Friday, October 9, 2009

Going, Going Gone: The Strong Dollar

A weak dollar might boost exports for a while, but our creditors are not going to like it.
More than a decade after former Treasury Secretary Robert Rubin made the “strong dollar” national policy, currency traders say the same words coming from the Obama administration have little meaning.  Timothy Geithner, the current Treasury secretary, has tolerated the greenback’s 12 percent slide from its peak this year in March as measured by the Federal Reserve’s trade- weighted Real Major Currencies Dollar Index. While he said as recently as Oct. 3 that “it is very important to the United States that we continue to have a strong dollar,” the last time the U.S. intervened in markets to support its currency was 1995.

The weaker dollar may boost America’s exports as the economy recovers from the deepest recession since the 1930s. The risk is that it may also drive away America’s largest creditors just as the Treasury relies more than ever on foreign investors to buy the bonds financing Barack Obama’s stimulus spending. The dollar’s share of global currency reserves fell in the second quarter to 62.8 percent, the lowest level in at least a decade, the International Monetary Fund in Washington said on Sept. 30.
SOURCE: I-Believe-in-Strong-Dollar Turns Relic as China Begs (Update2) -

Finally! Lawmakers Worry About Dollar's Collapse

We think they're a little late to the party, but glad they could join us before it's all over.
New waves of concern are rippling through Congress over the state of the U.S. dollar amid record budget deficits.  Lawmakers say there is a real danger of foreign investors losing faith in the dollar as a secure instrument if the nation’s debt continues to mount and the Federal Reserve fails to reabsorb trillions in commitments to help the economy and restore lending.

The worries prompted Federal Reserve Chairman Ben Bernanke on Tuesday to reassure a group of Democratic and Republican senators about the dollar’s stability and its status as a reserve currency when the subject came up during a private meeting.  But his words failed to quell anxiety.
SOURCE: Lawmakers show worry over U.S. dollar’s dwindling status -

CBS MoneyWatch: Australia Throws US Dollar on the Barbie?

Ouch! Even the Australian dollar is kicking our ass now. What next, the Peso?
In a surprise move, Australia became the first G-20 central bank to raise interest rates (by .25% to 3.25%), noting that the critical phase of the economic crisis was essentially over. The action spurred global stock gains; a pullback in the US dollar/a spike in the Australian dollar to a 14-month high; and a surge in gold. "So what really happened?" asked my friend and super-anchor Tony Cruise at WHAS radio in Louisville, KY. Tony, I'm glad you asked!

The boom for natural resources took a breather during the global recession, but has returned with renewed vigor, led by China. As a result, Australia raised rates because its natural resource-rich economy has weathered the financial storm better than consumer-driven economies, like those in the US, Europe and Japan. So while the Australian central bank believed that its interest rate policy was a little too loose for comfort, don't expect similar moves by the Federal Reserve any time soon.
Aussie Rate Hike: Throw the US Dollar on the Barbie? - Econwatch - CBS News

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Thursday, October 8, 2009

Dollar Panic Video of the Day

Peter Schiff tells Fox News on October 8, 2009 that golf prices are exploding while the US dollar is collapsing. What do you think?

The Case for Dumping Dollars for Gold

Should you be "all in" with gold? Some investors think so:
Gold just hit an all-time high of $1,045 and the dollar is coming under considerable pressure as China, Russia and other nations are calling for a new reserve currency. Rumors are swirling around that several countries are secretly planning to off-load their dollar reserves and begin settling international transactions in another currency. With the United States pushing towards a $2 Trillion annual deficit and doubling the money supply in a single year, there is legitimate cause for concern.
The case for dumping dollars and investing in gold - Precious Metals - Resource Investor

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Mainstream Media Fails to Report Collapse of the US Dollar; Why?

Who--or what--are the afraid of? Go ahead, try and search for something negative about the dollar on any of the major business sites.
AS of 7:09 AM ET CNBC and Marketwatch do not have anything on their front page about the Asian intervention in foreign currency markets to prop up the collapsing dollar. FT has a general story on the weak dollar four stories down. WSJ covers it, but only half way down, in the "Before the Bell" segment.

Let me make clear what MSM is obviously not getting. Panic out of the dollar is the great tsunami that could rock the financial system to its core. If this escalates. It means soaring--double digit-- U.S. inflation, a near impossible ability for the U.S. government to finance its debt, a complete restructuring of the international financial structure.
Mainstream Medias Failed Reporting on the Dollar Collapse : Truth is Contagious

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Financial Expert Max Keiser Talks About Collapse of Dollar

Check Max Keiser out at and

YouTube - Max Keiser on Alex Jones Tv 2/4:Kiss The Dollar Goodbye!!

Experts Look at Downside for US Dollar, See Upside for Stock

The experts seem to agree: the dollar is collapsing . . . but is it really good for stocks? Doubtful.

The U.S. dollar fell again Thursday, continuing a recent spell of weakness that has concerned policymakers and investors alike. What did experts have to say about the greenback's decline and other key topics for the economy and markets on Oct. 8? BusinessWeek compiled comments from Wall Street economists and strategists:

Vassili Serebriakov, Wells Fargo Bank
Downward pressure on the U.S. dollar showed few signs of subsiding [in overseas trading Oct. 8]. Australia's September jobs report surprised on the upside, playing into expectations of further policy tightening by the Reserve Bank of Australia and lifting the Australian dollar to a 14-month high. While the U.S. dollar is slipping broadly, some of the strongest currency performers are found among the growth-sensitive emerging-market currencies including the Indian rupee and the Brazilian real.

The euro also reached a two-week high against the dollar [on Oct. 8]. The European Central Bank left rates steady as expected and subsequent comments from the ECB President Trichet did not hint at any significant changes in the current policy stance. Trichet also made some remarks on the currency markets, saying foreign exchange volatility is "bad for economic stability" and that a strong U.S. dollar is "extremely important."
Experts: Downside for Dollar, Upside for Stocks - BusinessWeek

Dollar Collapses to Lowest Level since August 2008

Going, going, gone?

The dollar fell to its lowest level in almost 14 months against the currencies of six major U.S. trading partners as signs of global economic recovery spurred demand for riskier assets.

The euro strengthened versus the dollar after European Central Bank President Jean-Claude Trichet said the region’s economy is emerging from a period of “free fall.” Australia’s currency was the biggest winner against the greenback among the 16 most-traded counterparts tracked by Bloomberg on speculation investors favored higher yields.

“You have an increased capacity for risk,” said Thanos Papasavvas, who helps oversee $4 billion as head of currency management at Investec Asset Management Ltd. in London. “There is a move out of dollars into markets which offer better returns.”
Dollar Drops to Lowest Level Since August 2008 on Risk Demand -

Column: Dollar is Dead, Only Awaits Burial

What music do you think should be played at the wake?

It is only fitting on a day where the price of gold hit a new, nominal high that I should discuss the last days of the US dollar as a "reserve currency". An ounce of gold is what it is: the world's oldest and most widely-accepted money. It can never increase (or decrease) in value. Instead, it is the pseudo-money, the paper "fiat currencies" which are currently all plunging steadily downward in value -- with no currency able to keep up with the collapse of the US dollar.

Concurrent with the new nominal high for gold, the big 'news' of the day was a pair of news articles about global oil trade. One article out of London claims that a 'secret' agreement is being reached between Middle East oil-producers and the rising "BRIC" economies to work to exclude the US dollar in the future trade of crude oil -- phasing it out steadily over a 9-year period.

The second major news item was a parallel story out of the Middle East, where the Gulf oil-producers denied that such a deal is being reached. Shakespeare had a famous quote which deftly deals with such denials: "[Thou] doth protest too much, methinks."

The dollar is dead, only awaits burial -

Australian Economy Turning Around, AUD Surges Against USD

Things are looking up, down under. Will the US Dollar get left behind?

Thursday in Asia, the Aussie soared against its major counterparts amid a report that showed Australian employers unexpectedly added jobs in September, raising prospects of more interest rate hike by the central bank.

The Aussie jumped to fresh multi-month highs against the currencies of U.S., Europe and Canada. Against the yen and the kiwi, the aussie strengthened to new multi-day highs.

RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises ....

Stock Market Rally Result of Dollar Collapse?

Is the stock marker really making a comeback, or is it just the result of the collapse of the dollar?
Earlier today, David Rosenberg called the stock market rally a "money illusion," since without the benefit of the dollar collapse, things look a lot worse. Well, the rally isn't 100% based on the dollar... just about 50%.

As you can see here, since early May, when the Dollar really started breaking down the S&P 500 as measured in Euros is up less than half of what the S&P 500 is up in Dollar terms.

CHART OF THE DAY: The Dollar Collapse Is A Huge Part Of This Rally

Wednesday, October 7, 2009

President Obama Taking Fire Over Falling Dollar

The first shots against the administration are being fired. Too little, too late?
The falling US dollar is giving ammunition to the critics of the Obama administration and fuelling broader concerns about the potential erosion of America’s reserve currency status.

The depreciation of the US dollar is sparking growing jitters among critics of the Obama administration over the potential loss of America’s reserve currency status. Economists point out that a declining dollar could prove a boon to the US economy in the absence of credible anxiety over inflation.  Republican politicians have highlighted the dollar’s slide as evidence of waning US power.

Sarah Palin, the former vice-presidential Republican candidate, on Wednesday sought to link the dollar decline to rising US indebtedness and dependence on foreign oil. “We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar,” she wrote on her Facebook site. / US / Economy & Fed - Obama under fire over falling dollar

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US Dollar Hits New Low Against . . . Canadian Dollar?

The Canadian dollar hit the highest level in 2009 against the US greenback Tuesday.  The loonie - as the Canadian dollar is known - reached 94.66 US cents during the day. It is the highest level the Canadian currency has reached against the US dollar since October 1, 2008. The loonie has sunk as low as 77 US cents in March this year as oil and commodity prices plunged globally. Since then the Canadian currency has made steady climb as the greenback got battered against other currencies.

Tuesday's rise of the Canadian dollar against the US currency was also fuelled by speculative reports that many oil-producing Arab and non-Arab countries might switch over to non-dollar currencies for tradig in oil. Rising commodity prices, led by gold, also pushed up the Canadian markets, with the composite index on the Toronto Stock Exchange reaching 11,247.97 points.
Canadian currency at record levels against US dollar- Hindustan Times

Tuesday, October 6, 2009

Is the US Dollar Getting Too "Risky" for the Rest of the World?

They said it, we didn't: "policy-makers are resigned to a gradually weakening dollar."
The U.S. dollar fell against other major currencies on Monday after a meeting of finance chiefs from the Group of Seven wealthy nations underscored the market's view that policy-makers are resigned to a gradually weakening dollar. The dollar was also pressured as gains in global stock markets, and data showing the U.S. service sector expanded in September for the first time since August 2008, boosted risk appetite and diminished safe-haven demand for the greenback. "The U.S. dollar is once again falling into the trap of being a safe-haven currency, and you can see ... most securities that have a tie into yield demand and risk appetite are rising," said John Kicklighter, currency strategist at in New York.
FOREX-US dollar slips after G7, revived risk appetite | Currencies | Reuters

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WSJ: Iran Says Dollar "Detrimental"

How bad our things when even the Iranians don't want our money any more?
Iran's Economy Minister said that the U.S. dollar is detrimental to economies and that the country has gained billions of dollars after switching its foreign reserves to euros. "It's not only us that feels the domination of the dollar is not helpful but rather detrimental to economies," Shamseddin Hosseini, Iran's Minister of Economic Affairs and Finance told reporters at a press conference in Istanbul. "We have benefited [from] billions of dollars by shifting [our reserves] from a dollar base to euros and other currencies."
Iran Economy Min - US Dollar "Detrimental" To Economy -

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Market Heads Higher as Dollar Heads Lower

Is the market really going up, or is your dollar just worth less (not worthless, but that will be soon enough)?
A wide swath of the U.S. stock market is on the rise thanks to the weakness in the dollar.
In particular, dollar-based commodity stocks including energy, basic materials, mining and multinationals all are benefiting from the greenback's decline. And as the dollar rebounds, or declines further, U.S. stocks likely will be sensitive to those moves, market professionals say.
"Investors appear anxious to move funds to hard commodities and commodity-based equities as a hedge against the falling dollar," Fred Dickson, chief market strategist at Davidson Cos., wrote in a note.  The energy sector is riding high with the rally in equities as well as commodities, with oil breaking past the $71 mark and gold above $1,000. Anadarko also is active after favorable news from the U.S. Supreme Court. Steve Gelsi reports. "We continue to look for the stock market to remain volatile and remain closely tied to the daily movement of the dollar," Dickson said.
Weak dollar a key part of U.S. stock market's rise - MarketWatch

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UN Calls for New "Reserve Currency"

Does anyone want dollars anymore? Apparently not our friends in the UN.
The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit.

"Important progress in managing imbalances can be made by reducing the reserve currency country?s 'privilege' to run external deficits in order to provide international liquidity," UN undersecretary-general for economic and social affairs, Sha Zukang, said.Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: "It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity."

UN calls for new reserve currency

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Gold Spikes on "Ditch Dollar" Report

As gold heads higher, is the demise of the dollar on the horizon?
The price of gold struck an all-time high Tuesday as the dollar fell on a news report of a plan by Gulf states to stop using the greenback for oil trading.  Gold hit 1,045.00 dollars per ounce on the New York Mercantile Exchange in late trades.

Hours earlier on the London Bullion Market, gold surged to 1,043.78 dollars beating the previous record high of 1,032.70 dollars an ounce struck in March, 2008. Barclays Capital precious metals analyst Suki Cooper said dollar weakness appeared to be related to reported secret talks about oil being priced in a basket of currencies including gold rather than the dollar,
Gold price hits record high on report to ditch dollar - Yahoo! News

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Monday, October 5, 2009

Beginning of the End? Arab Oil States Don't Want Dollars

Is this the beginning or the end?
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The demise of the dollar - Business News, Business - The Independent

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Breaking US Dollar Collapse News

What's Behind the Decline of the US Dollar?

This is one the of the best and simplest explanations we have seen:
The U.S. dollar's downward slide is accelerating as low interest rates, inflation concerns and the massive federal budget deficit undermine the currency. - Wall Street Journal, April 23, 2011
Interestingly, the Federal Reserve is responsible for, or an active participant in all three of these factors.