The Australian dollar is trading now at 0.92 to the US $, up from 0.75 not too long ago. Along with the Candian loonie, the 'Roo will soon surpass the greenback in trading parity, if current trends continue (budget & trading deficits), and there's no reason to expect otherwise.
I guess I won't be going to Australia anytime soon....
But soon, the US dollar is going to experience a
Wile E. Coyote moment, where it will realize there isn't any ground underneath it, and it will plunge precipitously to a mushroom cloud on a canyon floor.
Be forewarned. The consequences will be grave.
Quote:The Australian dollar is trading now at 0.92 to the US $, up from 0.75 not too long ago. Along with the Candian loonie, the 'Roo will soon surpass the greenback in trading parity, if current trends continue (budget & trading deficits), and there's no reason to expect otherwise.
I guess I won't be going to Australia anytime soon....
But soon, the US dollar is going to experience a Wile E. Coyote moment, where it will realize there isn't any ground underneath it, and it will plunge precipitously to a mushroom cloud on a canyon floor.
Be forewarned. The consequences will be grave.
Funny you bring this up, seeing as just tonight I got in a lengthy debate about the US economy. The highlight was light heartedly coming up with ideas of how to better spend the money put into the War in Iraq.
**And before I continue, I am not implying any valuation to this at all. It's merely a pie-in-the-sky, what if there was no middle east at all, and we had that money floating around in our economy. Definitely not looking to start a political discussion on the economic merits and pitfalls of the War in Iraq.
The important topic we kept coming back to was: What is the United State's economic future? In all earnest, housing economy and other recent woes aside, the US is facing a period of turmoil in economic vision. We are no longer a country reliant on our production force. We have some great advances in science and technology, but those are shrinking quickly with other nations becoming a lot more competitive. Not to mention how troubling the years of sub-par math and science grades in school.
So what's the answer? Sadly I'm really not sure.
In the meantime, we still have a short term housing dilemma to tough out - the real consequences of which haven't been felt yet.
But hell, hockey's back on and it's almost ski season again. Those almost balance things out, right? :whistling:
Cheers,
Munk
Quote:The important topic we kept coming back to was: What is the United State's economic future? In all earnest, housing economy and other recent woes aside, the US is facing a period of turmoil in economic vision. We are no longer a country reliant on our production force. We have some great advances in science and technology, but those are shrinking quickly with other nations becoming a lot more competitive. Not to mention how troubling the years of sub-par math and science grades in school.
Cheers,
Munk
I don't think the production, science and education are the biggest problem. The US is still world class in all of these things, plus that the US does a much better job (compared to europe) to attract high educated foreigners.
The only problem is the over the top consumers culture. The central bank in the US, thinks only about the interest of hedge funds and investment banks. By keeping interest rates low, they continue to make it easy to lend money, and to keep consumption high. Interest rates need to go up (slowly) but instead are being kept too low. This avoids a crash in the housing market (for now) but will in a while will gives us a bigger one together with a crash on the stock exchanges.
The US government has to pay around 500 billion dollars of interest each year which is quite alarming. A thing that scares me is that the people with power (like bernanke) probably think more about the interests of the big investors than about the interest of the people.
Another thing that worries me is that when you read about these things, not many people seem to know what can be done, some say it will all fly over, but answers..no.
Quote:The central bank in the US, thinks only about the interest of hedge funds and investment banks. By keeping interest rates low, they continue to make it easy to lend money, and to keep consumption high. Interest rates need to go up (slowly) but instead are being kept too low. This avoids a crash in the housing market (for now) but will in a while will gives us a bigger one together with a crash on the stock exchanges.
The US government has to pay around 500 billion dollars of interest each year which is quite alarming. A thing that scares me is that the people with power (like bernanke) probably think more about the interests of the big investors than about the interest of the people.
Another thing that worries me is that when you read about these things, not many people seem to know what can be done, some say it will all fly over, but answers..no.
FWIW, interest rates have been increasing stateside. It's not the high rates of the 80's, but the US prime rate has been steadily increasing over the last few years. There is speculation it will be pushed as high as double digits before it goes back down.
Obviously the argument that they haven't increased enough is still on the table. Not disagreeing with you, just throwing in my two cents:)
Cheers,
Munk
Quote:FWIW, interest rates have been increasing stateside. It's not the high rates of the 80's, but the US prime rate has been steadily increasing over the last few years. There is speculation it will be pushed as high as double digits before it goes back down.
Obviously the argument that they haven't increased enough is still on the table. Not disagreeing with you, just throwing in my two cents:)
Cheers,
Munk
Well indeed the last half year or so interest rates have risen up till 5 % I believe (from around 2 and a half I believe??). This was of course the thing to do, but also resulted in the (small) mortgage crisis.
Tomorrow (wednesday) most likely the interest rates will be cut by 25 points to 4.5 %.
I think a small crisis is necessarry to show people that things cannot continue as they do now. Big problem with this is that the people (middle class and below) will be the victims......the big investors wont feel much.
Quote:The Australian dollar is trading now at 0.92 to the US $, up from 0.75 not too long ago. Along with the Candian loonie, the 'Roo will soon surpass the greenback in trading parity, if current trends continue (budget & trading deficits), and there's no reason to expect otherwise.
I guess I won't be going to Australia anytime soon....
But soon, the US dollar is going to experience a Wile E. Coyote moment, where it will realize there isn't any ground underneath it, and it will plunge precipitously to a mushroom cloud on a canyon floor.
Be forewarned. The consequences will be grave.
When the US economy goes, it's going to take a lot of other economies with it. Already stock analysts have been noting that the asian exchanges have been forming bubbles over the past few years and some of them are getting ripe to popping, only a few (notably the Chinese and Japanese, and to a lesser extent the Southern Koreans) have been trying to deflate their bubbles or contain them. When the US economy collapese, the world economy will probably go with it, or atleast most of the world economy.
As to our present situation and the issue with the mortgage crisis, this has more to do with underhanded lenders than anything else where they sold risky adjustable rate mortgages to people. They, the lenders, were more interested in the short term increase in profits than looking at the long term situtation for the economy and now it's coming back to bite everyone. The thing that annoys me most is while I had a non-risky loan and paid on time and have a good credit rating, I'm still going to have to show all kinds of proof when I purchase my next home because of the crap that these risky lenders caused.
Quote: The thing that annoys me most is while I had a non-risky loan and paid on time and have a good credit rating, I'm still going to have to show all kinds of proof when I purchase my next home because of the crap that these risky lenders caused.
Well that is still one of the minor problems. If you are good for a credit, you will get it.
Some other quite disturbing stuff about how the world of big money is working.
The chairman of the board of Merill Lynch decided to leave after some critisism, because the bank lost the pretty amount of 2.24 billion $ in 3 months.
So this guy is a complete screwup........but now that he is leaving he gets the nice amount of 161.5 million dollars in compensation (and some extra benefits like 3 years an office with an assistant). The whole deal and the search for a new chairman costs Merill Lynch around a quarter of a billion dollars.
Here is the point: these people when negotiating contracts settle these things beforehand....so it is all legal and fair that this money is made.
However the most disturbing thing, in my opinion, is that such a company that does not actually contribute to a growing economy directly, but is just pumping around money for a huge profit, is able to pay these amounts to people.
If you are a bright young person these days, what you do is becoming an investment banker, instead of doing something useful, like inventing better cares, microchips or a cure against cancer. If you are in it for the money, you are stupid not to become an investment banker.
So this was just besides the point that investment banks and hedge funds are ruining our economy....:unsure:
Quote:Well that is still one of the minor problems. If you are good for a credit, you will get it.
No, you don't seem to understand *why* it annoys me. Next time I have to buy a house I have to jump through a bunch of hoops again like I did when I purchased my first house even though I was never deliquent on a payment and have good credit. Those loan officers that pulled this crap for a short term profit have made it more difficult for everyone to buy a house now, even people with really good credit because of the present situation. So, even though I have really good credit, I'm going to be treated like I have mediocre credit when I buy another house in the coming year.
Quote:No, you don't seem to understand *why* it annoys me. Next time I have to buy a house I have to jump through a bunch of hoops again like I did when I purchased my first house even though I was never deliquent on a payment and have good credit. Those loan officers that pulled this crap for a short term profit have made it more difficult for everyone to buy a house now, even people with really good credit because of the present situation. So, even though I have really good credit, I'm going to be treated like I have mediocre credit when I buy another house in the coming year.
Yes Ok, I see what you mean.
I had the same in small here in the UK when I appklied for a credit card. They didn't want to give me one for now because I didn't have a credit history (which might have somethibng to do with the fact that i was only in teh country for one week, and that they don't look at you history in other countries..)
Sadly there is nothing you can do, and you 'problem' is probably the least severe consequence of a crisis.
People with no property, and also people in development countries will suffer really from these kind of crises. Where wealth 'trickles down' according to some, poverty expands down.