Great Economic news.....if

[KeyGuy]

http://www.bloomberg.com/apps/news?pid=100...YY&refer=canada

The Canadian dollar posted the biggest increase of the 14 major currencies tracked by Bloomberg that gained against the U.S. dollar. Speculation grew that Bush will struggle to reduce the budget and trade deficits, at a time when foreign demand for U.S. assets is waning, driving the U.S. currency lower.

Good or bad?

[Rolo]

Speaking from a USD vs. Euro point of view...

The dollar lost value today - at some point it was in its lowest value vs. the euro in 8-9 years - it gain alittle after that.

Bush & Co. have said that they support a strong dollar, however they have not done much to support this.

With the high oil price (which we probably are going to get used to), deficit, and with baby boomers starting their retirement in 5-6 years, then we will probably see a "weak" dollar in the next years. Since Bush have not talked about higher taxes or reducing government spending, then they will have to "bake more cake", and that can only happen with a low value dollar.

Now question is if european countries can sit on their hands for much longer - the economy in Europe is not growing as much as the worlds, so countries like Germany will probably debate for a weaker Euro. But like everything else in politics this can take years, so do not hold your breath.

Maybe the dollar will drop 10-15% more - I do not think that is unrealistic, if you compare the dollar´s history and the potential problems ahead

[KeyGuy]

Originally posted by Rolo@Nov 4 2004, 02:12 AM
Speaking from a USD vs. Euro point of view...

The dollar lost value today - at some point it was in its lowest value vs. the euro in 8-9 years - it gain alittle after that.

Bush & Co. have said that they support a strong dollar, however they have not done much to support this.

With the high oil price (which we probably are going to get used to), deficit, and with baby boomers starting their retirement in 5-6 years, then we will probably see a "weak" dollar in the next years. Since Bush have not talked about higher taxes or reducing government spending, then they will have to "bake more cake", and that can only happen with a low value dollar.

Now question is if european countries can sit on their hands for much longer - the economy in Europe is not growing as much as the worlds, so countries like Germany will probably debate for a weaker Euro. But like everything else in politics this can take years, so do not hold your breath.

Maybe the dollar will drop 10-15% more - I do not think that is unrealistic, if you compare the dollar´s history and the potential problems ahead

It demonstrates and underlying lack of confidence in American econonic policy. A snake can only eat its tail for so long.

[Rolo]

Well - I would not declare the US bankrupt - remember the world oil trade is mostly in dollars, and while the european countries struggle with their economies, then the US have had a decent year with 1.5 million jobs created in 2004. EU is still lagging behind the US.

Bush will be relying on goverment spending control and economic growth, which again would mean more tax revenue to cut the deficit.

I do not agree with what Bush & Co. is doing - the "bake more cake - so we can all eat" looks good on paper, but in real life things move slow - ex. when creating jobs via investments, also technological changes are more frequent today, and consumer debt + price aware businesses will make the "price" more and more important... all factors which slows down job creation.