall Street thrives on volatility. You can't make money in a stable economy. The more prone to manipulation, and the more radical the moves, the bigger the cut for the global gambling houses. The only time Wall Street likes a strong dollar is when Wall Street is dollar long and short everything else. What is really needed is to kick the speculators out of the markets where they don't belong.