By David J. Lynch, USA TODAY

The dollar sank to a record low against the euro Thursday and traded at parity against the Canadian currency for the first time since 1976.

 

The greenback's latest plunge to more than $1.40 to the euro was triggered by the Federal Reserve's half-point interest rate cut earlier this week. By cutting its target for short-term rates, the Fed aims to offset damage to the economy from an ongoing credit crunch.

 

But lower interest rates make the dollar ? and dollar-denominated stocks and bonds ? less attractive to global investors. The sinking dollar already is sending ripples through the economy, and worse conditions could lie ahead. "There's still plenty of downside there. We don't really know how far it's going to fall," says economist Nigel Gault of Global Insight.

 

As the dollar sinks, consumers find imported products? Australian wines, Japanese cars or Chinese toys ? are more expensive. Even as it cut interest rates earlier this week, the Fed vowed to "monitor inflation developments carefully."

 

Inflation fears Thursday helped send yields higher on 10-year Treasury securities for the fourth day in a row. The United States depends on foreign investors to purchase massive quantities of its government securities to finance a chronic current account deficit, the broadest measure of the overall trade balance.

 

Consumers, too, will feel the effects if investors shy away from Treasuries because rates on 30-year mortgages are influenced by the yield on 10-year notes. If investors demand higher yields to buy those securities, mortgage rates will rise just as the battered housing industry craves easier credit.

 

"Anybody who wants to borrow at a fixed rate or refinance out of an adjustable rate into a long-term fixed rate, it's bad news," Gault says.

 

Still, the weaker dollar is a boon for U.S. exporters whose goods are now less expensive for foreign customers. Net exports in the second quarter boosted economic growth by 1.4 percentage points as companies such as Caterpillar and Boeing racked up strong foreign sales.

 

So far, the dollar's decline has been gradual. If investors were to suddenly dump their holdings of the U.S. currency, the Fed's job of managing an already-troubled economy would instantly grow more complicated.

 

A plunging dollar would argue for interest rates to be raised, to encourage investors to hold dollars. But higher rates would be a drag on an economy that is weakly advancing. "That's the kind of nightmare the Fed wants to avoid," says Morris Goldstein of the Peterson Institute for International Economics.

 

Still, the dollar's status as the world's reserve currency appears safe. It is far more widely used globally than the euro and remains the major holding of foreign central banks. Dollar weakness over "many, many years" would be needed for that to change, says economist Kristin Forbes of the Massachusetts Institute of Technology, a former White House adviser.

 

Link

Another site reported that in 2002, the Canadian dollar was worth about .64 cents to the dollar. Now it is about $1.01 to the dollar.

 

Thanks GOP! :thumbup

This is the worst thing to happen. Ever.

It doesn't matter.

I'm half Canadian, and I'm embarrassed. Primarily because the USA is 100x better than Canada. It's a nice place to visit, but a little too quiet.

Embarrassed? You are ridiculous.

I'm half Canadian

 

Explains a lot.

Thanks GOP! :thumbup

You are a complete waste.

 

I don't know why I've been stubborn enough not to give you the jimmyjack treatment.

 

Where were your threads about the good economy over the last few years Negative Nancy?

 

That's right they don't exist because you wouldn't be able to post pointless tool things like you just did. The prototypical, toe the party line, 'enlightened' college liberal.

This isn't necessarily a bad thing. Different sectors of the economy benefit from a weaker dollar (such as the exporting sectors).

 

And I take issue with the article's assertion that a weaker dollar and lower interest rates decreases interest from global investors. Well, it depends on what kind of investors you're talking about. If someone from Europe wishes to invest in manufacturing in the U.S. (or any other industry, really), he likes what's going on because it's cheaper for him to enter the market and invest (he can buy more weaker dollars (get more bang from his Euro buck) and can get lower interest rates on his loans) and then export those goods and services abroad. Clearly, if you're trying to make money by holding U.S. currency or lending to Americans then you're not going to like this.

 

If you really want to know what's going on, read the Economist, not USA Today or even the New York Times.

Thanks GOP! :thumbup

You are a complete waste.

 

I don't know why I've been stubborn enough not to give you the jimmyjack treatment.

 

Where were your threads about the good economy over the last few years Negative Nancy?

 

That's right they don't exist because you wouldn't be able to post pointless tool things like you just did. The prototypical, toe the party line, 'enlightened' college liberal.

What good economy? Just because the stock market has been high doesn't mean that wages haven't been decreasing for the average American.

Newsflash a weak dollar DOES NOT mean a weak economy. In fact, the US as a whole is better off with a 1 to 1.4 exchange with the euro than it is a 1 to 1.

 

Let me start of by saying that the US travelers looking to go abroad are the losers here....

 

But with a weak dollar you will see all the european countries start to buy a lot more american goods. They will also start coming over and spending a lot of money. I recently read in the Boston Herald that there will be record number of visitors from the UK, Germany and France this year. Any US business that sells products abroad will be making a lot more money.

 

Why do you think China refuses to devalue their currency? Right now Americans are buying everything from China because its so cheap to do so. If the currency were to be adjusted and drop to 1 dollar to 4 yuans, then guess what? Chinese goods just became twice as expensive. This is why China with its "weak" currency is having the largest economic growth of any country in the world. And Germany with its "strong" has the largest growth in europe and its less than 1%

Thanks GOP! :thumbup

You are a complete waste.

 

I don't know why I've been stubborn enough not to give you the jimmyjack treatment.

 

Where were your threads about the good economy over the last few years Negative Nancy?

 

That's right they don't exist because you wouldn't be able to post pointless tool things like you just did. The prototypical, toe the party line, 'enlightened' college liberal.

excuse me, fox...your big internet ego is getting in the way of sense and logic...and you only wish you had something remotely enlightened about yourself

This isn't necessarily a bad thing. Different sectors of the economy benefit from a weaker dollar (such as the exporting sectors).

 

And I take issue with the article's assertion that a weaker dollar and lower interest rates decreases interest from global investors. Well, it depends on what kind of investors you're talking about. If someone from Europe wishes to invest in manufacturing in the U.S. (or any other industry, really), he likes what's going on because it's cheaper for him to enter the market and invest (he can buy more weaker dollars (get more bang from his Euro buck) and can get lower interest rates on his loans) and then export those goods and services abroad. Clearly, if you're trying to make money by holding U.S. currency or lending to Americans then you're not going to like this.

 

If you really want to know what's going on, read the Economist, not USA Today or even the New York Times.

Newsflash a weak dollar DOES NOT mean a weak economy. In fact, the US as a whole is better off with a 1 to 1.4 exchange with the euro than it is a 1 to 1.

 

Let me start of by saying that the US travelers looking to go abroad are the losers here....

 

But with a weak dollar you will see all the european countries start to buy a lot more american goods. They will also start coming over and spending a lot of money. I recently read in the Boston Herald that there will be record number of visitors from the UK, Germany and France this year. Any US business that sells products abroad will be making a lot more money.

 

Why do you think China refuses to devalue their currency? Right now Americans are buying everything from China because its so cheap to do so. If the currency were to be adjusted and drop to 1 dollar to 4 yuans, then guess what? Chinese goods just became twice as expensive. This is why China with its "weak" currency is having the largest economic growth of any country in the world. And Germany with its "strong" has the largest growth in europe and its less than 1%

These two have it.

 

Exports will more than likely go up now. It's the same thing we see with China, except they cheat while our dollar just doesn't want to be high right now.

 

The big mess will be when inflation catches up with the Chinese.

I don't blame the GOP because I do think the government's effect on the value of the dollar itself is extremely limited. But I do think the government can do things to alleviate the effects that a weakened dollar can have on the population.

 

As far as the decline of the dollar somehow being a good thing, it cuts both ways. It isn't just the Ameicans who go abroad who suffer, and in fact I think that shows a limited acknowledgment of economic consequences.

 

Anybody who buys foreign goods now has to pay more for those foreign goods. Most of the purchases of foreign goods is not buy American tourists. It is buy American companies. One of the benefits of globalization is that our products our lower because we get lower costs resources and products from foreign countries. Without a strong dollar, the amount we pay in converted currency is now higher.

 

For example(and this is just an illustrative example, not meant to be accurate in the underlying facts)-Company A makes cars. It buys raw steel from India. The raw steel costs 50 rupees/1 unit in India. In 2006, 1 dollar equals 50 rupees. So 1 dollar can buy you 1 unit of raw steel, which you then use to make a car in Michigan and include the cost of purchasing raw steel in the cost of the car.

 

Now in 2007, the weakened dollar equals 25 rupees. So now in 2007, the car company has to pay 2 dollars for the single unit of steel from India. So the cost of the steel increases, as does the cost of the car, which means Americans have to pay more for an item they purchase here. Companies cut costs in many ways, and if they can't cut costs through lower cost steel from India, guess how they cut costs? Layoffs.

 

The costs of items also increases. Unless wages increase, the population as a whole suffers.

 

So no, a devalued dollar is not always a good thing. The suggestion that it somehow is makes me suspect intellectual dishonesty or at the least bias from some of you.

 

I really think some of you dislike futureGM and jimmyjack so much that you will put the cart before the horse on your opinions.

 

Prinmemito hit it on the head: Different sectors of the economy benefit from a weaker dollar (such as the exporting sectors).

 

 

I was always under the assumption that we are more of an import country than export country because of globalization. Our that's at least what Pat Buchanan has been telling me for years. :lol

Yes, but the general point is that some sectors get hurt while some get helped. That's the nature of the beast and it doesn't need to be worked with.

 

Would we have to pay more for foreign goods? Possibly. Unintended consequence? American goods are now more attractive price-wise. Unintended plausibility? American firms have their sales go up.

Yes, but the general point is that some sectors get hurt while some get helped. That's the nature of the beast and it doesn't need to be worked with.

 

Would we have to pay more for foreign goods? Possibly. Unintended consequence? American goods are now more attractive price-wise. Unintended plausibility? American firms have their sales go up.

 

I just added the part at the end of my post, but aren't we more of an import economy than export economy? ie the trade deficit.

 

And the extension of paying more for foreign resources is that American goods are now more expensive.

How is unemployment?

 

How are the prices of basic need compared to the average wage?

 

Those are the numbers that matter. You want a "healthy" unemployment rate and reasonable cost of living. Everything else works itself out in the grand scheme of the global economic cycle.

Yes, but the general point is that some sectors get hurt while some get helped. That's the nature of the beast and it doesn't need to be worked with.

 

Would we have to pay more for foreign goods? Possibly. Unintended consequence? American goods are now more attractive price-wise. Unintended plausibility? American firms have their sales go up.

I just added the part at the end of my post, but aren't we more of an import economy than export economy? ie the trade deficit.

 

And the extension of paying more for foreign resources is that American goods are now more expensive.American goods are not necessarily more expensive at all. Obviously, this is a wait and see thing because we'll simply find out who drew the proper conclusion in six months or so, but it's not a lock that American prices go up simply because some foreign parts need to be used to make things. It's easier to see the possibility that our goods seem more attractive by either lowering the price or merely by staying stagnant.

 

If the dollar falls, it costs more to transfer them to other currencies (duh). It'll now cost more for someone here to buy a foreign good for resale (think big box retail). American firms, on the other hand, not only don't have to worry about shipping costs but also don't need to fight a lowering dollar since it doesn't affect them directly. If they charged $20 before the dollar fell, they don't have to raise their prices. Same difference to them. An importing firm, if they charged $15, will have to raise their prices to match the loss of their buying power.

 

Yeah, we're an import country at the moment. But that by no means ties the country to importing forever. If the dollar continues to be weak, we'll see a growing trend of homegrown items becoming the dominant products I believe. We've been an import country forever simply because it's been easy - the dollar has always been top dog and other countries rather sell to the US. If the dollar no longer has the same clout, the long term effects will be probably be a balancing of the scale. We're not a country like Japan that has its hands tied behind its back as far as forced imports go.

How is unemployment?

 

How are the prices of basic need compared to the average wage?

 

Those are the numbers that matter. You want a "healthy" unemployment rate and reasonable cost of living. Everything else works itself out in the grand scheme of the global economic cycle.

 

I think the more relevant number is how wages have competed against price and costs increases, and I'm pretty sure it hasn't been going to well the past few years despite the supposed booming economy.

What about oil, which we are stuck with in terms of imports being higher than home grown products. Doesn't this also increase the cost of oil, which is never a good thing.

How is unemployment?

 

How are the prices of basic need compared to the average wage?

 

Those are the numbers that matter. You want a "healthy" unemployment rate and reasonable cost of living. Everything else works itself out in the grand scheme of the global economic cycle.

The unemplyment rate for August 2007 was 4.6%

 

Bill Clinton had 60 months in office with an unemplyment rate higher.

 

Posting pointless/borderline retarded things like 'Thanks GOP :thumbup ' is a lot more fun though!!!!!!!!111

What about oil, which we are stuck with in terms of imports being higher than home grown products. Doesn't this also increase the cost of oil, which is never a good thing.

In theory. It's hard to make a call on oil right now, though, since it's essentially doing whatever it wants. I don't know how many times in the last couple of months I've been listening to someone mention the price of oil on the radio with a tone of puzzlement.

 

Then again, it's all cause and effect. I heard about an interesting study the other day that said that we lose weight when oil prices go up. I also don't believe that American firms will charge more for their goods if oil prices go up. There's a possibility they might have to lower their prices to entice people to leave their homes, since transportation goes down when gas goes up (one of the premises of the study I mentioned earlier). Some parts of the economy have their prices go up (see: electricity), some plateau, some drop (in theory, restaurants). Going back to the original point, it's all cause and effect and the latter varies by sector. All of this doesn't make it a bad thing.....or a good thing.....just a thing.

I would think this is a natural way of trying to correct the trade deficit.

 

The cheaper it is to visit, invest, or do business in the United States then the more money that rolls in.

 

Hopefully this means an even better tourism season for Florida...god knows we need the extra infusion of cash.

I don't blame the GOP because I do think the government's effect on the value of the dollar itself is extremely limited. But I do think the government can do things to alleviate the effects that a weakened dollar can have on the population.

 

As far as the decline of the dollar somehow being a good thing, it cuts both ways. It isn't just the Ameicans who go abroad who suffer, and in fact I think that shows a limited acknowledgment of economic consequences.

 

Anybody who buys foreign goods now has to pay more for those foreign goods. Most of the purchases of foreign goods is not buy American tourists. It is buy American companies. One of the benefits of globalization is that our products our lower because we get lower costs resources and products from foreign countries. Without a strong dollar, the amount we pay in converted currency is now higher.

 

For example(and this is just an illustrative example, not meant to be accurate in the underlying facts)-Company A makes cars. It buys raw steel from India. The raw steel costs 50 rupees/1 unit in India. In 2006, 1 dollar equals 50 rupees. So 1 dollar can buy you 1 unit of raw steel, which you then use to make a car in Michigan and include the cost of purchasing raw steel in the cost of the car.

 

Now in 2007, the weakened dollar equals 25 rupees. So now in 2007, the car company has to pay 2 dollars for the single unit of steel from India. So the cost of the steel increases, as does the cost of the car, which means Americans have to pay more for an item they purchase here. Companies cut costs in many ways, and if they can't cut costs through lower cost steel from India, guess how they cut costs? Layoffs.

 

The costs of items also increases. Unless wages increase, the population as a whole suffers.

 

So no, a devalued dollar is not always a good thing. The suggestion that it somehow is makes me suspect intellectual dishonesty or at the least bias from some of you.

 

I really think some of you dislike futureGM and jimmyjack so much that you will put the cart before the horse on your opinions.

 

Prinmemito hit it on the head: Different sectors of the economy benefit from a weaker dollar (such as the exporting sectors).

 

 

I was always under the assumption that we are more of an import country than export country because of globalization. Our that's at least what Pat Buchanan has been telling me for years. :lol

 

Perhaps we are more of an import country. But perhaps that is partly the case because the dollar is generally strong - meaning our goods are generally more expensive for them.

 

We'll see what kind of an effect the weak dollar will have on exports.

I would still say that overall, this is a bad thing. We are certainly more of an import country than we were 20 years ago. Yes, some sectors of the economy will benefit, but I would think that, as a whole, the economy will suffer.

 

And yes, the major problem with this economy that does not get talked about much are the falling wages that aren't matching the costs of living, and are in turn hurting the middle class.

How is unemployment?

 

How are the prices of basic need compared to the average wage?

 

Those are the numbers that matter. You want a "healthy" unemployment rate and reasonable cost of living. Everything else works itself out in the grand scheme of the global economic cycle.

The unemplyment rate for August 2007 was 4.6%

 

Bill Clinton had 60 months in office with an unemplyment rate higher.

 

Posting pointless/borderline retarded things like 'Thanks GOP :thumbup ' is a lot more fun though!!!!!!!!111

 

How many months during Bush's presidency has the unemployment rate been higher?

 

A healthy economy is measured by more than the unemployment rate. It is measured by economic growth, wages, and inflation, among others.