Forum Moderators: buckworks
It looks as though the US Dollar is going to tank badly from here on in. Up until now I've been eating it on the exchange rate because the American market is my largest segment, and most of my competition has not yet upped their prices. As the Canadian dollar has gone from 62 cents US to over 97 cents yesterday I'm finding it very hard to hold the line on pricing. Anyone else in this same boat and have any idea what the best course of action might be? My big concern is that surely a great many business's are in the same situation and are all going to jump their prices as soon as the competition does. This will cause a massive run up in inflation and crash the economy for us all.
Lovejoy
Part of it IMO (not an economist :)). We are paying a fortune for it and that money has to be borrowed...
With all due respect, what do you consider tanking? it's already dropped
from from well over $1.40 Canadian down to .93 cents Canadian as of today's date.
In my opinion an 18% drop over 12 months against the CD doesn't necessarily constitute tanking. During that same period, the USD dropped 13% against the Euro, and 9% against the british pound, and 6% against the Chinese Yuan. I would read this as a moderate devaluation of the USD that is simply being amplified by a significant increase in the value of the Canadian Dollar. For example, during the past 12 months, the Canadian Dollar has increase 7% in value against the Euro, and it has increased 13% against the Yuan.
Sean
Eighty percent of all questions are actually statements in disguise, and that question has a strong statement. It's painfully obvious that many Europeans (except right wing Poles and Romanians) would love it if the falling dollar were due to the war.
But is it? The short answer is No. The long answer is Yes - in that the war, the war on terror, and Bush's post 9/11 stupidity and drive to a police state has pretty much added $4 trillion to the deficit. And rising debts lead to falling currencies.
However war does have a positive or negative factor in any economy.
Remember what happened to the US economy after WWII and how the Japanese economy took off two decades later?
East Germany under the USSR didn't fair as well.
And take your pick were you would rather live, North Korea or South Korea.
Since the Hong Kong dollar is pegged with the US dollar, we are in the same boat over here. The problem with market crashes is that they tend to happen right at the very end. There is now a real fear among financial circles that the dollar may now nosedive suddenly like the Titanic as investors go into a general panic. The only possible way to prevent this is for the central banks to intervene massively.
In the long run, an undervalued currency is always good for the economy, as the Chinese have found out long ago. Now US-linked Hong Kong dollar is in the doldrums, we are likewise seeing a boom over here.
Lovejoy- Out
Unfortunatly it will only get worse, there is a long way down to go before it turn the corner and rises.
In Colombia, international investors buying stocks and bonds must leave a 40 percent deposit at Banco de la Republica for six months. The Reserve Bank of India created a bureaucratic thicket to curb speculation by foreign money managers. The Bank of Korea is investigating trading of currency forward contracts to limit gains in the won, now at a 10-year high.
Instead of using currency reserves or interest rates to influence foreign exchange markets, central banks and finance ministries are setting up obstacles to keep the falling dollar from threatening company profits and economic growth. The U.S. currency slumped 10 percent this year against its biggest trading partners, the steepest decline since 2003, while Treasury Secretary Henry Paulson has reiterated that the U.S. supports a ``strong'' dollar.
[bloomberg.com...]
This is just completely surreal! Exchange controls are usually imposed to stop the local currency from collapsing, not the other way round! It should be the US who is imposing currency controls on itself. When Zimbabwe joins in, we will know that we are in an utter mess!
The Politicians, beuracracy, news organization and media are all screaming at people to BUY, BUY, BUY.
I am so sick and tired of people trying to sell me s&^t.
There was a time when the savings rate in this country was 10 percent, now it is negative 1 percent.
In the last 4-5 years, many Americans decided they wanted to BUY even more crap, and took out equity loans on their home. Now, thanks to the housing market bubble bursting, their homes are not as worth as much and many owe more then it's worth. They're stuck with a mortgage, equity loan, average $8,000 in credit card debt, car payments, college for the kids, etc., etc.
Now, they want to believe all the false prophets on CNBC and Fox Business News that tell them the housing crash is almost over. - Hell, it's not almost over. You can't have a 6-7 year housing boom and a bust that only lasts 12 months. Cycles don't work like that.
If you want to get into a huge argument with an American, tell him his house is not worth as much as he thinks it is. Whoa, boy, that's personal. You might as well have told him his wife is a whore and his son is gay, that would have gone over better.
My point is that derekwong is right when he wrote:
More often than not, huge market movements are based on herd mentality and mass hysteria rather than plain economic and financial sense.
Americans are the epitome of the herd. And the herd always does the wrong thing. They were raised by their parents to think that they are special and "can be anything in the world." - And despite that childhood brainwashing, they realize when it's too late they are not special and the only thing mommy and daddy's words did was to instill in them a huge sense of entitlement.
Entitlement to things that can't afford and their skills can't get for them without going into debt or bankruptcy. They realize when it is all to late that they are not special, they are just like everyone else in the herd, and the only thing they are qualified to be - is broke.
But that American hubris is amazing. If it could be harnessed as energy, it would solve the world's energy crisis and save the planet for Al Gore.
However I would add that this trait of entitlement is not exclusive to Americans. I think many of us in the western nations have a sense of entitlement and invincibility.
Its not really fair to pick on only Americans.
This time it is the USA that is in an economic crises. Oddly, not many Americans know it yet but that is another issue.
Its not really fair to pick on only Americans.
Yes Please. Let's not make any more sweeping generalizations about ANYONE. I'm an American and I don't own a home, have been working post-college full time for only about a two years, have saved 10% of that income for buying a home in another two. I won't buy one that I can't afford, not because I've learned from the 'housing crisis', but because I'm smart enough to know better. My parents didn't teach me that I'm entitled to anything that I can't get for myself, but they did teach me how to earn it.
I'm a US citizen and proud to be one. I don't agree with everything my country does, and I don't think that 'My Fellow Americans' always make the smartest or best decisions, but I'm really quite tired of being the bad guy simply because I was born in North America between Canada and Mexico.
Thank you. Now I would ask that smarter financial minds than mine continue this interesting and rather frightening thread.
No, probably not, and I've been in enough countries to know that Americans do not have a monopoly on self destructive behavior.
The last one I lived in, wow, truly unbelievable. And they all delighted in repeating their secondary school education recital of communist propaganda (I'm being serious) of why their country was great, and USA was bad. And polluted. And stupid. And none of us had to work hard, we all have it easy.
For them, laziness and ignorance has proven to be a hazardous combination of the third world variety. They could not grasp the concept of: "more work, equals more money."
That was totally lost on them. It was not a part of their mindset. In communist times, you showed up to work for eight hours and you got paid - whether you got anything done or not. And they quickly realized that since their jobs were secure, they could take years to finish constructing a building.
Why do any actual work when you still got paid? That state-run company is never going to go out of business because it never finishes a job in a reasonable time. This gravy train will last forever. Well, maybe just until 1989.
My wife (who is from un-named Eastern European country) and I moved back here in January. We moved to a large city in the midwest. We then went on vacation through the western states and to central California. We sent 400 pictures back to her parents.
The one thing her dad wanted to know was, "where is all the pollution?" He couldn't believe that we had all that "clean nature."
That old-school propaganda stays with them. It's hard to let go. "My country is better then your country." - "Elbonians are superior to Americans."
Patriotic propaganda.
Americans might have a bad case of hubris, but I will say they do work hard, and they are creative. And they never, ever, never sit around and talk about what those "darn French, or Germans, or Norwegians" are up to, and how their politics or justice system or economics is bad.
Travelling through other countries, I never had locals shy away from telling me just what they think of USA. Often, I would just let them tell their opinion and never argue or point out the flaws in their beliefs. I'd just let them unleash whatever they feel they need to "educate" me on. I got all that America bashing live and in person.
But when I asked them why they didn't use this energy to discuss their own country and the problems they face, well, that didn't go over so good. I never got a solid answer.
I actually told some of them that Americans never, ever, never sit around and discuss what those "darn French or obstinate Germans" are doing - and they couldn't believe that either.
My wife, who's been over here now 10 months, writes and calls back and tells them what life is like here. She tells them it's harder to make decent living over here then it is there, and that life is not like they see on the American TV shows.
They don't believe her.
It seems their belief system is anchored in American TV shows (our own propaganda) and old-school Communist propaganda.
What a strange combination.
PS: BTW, before I forget: This is "frightening"
Talk of Worst Recession Since 1930s [nysun.com]
[edited by: Freedom at 4:09 pm (utc) on Nov. 12, 2007]
Don't blame the people for the actions of the Government, or on the wisdon or lack of it, of its leaders.
In democracies today, more and more governments are being elected by the minority, as more and more people don't vote, for various reasons.
This is another reason of not associating the actions of the government with the will of the people.
...The long answer is Yes - in that the war, the war on terror, and Bush's post 9/11 stupidity and drive to a police state has pretty much added $4 trillion to the deficit. And rising debts lead to falling currencies....
While some people love to blame the Iraq war, a much bigger component might be the 56 billion per month trade deficit with China. Which, to a large extent, is still due to stupidity - but not just Bush's - this has been building for 20 years and has once again reached record levels of trade deficits.
Wally World will just raise their prices, that is all. They are not going anywhere. They reported an excellent quarter yesterday but the inventory they are selling now was all contacted a year ago.
Wait until next spring/summer.
Some people do overspend, but i don't think thats an issue with why the dollar is failing.
Cost of living is getting entirely out of hand and those are expenditures that you nor i have any control of outside of hoping our vote actually matters.
1. Health costs still ballooning
2. Energy costs still ballooning
3. Insurance costs & Liabilities are ballooning.
Oddly enough the majority of our wasteful congress critters are still so focused on tax and spend bs they fail to see that taxes have little to do with the economic pressures facing society and have more to do with how they could alleviate those pressures on society.
1,2 and 3 are what prevent people from getting jobs, trying to start a new business, failing to establish them selves and getting in over there heads - probably more than anything else.
Put it this way, minimum wage doesn't even cover the cost of getting to work yet alone paying for healthcare.
Put it this way, blue collar wages barely cover your ever increasing utilities, energy, insurance and risk costs before you can even contemplate having mortgage
we're milked by corporate greed on all sides and thats the problem. Our administration has made us fear taxes instead of leverage taxes to make sure the wealth is disbursed appropriately and fairly. We're a man eat mean, corporation eat man society and thats the way it will be until we get out *(&* straight.
3.00 gallon of gas, 3.00 gallon of milk, ever increasing car insurance, home insurance, mortgage insurance.. hell - the premiums i pay that i never ever use go up because now instead of paying for social risk i'm paying for corporate risk and profit taking.
what a screwed up society we are in today.
While some people love to blame the Iraq war, a much bigger component might be the 56 billion per month trade deficit with China. Which, to a large extent, is still due to stupidity - but not just Bush's - this has been building for 20 years and has once again reached record levels of trade deficits.
The trade deficit is failed logic, while the war is a realized up front cost.
Trade deficit isn't a deficit because 9 out of 10 times the margin of profit on that deficit is so high that its cheaper to import than to produce stateside.
What the trade deficit does is create environments of social, ecological and environmental risk where these exporting nations become dependent on our purchasing and thusly stay so poverty stricken so that corporate america can make HUGE profits off them. IF we let price disparity and cost of living disparity equalize across the globe then the US looses its super power status. Thats the simple gist of it. Our current administration, the Cato institution and our current ""conservative"" party is designed around greed and obsessed with blaming everyone but themselves on the global issues that face our country that could simply be fixed or prevented if we weren't hell bent on profiting from the misery and misfortune of others and respected people for the people they are.
someone has to say it.. we're so numb to the real issues because people try and tell me its about tax and spend or health care or social security when the real fallacy of our current administration is how hell bent they are on keeping fear prevalent to not only control its own populous but to sustain the profiting off the misfortune of those around the globe.
wake up sheeple.. the US dollar isn't our problem, its the loony Neo-Cons, Cato institution and power hungry bigots that we have to worry about. They've hijacked our faith, our liberty and our democracy and turned it against us in vain.
we're milked by corporate greed on all sides and thats the problem.
Puh-lease. Government creates most of the problems it eventually tries to solve, usually making them worse.
The big corporations may cause problems, but only because of the amount of power that Congress has claimed for itself using the banner of the "general welfare" clause which was never intended to give the federal government the extent of power it claims.
Gaining customers is hard. It often costs big bucks to convince consumers that you're better than the competition. It's much more cost-effective to lobby the government to implement policies that make things easier for you at the expense of your competition. Why go through as much money and effort convincing consumers you have a better product when you can more cost-effectively lobby a mere handful of the population (i.e. their Congressional "representatives") instead?
As government claims more and more power over our daily lives, you can expect that things will continue to grow worse. Big corporations are frequently not as agile as small businesses that may challenge them in the marketplace. Much easier to lobby for legislation that raises the barriers to entry in the marketplace than to fend off the competition through marketing or making a better product or lowering prices.
When the politicians have less power, the big corporations also have less power and must then compete in the marketplace rather than in the lobbying sphere.
I think you are thinking of The Heritage Foundation.
"A conservative think tank that is at the forefront of the pro-globalization perspective."
Puh-lease. Government creates most of the problems it eventually tries to solve, usually making them worse.
Name one. :)
The big corporations may cause problems, but only because of the amount of power that Congress has claimed for itself using the banner of the "general welfare" clause which was never intended to give the federal government the extent of power it claims.
How so? Why is the balance of power entirely for the corporation and not the people. Isn't the government for and buy the people? Why should corporations have any say in our personal matters. They don't own us but people give corporations credit for sustaining us like its a privilege to work for them.
Gaining customers is hard. It often costs big bucks to convince consumers that you're better than the competition. It's much more cost-effective to lobby the government to implement policies that make things easier for you at the expense of your competition. Why go through as much money and effort convincing consumers you have a better product when you can more cost-effectively lobby a mere handful of the population (i.e. their Congressional "representatives") instead?
Exactly.. #*$! doe governmnet have to do with business and why does business get more value from government than the people. You just supported the very proposition you denied above. The problem isn't the government, the problem is corporate control of our government.
Another person said i have Cato confused but again, Cato and modern day conservatism go hand in hand and will do everything they can to preserve the privatization of our Country in the name of corporate greed.
As government claims more and more power over our daily lives, you can expect that things will continue to grow worse. Big corporations are frequently not as agile as small businesses that may challenge them in the marketplace. Much easier to lobby for legislation that raises the barriers to entry in the marketplace than to fend off the competition through marketing or making a better product or lowering prices.
Again, big government isn't what i'm talking about and big government doesn't have to be described as allowing control/monopolies or power. The government i'm talking about is a representative democracy that gives power to the people. Our government should have no say in what goods i can buy but there isn't any reason as a country we can't vote to give people basic fundamental rights such as healthcare and social security. We're rich, we should be proud of how we help each other and not scared of it and we shouldn't use our "richness" to keep everyone else piss poor in the name of power/greed.
When the politicians have less power, the big corporations also have less power and must then compete in the marketplace rather than in the lobbying sphere.
Thats the biggest fallacy of 'em all. The government IS the people. You take away power from the people and corporation can do whatever they want. Lets not forget we got to where we were today through 200 years of refining what has and hasn't worked. The Current administration wants to throw out 200 years of progress in the name of starting over as if we have been a failure.
How the hell could the most successful nation in the world that people used to flock to in droves be considered a failure and why do we need to turn back the clocks?
Big government is a lie.. tax and spend is a lie. Nothing in life is free, so quite preaching to me freedom isn't free and then complain about taxes (you all know who you are)
The government is for and by the people and getting back to that government doesn't take away the power it has to create fairness, enforce a fair/open market and get america back on its heals as the country everyone once loved and modeled after.
No on was ever perfect mind you, but its a terrible lie our current administration, the fox newses and the rush limbaughs of the world preach.
Big government as you describe is a model citizen of republican-economics. Control the market, lock in profits and create a perpetuation of the power struggle that sustains there un-restrained growth and profits.
believe me.. in no such way or fashion am i stating the dems or anyone else has a solution to the problem.. the only thing i'm saying is people need to quite lying to themselves that "government" is the problem when its our current administration that needs to go and we can sort out the rest like we always have.
No they don't. Cato Institute is about Libertarian principles, which have nothing to do with today's Republican Party.
Anyway, regardless, that kind of wild angst of raging against the machine, whether it's big goverment, or big business, is a definite sign that things are going to get interesting in America.
The symptoms of an economic depression, like:
1. Wild angst in all directions.
2. Strikes
3. Massive Lay-offs
4. Retail spending down
5. More property crime
6. Families moving in together.
7. Crazy, money-making pyramid scams
8. etc
9. etc.
Besides the point that this thread just veered to the left in a political discussion, against TOS, ByronM clearly demonstrated one of the symptoms of economic hard times. There are predictable patterns of behavior that we are going to see, and we just saw one of them.
I love the discussion, it is all very interesting to hear the take from people in different places, occupations and incomes.
Puh-lease. Government creates most of the problems it eventually tries to solve, usually making them worse.
Name one. :)
HMOs.
The big corporations may cause problems, but only because of the amount of power that Congress has claimed for itself using the banner of the "general welfare" clause which was never intended to give the federal government the extent of power it claims.How so? Why is the balance of power entirely for the corporation and not the people. Isn't the government for and buy the people? Why should corporations have any say in our personal matters. They don't own us but people give corporations credit for sustaining us like its a privilege to work for them.
Gaining customers is hard. It often costs big bucks to convince consumers that you're better than the competition. It's much more cost-effective to lobby the government to implement policies that make things easier for you at the expense of your competition. Why go through as much money and effort convincing consumers you have a better product when you can more cost-effectively lobby a mere handful of the population (i.e. their Congressional "representatives") instead?Exactly.. #*$! doe governmnet have to do with business and why does business get more value from government than the people. You just supported the very proposition you denied above. The problem isn't the government, the problem is corporate control of our government.
You're missing the point entirely. There is only "corporate control" of our government insofar as the politicians have claimed power over this or that and the corporate lobbyists urge them to positions that best serve their interests.
And, it's not just corporations that like to use government authority to crush the competition, but small companies and individuals too. The more power you give to the government, the more opportunities for abuse that arise.
You need look no further than WebmasterWorld for examples of this. If there is talk of raising domain name registrations fees, you will see cheerleaders for that because it reduces the number of potential competitors in the marketplace. You'll see people that will be perfectly happy if Joe Schmoe cannot afford a domain name and start a website that might compete with their own. If there is talk of more regulations on online businesses, you'll find cheerleaders here for that, because--again--it cuts down on the competition. These cheerleaders will use excuses to try to justify their positions--they'll argue it's better for the consumer or if someone isn't willing to spend big bucks they aren't serious about business, etc.--but the truth is they just want to see less competition.
When the politicians have less power, the big corporations also have less power and must then compete in the marketplace rather than in the lobbying sphere.Thats the biggest fallacy of 'em all. The government IS the people. You take away power from the people and corporation can do whatever they want.
They can't do whatever they want if the people aren't buying what they're selling. Besides, by taking power away from the government, we are putting that power back in the hands of the people. "The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people."
