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

To: No Mo Mo who wrote (24190)	11/11/2009 8:56:32 PM
From: benwood	5 Recommendations Read Replies (1) \| Respond to of 71463

I think the fundamental problem is that the outsourcing is to regions which are so phenomenally cheap compared to the US that the dollar must drop significantly to stop the flow, and even further to reverse the flow of jobs. The end result will be a drastically lower standard of living. Already, the credit card companies are panicking. They already skim 2 to 3.5% off the top of nearly ever transaction made in the US; yet the prospect of a declining middle class fighting to reduce debt (on top of reduced spending) means that the only way to continue growth in credit card profits (with defaults increasing) is to jack up the interest rates and jack up the penalties and fees for everything they can think of. Nobody in their right, or belly-full, mind would accept terms of 25% or more. They seek to entrap those who over-indulged in the debt bubble, for the total transaction load from which they skim profits is being reduced, and will continue to shrink for several more years (I believe -- in real terms). I agree with gregor btw about the consensus view being that the US dollar rally is imminent. We truly have a horrible backdrop in terms of fundamentals, and the other shoe to drop will be the State's death rattle. Arizona talking about mortgaging its capital buildings? That is absolutely pathetic, and a testament to how gov't ultimately is job security to millions of those within it who will do all kinds of crazy things to keep their jobs.

To: No Mo Mo who wrote (24190)	11/12/2009 12:07:33 AM
From: GST	7 Recommendations Respond to of 71463

<help mitigate the current account deficit> The current account deficit is more than the trade deficit. As our foreign indebtedness skyrockets we will spend a higher and higher percentage of our income on servicing existing debt. As we continue to run on debt rather than income, this will only get worse. As for a cheaper dollar spurring exports, yes, we will become attractive as a source of cheap labor. But ask yourself on a personal level, is that your goal in life -- to lower your wages and sell your services as cheaper and cheaper labor? If a lower standard of living and creeping poverty throughout society is your goal, we are right on track. If on the other hand we aspire to a higher standard of living, a lower dollar is not the way to achieve it. Growing and harnessing brains is the way to live well and prosper in a global economy -- we seem to have forgotten that brains are the difference between the rich and the poor of the world. Cheap card tricks and socialized theft are no substitute for brains and innovation. Bottom line, the dollar is toast and we are going to suffer for it.