US dollar reaches new lows -- like this administration.
The US dollar is sinking faster than the popularity of George Bush. And coincidentally (?) for pretty much the same reason -- King George.
The Republican mismanagement of the economy has been so colossal as to defy expectations. And my expectations of King George were very, very low. I can honestly say he meet them and exceeded even the lowest of the low.
Canadians are facing the unusual circumstance of a Canadian dollar that has the same value as a U.S. dollar. I remember when it was worth about half that. As a kid I was not aware of economics and remember wondering why Americans got so upset to get a Canadian coin instead of a U.S. coin in change. Now they might not feel so bad and based on trends they ought to be clamoring for Canadian change pretty soon.
The Euro hit an all-time high against the U.S. currency. It wasn’t that long ago a Euro was worth about 90 cents. Now it is valued at $1.40.
With Bush at the helm I was warning American friends to set up foreign accounts (harder to do because of US laws but still possible) and get their savings out of dollars. I have no U.S. dollars myself. I have Euros, British Pounds and the Kiwi dollar only. Unfortunately not a lot of any of them. But at least they are generally stronger than when I got them.
When people see the price of oil they forget that the price is a two way relationship. It reflects the supply and demand for oil but it also reflects the value of the U.S. dollar. One reason oil prices are so high is because they are denominated in U.S. dollars which are rapidly losing value.
And the really bad news is that this trend is expected to continue. Most people realize this but Bush says things are just peachy and we shouldn’t worry. Bush has handled the economy the same way he handled Hurricane Katrina. His involvement took a bad situation and made it a real disaster. Look at this charts carefully. Notice where the dollar was when King George had his coronation. Notice where it is today.
Investment guru Doug Casey quotes the Daily Telegraph the Saudi reaction to the recent interest rate cuts in the U.S.. The Saudis didn’t follow suit and the Telegraph says this is “signaling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollars across the Middle East.
The Telegraph notes that the Saudis have attempted to stay pegged to the U.S. dollar but “the link is now destabalising its own currency.” Foreign investments in the U.S. are likely to become more and more scarce. So investment in the U.S. is likely to be diverted elsewhere furthering the fall of the dollar.
Hans Redeker of BNP Paribas says “We think that a fall in the dollar to $1.50 against the euro is not out of the question at all by the first quarter of 2008.” Commodity guru Jim Rogers points to U.S. policy as the culprit. “If [Fed chief] Ben Bernanke starts running those printing presses even faster than he’s already doing, we are going to have a serious recession. The dollar’s going to collapse, the bond market’s going to collapse. There’s going to be a lot of problems.” And Alan Greenspan, former Fed chair, says that house values could drop by “double digits”.
Considering the amount of debt that Bush is accumulating the American taxpayers will eventually feel the pinch. Taxes will eventually have to be raised to pay for Republican wild spending. If you go on a spending spree the bills eventually come due. But the moron in the White House figures if the bills are paid when he’s sitting on his ranch then things are just fine for him. Bush has sacrificed the nation’s economy to pursue his own agenda.