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Currency Speculation with AdSense Payments

     
2:06 am on Nov 22, 2006 (gmt 0)

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The US dollar is very low right now. Are any European publishers holding payments till it rises? :)
2:36 am on Nov 22, 2006 (gmt 0)

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Nope it will probably sink further ... since your government senate and so on is basically working against each other, so that can't be good for the economy.
2:38 am on Nov 22, 2006 (gmt 0)

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I have no idea about the $$, but gridlock is actually good. I wish no party controlled all branches.
2:41 am on Nov 22, 2006 (gmt 0)

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"since your government senate and so on is basically working against each other, so that can't be good for the economy."

Actually, I'm European; I was considering doing this.

And lack of total co-operation within government can be a good thing, you know. :)

2:51 am on Nov 22, 2006 (gmt 0)

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And lack of total co-operation within government can be a good thing, you know. :)

Maybe it's the norm .. but now it's obvious.. ;)

I hope we can at least bank on the crash detection software in the Wall Street stock market ..

2:53 am on Nov 22, 2006 (gmt 0)

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EFT changes when it's deposited ( unless you are holding dollar accounts )..and checks / cheques are not valid forever ..

Example ..in France ..cheques ( including foreign ones ) are considered valid for one year only ..if one hasnt cashed them by then ..one is too late ( the bank may refuse to take them in for crediting to your account ) and the money is forfait ..

be carefull not to outsmart yourself ..depending on where you live ;-)

4:29 am on Nov 22, 2006 (gmt 0)

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This topic has come up a few times. But my reminder is that many large, experienced and profitable companies have gone under because they took the wrong bet on currencies.
Change your view - think of your monthly cheque as an opportunity for 'dollar cost averaging' (Google it). Sometimes it's up, sometimes it's down but the fact you get payments once a month lets you smooth out the highs and lows.

Greed is a rabid dog - it will bite you more than once.

11:09 am on Nov 22, 2006 (gmt 0)

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I've been studying currency movements, international markets and equities and commodities over the last 3 years pretty closely and I can say with 100 percent certainty that the dollar is going to continue to decline. The Fed has paused interest rate increases due to a housing bubble that's popping right now. Without further increases in the over-night lending rate, foreigners are not enticed to invest their money in government debt when there is already $8.3 trillion.

Further, most foreign central banks, China in particular, have signalled they are going to start diversifying out of the dollar. China has over $1 trillion in USD gov't bonds and to quote one of their bank officials "We think we have enough."

Russia is selling off dollars, Japan is full of dollars and doesn't want anymore. The same goes for many central banks in Europe.

If the FED raises interest rates, the dollar could stabilize - but only for awhile. It could attract some more foreign investment to stabilize the currency.

But the interest rate increases they have already made are about to slaughter home owners who have ARMs. (Adjustable Rate Mortgages) - Not to mention the average American has $9,000 in credit card debt that will be affected too.

Greenspan and Bernanke have worked the American financial situation into very bad corner. FOrmer Fed Chairman, Paul Volcker said the dollar will be in full crisis mode in 2 and 1/2 years. (He's the one who raised interest rates to 18 percent back in the early 80s in order to stabilize the high inflation of that time. SOme of you may remember.)

Robert Rubin, Secretary of the Treasury under President Bill Clinton and former Fed Chairman Paul Volcker have said that foreign investors probably won’t keep increasing their dollar holdings, which raises the risk of a slump in the US economy.

Failure by the US government to shrink its budget deficit may spook the central banks and others who have been buying Treasuries said Mr. Rubin. Volcker said the borrowing requirements raise the risk of a crisis in the dollar as soon as the next 2-1/2 years.- International Forecaster

So we have is a damned if they do, and damned if they don't for Bernanke.

If he raises interest rates, it will attract more foreign investors to prop up the USD but will kill homeowners and credit card users who are sensitive to interest rate increases.

And if they lower interest rates, less foreign investors will be attracted back to the USD which will fall.

The "behind the scenes" talk for the G-8 bankers is an "orderely decline" for the USD - because none of those central banks want to get caught holding 100s of billions of worthless USD when the currency hyperinflates like it did in the Wiemar Republic. (Loaf of bread was 1 million marks) Even the US wants an orderly decline so that it's exports remain competitively priced and so they can inflate their way out of all that debt. (It's cheaper for them to pay it off in dollars that are more worthless).

So they plan an "orderly devaluation" of the USD - but at one point, some of those central bankers are going to put their finger on the chicken switch and sell off in a panic AND stop buying the daily dose of debt the USGovt sells - about $2-3 billion per day). When that panic happens, American's will wake up one day and their money and economy is going to go south like it did with the Mexican Peso or Argentinean dollar in the 90s. - Americans will wake up one day and it will be a very different world for them.

Unfortunately, this could spill over to the global economy very easy and the pendulum could swing back and knock over the Euro, yen, yuan and other world currencies, so I don't really see them as safe as one might think. Maybe. I don't know for sure about them. But the USD, it's toast.

2:16 pm on Nov 22, 2006 (gmt 0)

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Wow. That makes my reply seem very trivial. I was just going to say - having read the recent postings of Google bans, reclaiming funds etc, etc, - that I would feel happier if the money was sat in my bank account rather than theirs - even if the exchange rate is non-favourable at the moment. At the end of the day 100% of something is better than 50% of nothing!

Really interesting post about the currency. Wish I had that much knowledge on World-Wide currency. Thanks. :)

2:24 pm on Nov 22, 2006 (gmt 0)

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Well Freedom, if you are so certain (can't get more than 100%), why not buy a hedge contact and not worry about Adsense. Sorry, but the post contains the same hyperbole that has bankrupted billion dollar companies.

Nothing is certain and then what about time frames - sure the dollar might go down -how far and how long? What if it retraces.

But since the poster was talking Euros, what should they do? Forget it, it's too greedy.

It gets more complex. Not all advertisers are from the US, so a lower dollar may lead to higher incomes (in US doallrs) if there are non-US players.

3:42 pm on Nov 22, 2006 (gmt 0)

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I have been battling with this issue for over three years now. The Canadian dollar has gone from .62 cents USD to close to .90 cents USD
and I have been holding the line on my prices, mainly because of my competiton.

My thinking on this is that many others are doing the same for now until one of us hits the walland raises prices. The rest will follow suit, then inflation will rear it's ugly head whether the Fed likes it or not.

P.S. I cash in all USD funds daily.

Lovejoy- out

2:18 am on Nov 23, 2006 (gmt 0)

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For us uk publishers this is all quite worrying.

How does the effect of uk advertising and competition effect this bad dollar google income? Presumably uk advertisers have to pay more to compete? So whats the effect In so far as epc (ecpm)?

And now you know why we get a cheaqp flight to new york to get our half price christmas shopping! To UK people US prices are like a third world country - stupidly cheap! But it works both ways, adsense income is worth about half as much here as it is to US publishers. I may go live in the former yugoslav republic (gf comes from there) as 100 uk pounds a month is good money!

[edited by: Genuine1 at 2:23 am (utc) on Nov. 23, 2006]

3:23 am on Nov 23, 2006 (gmt 0)

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Speaking from the US---> A weak dollar is good for exports and domestic manufacturing, the trade deficit will fall. Wal-Mart may actually sell items "made in the USA" again. It will be good for tourism. Fewer foreign nationals will come here to work, legal or illegal improving domestic employment and wages. Foreign investment will improve, American assets will be cheap.

Fewer Americans will travel abroad. That's fine, they're safer at home and it seems nobody likes us anymore anyway.

4:02 am on Nov 23, 2006 (gmt 0)

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The dollar is good in Australia, so where getting short changed again this month. I like when it was .75 at the start of this month not .77 like is now. Not Happy Jan. :(

[edited by: mack at 2:26 pm (utc) on Nov. 26, 2006]

5:27 am on Nov 23, 2006 (gmt 0)

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Here's the raw data, cost of a Euro in US$ since 2000:

3-Jan-00 -- 1.0155
2-Jan-01 -- 0.9465
2-Jan-02 -- 0.9031
2-Jan-03 -- 1.0361
2-Jan-04 -- 1.2592
3-Jan-05 -- 1.3476
3-Jan-06 -- 1.1980
22-Nov-06 - 1.2928

Its gone up, its gone down - but bottom line, it hasn't changed that much. Cash the checks and don't worry about it.

10:39 am on Nov 23, 2006 (gmt 0)

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Its gone up, its gone down - but bottom line, it hasn't changed that much

i'm amazed you can say that given the stats you posted in the same post, 0.9 to 1.35 is a 50% drop in income, you think that's not a significant change?

11:06 am on Nov 23, 2006 (gmt 0)

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Lol indeed.

$3000 in January 2001 was worth 3170EUR. Today it's only worth 2315EUR. That's a pretty significant drop IMO.

1:11 pm on Nov 23, 2006 (gmt 0)

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2 ways to look at it:

  • Get a dollar account, transfer money when you think it's time to do so, or pay bills you have in dollars from that account
  • Cash it in and treat the exchange rate as a fact of life.

    All the rest is irrelevant for a webmaster/site owner as it's beyond our control anyway.

  • 2:48 pm on Nov 23, 2006 (gmt 0)

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    Ah the mutterings of people just waiting to be burnt:
    "$3000 in January 2001 was worth 3170EUR. Today it's only worth 2315EUR."
    "i'm amazed you can say that given the stats you posted in the same post, 0.9 to 1.35 is a 50% drop in income, you think that's not a significant change?"

    How about:
    3-Jan-05 -- 1.3476
    3-Jan-06 -- 1.1980

    $3000 was $2,226 on 05, then it went up to $2504 in 06, now its down again.

    Selectively picking out dates to make it seem that you could have made a killing is a recipe for disaster. Remember too that you are getting a monthly income and the further into the future you look, the more unpredictable it all gets. The only 100% certain aspect is that exchange rates will go up and down, up and down.

    But hey, go ahead, play the forex market. You don't need to be in Adwords to do that. Take all your money, ring up a broker and say I want to buy some hedge contracts. Money is evil anyway, best it be gone.

    3:12 pm on Nov 23, 2006 (gmt 0)

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    Selectively picking out dates to make it seem that you could have made a killing is a recipe for disaster

    ermm excuse me but it was YOU who selectively picked the dates to post
    what your stats show is that in 3 years, the value of the euro against the dollar plunged by more than 50 %

    nobody was suggesting that we play the market and get burnt.

    obviously time scales are important but you can't post those stats and then say "bottom line, it hasn't changed much" because by inference, your comments are taken to allude to the very same stats that you posted which reveal massive fluctuations, maybe if you had qualified your statement to say "hasn't changed too much in the last two years" then i might agree with you ;)

    3:53 pm on Nov 23, 2006 (gmt 0)

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    Money is evil anyway, best it be gone.

    Poverty is evil, money is the cure.

    Currency speculation is less risky than the tables in a casino, but you do have to buy your own drinks...

    6:03 pm on Nov 23, 2006 (gmt 0)

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    Arguing over the specific interpretation of whether the rate has changed "that much" is irrelevant. What dcheney was saying is that holding on to the US funds would be a pure throw of the dice. Nobody knows which way the dollar is going to go next.
    6:14 pm on Nov 23, 2006 (gmt 0)

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    >>> What dcheney was saying is that holding on to the US funds would be a pure throw of the dice. Nobody knows which way the dollar is going to go next.

    I agree with Dick Cheney on this issue. It's rolling the dice and usually the small fish lose. Even Warren Buffer lost 100's of millions in currency trading.

    6:30 pm on Nov 23, 2006 (gmt 0)

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    Even Warren Buffer lost 100's of millions in currency trading.

    That's a lot of cache. :-)

    6:33 pm on Nov 23, 2006 (gmt 0)

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    My point is the going up/down is fairly random (even more so when compared against the forecasts of "experts"). And when you start factoring in things like the local country's inflation rate - your chance of making significant money by hedging your AdSense checks is pretty darn small.
    6:16 pm on Nov 24, 2006 (gmt 0)

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    Freedom's commentary is very insightful.

    Until the U.S. deals with its massive budget and trade deficits, the dollar will continue to be under severe downward pressure.

    The U.S. will probably eventually have to deal with the budget deficit through tax increases and spending cuts (an end to some of its foreign military commitments would help).

    The trade deficit can only be dealt with my making American goods and services more attractive to foreigners. They appear to be very overpriced at the present time. A slowing in the trend to outsourcing would be very helpful as well.

    Foreign publishers are going to continue to pay the price for U.S. dollar weakness. I would agree, however, that it is not worthwhile to postpone cashing cheques - especially when the trend for the U.S. dollar continues to be negative.

    6:48 pm on Nov 24, 2006 (gmt 0)

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    Until the U.S. deals with its massive budget and trade deficits, the dollar will continue to be under severe downward pressure.

    Sounds great until you look at the data. The budget and trade deficits in 2005 didn't go down, but the dollar got stronger...

    7:10 pm on Nov 24, 2006 (gmt 0)

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    Sounds great until you look at the data. The budget and trade deficits in 2005 didn't go down, but the dollar got stronger...

    Exchange rates are strongly influenced by interest rates, at least in the short term. That's one reason why currency speculation is so risky--and why it's nice to earn revenue in more than one major currency.

    8:48 pm on Nov 25, 2006 (gmt 0)

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    Sounds great until you look at the data. The budget and trade deficits in 2005 didn't go down, but the dollar got stronger...

    Yes, the dollar did get stronger during 2005, because interest rates went UP at every chance the Fed Reserve could make. As long as rates kept going up during that time, the dollar was an attractive investment to foreign investors (who now hold 40 percent of US Treasuries).

    But now that they are paused at 5.25, and with the data coming in, the Fed is feeling schizophrenic. If they raise rates, they kill their own economy. If the DON'T raise rates, the dollar will slip against other currencies.

    No offense, but some of the comments so far are based on generalizations with no facts or evidence to back them up.

    Here is a quote from the Financial Times Friday edition when the dollar slipped 1.2 percent in one day.

    The dollar has now fallen this year by more than 10 per cent against the euro and 12 per cent against sterling. Some economists suggest the greenback has further to slide given a weak economic outlook in the US, and the prospect of interest rate cuts there next year.

    Steve Saywell, currencies analyst at Citigroup, said: “While the economic data remain soft, the dollar will continue to fall.”

    Markets Rocked by Sharp Slide in the Dollar [ft.com]

    It's true the dollar will go up and down, but all stocks, equities, mutual funds go up and down when they are on the way up (bullish trend) or going down (bearish). No stock, currency, or commodity every goes STRAIGHT UP or STRAIGHT DOWN. So interpreting the data above as "dollar goes up, and it goes down" - is quite irresponsible. Of course it goes up and down, but in what long term direction? Bull? or Bear? Based on what facts? Who says? Some webmaster or an analyst or Warren Buffet?

    But for those that actually do the research into the boring and yet fascinating world of global economics, you'll easily see for yourself the dollar is in a long, downward trend by even the most conversative of viewpoints.

    [edited by: Freedom at 8:50 pm (utc) on Nov. 25, 2006]

    9:31 pm on Nov 25, 2006 (gmt 0)

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    The charts are out there for those who care to search, I'd link if I could.

    The dollar trend from June through mid October is flat, since then it is sharply down.

    Long-term trends are predicted by crystal ball gazers. Short term moves are predicted by billionaire manipulators and those they scalp. Without insider information from national treasuries speculation is just foolhardy.

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