Sinking currency, sinking country

[pepe]

The euro, worth 83 cents in the early George W. Bush years, is at $1.45.

The British pound is back up over $2, the highest level since the Carter era. The Canadian dollar, which used to be worth 65 cents, is worth more than the U.S. dollar for the first time in half a century.

Oil is over $90 a barrel. Gold, down to $260 an ounce not so long ago, has hit $800.

Have gold, silver, oil, the euro, the pound and the Canadian dollar all suddenly soared in value in just a few years?

Nope. The dollar has plummeted in value, more so in Bush's term than during any comparable period of U.S. history. Indeed, Bush is presiding over a worldwide abandonment of the American dollar.

Is it all Bush's fault? Nope.
The dollar is plunging because America has been living beyond her means, borrowing $2 billion a day from foreign nations to maintain her standard of living and to sustain the American Imperium.

The prime suspect in the death of the dollar is the massive trade deficits America has run up, some $5 trillion in total since the passage of NAFTA and the creation of the World Trade Organization in 1994.

In 2006, that U.S. trade deficit hit $764 billion. The current account deficit, which includes the trade deficit, plus the net outflow of interest, dividends, capital gains and foreign aid, hit $857 billion, 6.5 percent of GDP. As some of us have been writing for years, such deficits are unsustainable and must lead to a decline of the dollar.

A sinking dollar means a poorer nation, and a sinking currency has historically been the mark of a sinking country. And a superpower with a sinking currency is a contradiction in terms.

What does this mean for America and Americans?

As nations realize that the dollars they are being paid for their products cannot buy in the world markets what they once did, they will demand more dollars for those goods. This will mean rising prices for the imports on which America has become more dependent than we have been since before the Civil War.

U.S. tourists traveling to the countries whence their ancestors came will find that the money they saved up does not go as far as they thought.
U.S. soldiers stationed overseas will find the cost of rent, gasoline, food, clothing and dining out takes larger and larger bites out of their paychecks. The people those U.S. soldiers defend will be demanding more and more of their money.

U.S. diplomats stationed overseas, students and businessmen are already facing tougher times.

U.S. foreign aid does not go as far as it did. And there is an element of comedy in seeing the United States going to Beijing to borrow dollars, thus putting our children deeper in debt, to send still more foreign aid to African despots who routinely vote the Chinese line at the United Nations.

The Chinese, whose currency is tied to the dollar, and Japan will continue, as long as they can, to keep their currencies low against the dollar. For the Asians think long term, and their goals are strategic.

China – growing at 10 percent a year for two decades and now growing at close to 12 percent – is willing to take losses in the value of the dollars it holds to keep the U.S. technology, factories and jobs pouring in, as their exports capture America's markets from U.S. producers.

The Japanese will take some loss in the value of their dollar hoard to take down Chrysler, Ford and GM, and capture the U.S. auto market as they captured our TV, camera and computer chip markets.

Asians understand that what is important is not who consumes the apples, but who owns the orchard.

Other nations that have kept cash reserves in U.S. Treasury bonds and T-bills are watching the value of these assets sink. Not fools, they will begin, as many already have, to divest and diversify, taking in fewer dollars and more euros and yen. As more nations abandon the dollar, its decline will continue.

The oil-producing and exporting nations, with trade surpluses, like China, have also begun to take the stash of dollars they have and stuff them into sovereign wealth funds, and use these immense and growing funds to buy up real assets in the United States – investment banks and American companies.

Nor is there any end in sight to the sinking of the dollar. For, as foreigners demand more dollars for the oil and goods they sell us, the trade deficit will not fall. And as the U.S. government prints more and more dollars to cover the budget deficits that stretch out – with the coming retirement of the baby boomers – all the way to the horizon, the value of the dollar will fall. And as Ben Bernanke at the Fed tries to keep interest rates low, to keep the U.S. economy from sputtering out in the credit crunch, the value of the dollar will fall.
The chickens of free trade are coming home to roost.

Pat Buchanan

[BrianK]

I'll take the easy way out on this one & copy what I posted before. Most of the elements I mentioned are in this article.

Originally Posted by BrianK

I tend to think about this as the perfect storm with significantly more factors. Trade imbalance, lagging education, health issues, dollar decline, increasing personal debt, lower work force, higher draw on social programs, wages to sustain the economy much higher that emerging countries, suburban living as opposed to urban, dependent on oil.

[pepe]

Originally Posted by BrianK

I'll take the easy way out on this one & copy what I posted before. Most of the elements I mentioned are in this article.

There are very few "young folks" who have the wisdom to understand what you are observing, the "perfect confluence" of events.

National Debt, Balance of Trade, Loss of manufacturing base, "Addiction" to Imported Energy, Debasement of currency, outright economic lies by the Government concerning inflation, employment, CPI and other data, et al.

Oil: running out for good this time


With the markets hypnotised by the approach of $100-a-barrel oil, analysts are ready to point the finger at all the usual suspects: speculators, the Opec bogeyman, the weak dollar, soaring consumption in China and India and geopolitical tensions.
All play a part - but the real cause is altogether less palatable. The world is running short of oil, and this time it is likely to be permanent.

For all their power and profits, the world's biggest oil companies are in trouble. These days they struggle to replace the oil they produce each year with fresh discoveries - but it's not for lack of trying. A recent study by analysts John S Herold showed that the world's 230 biggest oil companies raised their 'upstream spending' - on exploration and development - by 45% to more than $400bn last year, but that oil and gas reserves inched up by just 2%. And many companies cannot even sustain their current levels of production. Output at BP and Shell is lower today than in early 2005.

None of this should come as a surprise: much of the oil-producing world is what they politely call 'mature'. After 150 years of rising oil production, in which the biggest and most productive fields were exploited first, the industry is now having to run flat out just to stand still. According to the International Energy Agency, for every $4 invested in the upstream business, only $1 goes towards satisfying growing demand, and $3 goes to make up for the declining output of existing fields.

Oil production is already falling in 60 of the world's 98 oil-producing countries - including once-mighty producers such as the United States, Mexico, Norway, Indonesia and the UK, where North Sea production peaked in 1999 and has already fallen by well over 40%.

Aggregate oil production in the OECD peaked in 1997 and has been in decline ever since. ExxonMobil chief executive Rex Tillerson told me recently that non-Opec production growth would be all over in 'two to three years'. So from early in the next decade, by common consent, it's all down to Opec.

Opec has promised to raise production by 500,000 barrels per day from this month but many doubt they can increase their capacity much further, because experts believe the cartel has comprehensively overstated its reserves since the mid-Eighties. Just last week Sadad al-Huseini, who until recently was the head of production at Saudi Aramco, said that the world's 'proved' reserves had been falsely inflated by 300bn barrels. All of which has led a growing band of senior oilmen including Lord Oxburgh, the former chairman of Shell, and Thierry Desmarest, current chairman of Total, to conclude that global oil production could soon peak and go into decline. At which point oil prices could double from current levels. If that ever happens, it would spark an economic crisis to put the sub-prime meltdown in the shade.

This is Money

[Shooterman]

Top, as I believe you have probably realized, the reception toward 'doom and gloom' financial matters here is considerably different from what we are use to, eh?

[pepe]

Originally Posted by Shooterman

Top, as I believe you have probably realized, the reception toward 'doom and gloom' financial matters here is considerably different from what we are use to, eh?

Excellent Site.

Appears to be a good crowd here more aware of the shannanigans of the Gubmit when it come to lies about all things economic.

[Snowden]

All play a part - but the real cause is altogether less palatable. The world is running short of oil, and this time it is likely to be permanent.

What eludes me is why we are not making use of the solar power that comes to us free -- rain or shine. Surely these greedy so-and-so's can work out a way to make money converting that power. If not, they can (and will) charge an arm and a leg anyway -- but the thing is, we do need some sort of electrical energy.

I realize oil and sunlight differ; but solar power can be used to do what both oil and electricity are doing now. Cars use electricity that's generated within the engines, after all; some adaptation and the automobile can be run on electricity.

Heating houses in the Old City of Jerusalem is done with solar power. Really. I've seen the panels, talked to the people there. Why can't the US find a way to get this project moving in that direction.

When I was a kid, we had streetcars for public transportation. We had trains that went everywhere in the country. The oil lobby did away with all that -- they even went so far as to remove the tracks so only buses or cars could be used for transportation in this immense nation.

No wonder we're running out of oil, is there? It's far past time we should revert to Jimmy Carter's one brainstorm of value and get that alternate fuel thing going, but without depleting the world of corn on the cob.

[sabadgeman]

Originally Posted by Snowden

Why can't the US find a way to get this project moving in that direction.

Bluntly big business does not want that. When they do, the politicians whose wages are paid for by big business will suddenly spring to life and pass laws that we must use only solar panels made in China by American/British/European (choose your government) and solar or what ever other renewable is the flavour of the month!

Until then as big business is still doing ok thanks you suffer.