The Economy

Decide how the world should be governed and by whom.
Forum rules
The emphasis here is on original comment and opinion by the poster.
Article length Cut-and-Past posts are discouraged
The general Code of Conduct rules apply to this forum.

The Economy

Postby OLDMD » 18 Sep 2007, 12:45

Consider this: In 2000, when Bush took office, gold was $273 per ounce, oil was $22 per barrel and the euro was worth $.87 per dollar. Currently, gold is over $700 per ounce, oil is over $80 per barrel, and the euro is nearly $1.40 per dollar.

If Bernanke cuts rates, we’re likely to see oil at $125 per barrel by next spring.

http://www.counterpunch.org/whitney09182007.html

The Canadian dollar should be at par with the US by the end of this year.

Thoughts?
User avatar
OLDMD
 

Re: The Economy

Postby AJRC » 18 Sep 2007, 15:59

I think the poor economy it's great, i don't mean that in a nasty way, but for UK residents it's a bonanza. The currency rate is now at £1 = $2.01. We have a holiday to Mexico in November and we are thinking of taking advantage of the weak dollar and having a shopping trip to New York in December.

I think a lot of things are going wrong with the US economy at the moment, it's obviously having a global effect as well. The US sub-prime mortgage and lenders fiasco is having a knock on effect in the UK with banks panicking and getting out of the US as fast as they can. This is saving the banks in the UK but will have an adverse affect on the lenders in the US. Other factors have seriously damaged the US economy like the housing market slump and credit market problems.

The poor economy is why the Federal Reserve have just cut interest rates by 0.5% to 4.75%, they're hoping that by making money cheaper to borrow, people can spend and invest more, revitalising the economy, well that's what they hope will happen anyway.

Experts have said that the US economy was overheating and needed cooling down. I think this should do the trick to avoid any stock market crashes.
User avatar
AJRC
Oracle Class Poster
Oracle Class Poster
 
Posts: 5108
Joined: 22 Aug 2007, 03:34
Location: Newcastle Upon Tyne, England

Re: The Economy

Postby OLDMD » 19 Sep 2007, 05:37

Fed Cuts Key Rate More Than Expected

Reduction Designed to Insulate Economy From Problems in Markets

By Neil Irwin
Washington Post Staff Writer
Wednesday, September 19, 2007

The Federal Reserve cut a key interest rate yesterday in an aggressive attempt to keep turmoil in financial markets from damaging the overall U.S. economy.

The central bank's policymaking committee cut the federal funds rate, which determines what banks pay to borrow money from each other overnight, by half a percentage point, to 4.75 percent. The rate cut, the first in four years, will eventually lead to lower borrowing costs for consumers and businesses, making it cheaper to take out a car loan or home mortgage or to invest in a business.

Continued...

http://www.washingtonpost.com/wp-dyn/co ... newsletter

I'm not sure what most people are using for money here... :cry:
User avatar
OLDMD
 

Re: The Economy

Postby AJRC » 19 Sep 2007, 06:02

OLDMD wrote:I'm not sure what most people are using for money here...


It's a shame when governments think the only way to revitalise the economy is to make borrowing cheaper. In essence to save the economy people have to get more and more into debt with credit cards and loans. This tactic will always be a quick fix as a few years down the line the people crippled with debt will no longer be able to keep up with repayments, the loan and mortgage companies will be forced to settle debts themselves, people will have less money to spend and the economy will be right back to where it started from.
User avatar
AJRC
Oracle Class Poster
Oracle Class Poster
 
Posts: 5108
Joined: 22 Aug 2007, 03:34
Location: Newcastle Upon Tyne, England

Re: The Economy

Postby OLDMD » 19 Sep 2007, 09:33

RATE CUT POWERS LOONIE ABOVE 99 CENTS US

The loonie's strong flight continued Tuesday night as it crept above 99
cents US in overnight trading after North American markets closed.

http://www.cbc.ca/story/money/national/ ... arise.html

The US dollar is tanking after that desperate move. One of these things will be the last straw.

The Bridge is a zoo with Canadians crossing to shop... we'll be getting lots of visitors...

One can only hope the Chinese continue to want the US economy NOT to collapse because they hold so much of the paper.
User avatar
OLDMD
 

Re: The Economy

Postby AJRC » 20 Sep 2007, 06:19

Just read today that the dollar has just gone under the $1 = €1.40 mark. It now stands at 1 euro is worth $1.4018. This must come as a huge blow to the US economy, especially as the interest rates cut was meant to make the dollar go the other way. It just goes to show that the people who put their money in dollars no longer get such a high rate of return, therefore people are starting to lose confidence in the dollar and investing in other currency.

I think the main sticking point for the US economy is the spiralling out of control trade deficit, which is now more than $700bn, Iraq has contributed a huge chunk to this, but also the fact that the US has imported far more goods than it has exported. This is unsustainable! I think i major currency adjustment is required, before the economy gets any worse.
User avatar
AJRC
Oracle Class Poster
Oracle Class Poster
 
Posts: 5108
Joined: 22 Aug 2007, 03:34
Location: Newcastle Upon Tyne, England

Re: The Economy

Postby OLDMD » 20 Sep 2007, 12:59

Live rates at 2007.09.20 18:01:37 UTC - 18:05:37 UTC

1.00 CAD = 0.998103 USD
1.00 EUR = 1.40761 USD
1.00 GBP = 2.00940 USD
1.00 AUD = 0.862722 USD
1.00 JPY = 0.00873645 USD
1.00 INR = 0.0252016 USD
1.00 CNY = 0.133076 USD (China Yuan Renminbi)

Remember our so-called Cost of Living Index as published does NOT include Housing, Food or Transportation(gas) - so it's meaningless...

The war cost is completely outside the budget ...

NOBODY really knows what the economic situation is - so we just keep putting one foot in front of another at this stage.

Personally WE can cut back a lot more.

My contractor has 7 kids - (from 7 to 19), one rental unit empty that he's refurbishing, another about to be empty because they are four months behind on rent...and no signed contracts for the next job. His wife is working overtime as a home-care nurse now...where can they cut back? :cry:

China has passed Canada as the U.S. largest trading partner...

The Canadians will inject some into the tourist economy of Florida,Arizona and California this winter - but hardly enough to make up for what has been LOST in recent years because of the dollar differential.

The cross-border shoppers are ecstatic :!:
User avatar
OLDMD
 

Re: The Economy

Postby G5Pontiac » 20 Sep 2007, 14:09

Well, it will be interesting to watch. As the dollar declines, the balance of payments will be paid back with those weak dollars. In effect, it is like reducing the debt. Of course those receiving weak dollars for strong dollars invested are going to effectively loose money. Is that right?

(That is happening to one of my retirement accounts. Although the principle grows due to the interest, it is not keeping up with inflation, and I am effectively losing money. When I arranged the account in the late 1980s, I was earning 14% per year. Now, the invested money is in a "stable" fund and earns about 4.75% per year and does not keep up with inflation.)

Increases in gold prices spur on the mining industry. Areas that were not profitable at $273.00 per ounce, are profitable at $700.00 per ounce. Several years ago gold was over $800.00 per ounce; but it makes no difference, because in times of crisis you can't eat it, and it won't buy much food. Here is a link to the countries and the value of their gold reserves.
http://en.wikipedia.org/wiki/Official_gold_reserves

If times are bad, you can't tell it around here. My daughter just opened another new restaurant and lounge. She's had so much business that she has had to turn people away that did not have reservations. Also, I'ts very hard to find construction workers and builders, too. They're all booked to the hilt. It took me a year to find someone to replace the roof on my house; and then I had to hire guys that were not licensed or bonded to do the job.

Skilled workers and professionals are doing pretty good, and there is little unemployment in the professions. My son is a metalurgist that inspects new construction, and does "non-destructive" testing of matierials using sophisticated electronic instruments. He makes about $100,000.00 per year, and is always busy. Often he is hired by sub-contractors who pay his wages and all his food and lodging costs. Every young and healthy person who wants to work is working around here. Only those young and healthy parasites that want to suck from the system are not working.

These were just a few thoughts.
User avatar
G5Pontiac
 

Re: The Economy

Postby AJRC » 20 Sep 2007, 15:27

Being in work doesn't necessarily mean the economy is not in trouble, even in the depths of recession there are still jobs to do. The economy thrives on the spending power of the average consumer, if that consumer has lots of spare money to spend then the economy does well, if the consumer only has enough to buy the essentials, then the economy suffers.

I honestly don't think there is to much to be worried about, there are talks of another recession but i can't see that happening. Yes, the dollar is very weak, weaker than I've ever seen it. But unless countries like Britain start trading in euros then the dollar has nothing to worry about. It's just in a slump.

The stock markets have been very volatile recently so this won't have done the economy any good. Also the US GDP (Gross domestic product) has slowed, as i said earlier more is being imported than exported.

But the recession hasn't hit yet, and i hope it doesn't because the last US recession in 2001 hit the UK as well!

OLDMD wrote:The cross-border shoppers are ecstatic


The cross-ocean shoppers are ecstatic as well. :dancer2:
User avatar
AJRC
Oracle Class Poster
Oracle Class Poster
 
Posts: 5108
Joined: 22 Aug 2007, 03:34
Location: Newcastle Upon Tyne, England

Re: The Economy

Postby OLDMD » 20 Sep 2007, 15:51

Every Liberal* and Green*I know who can't afford to stay in the Bay Area is heading up to Oregon or Washington. At least the jobs will be there if they are willing to work, G5!

(*To me those are the "good guys" ;)

We are in St. Clair County - the poorest county in Michigan, which has taken some severe hits with the auto industry woes. The young(unmarried) carpenter on our just-completed building addition is now in Florida, working commercial jobs until Christmas to build up a nest egg.

The contractor, mentioned above, can hold it together with renovations and repairs - but none of his 3 teenagers, all hard-working kids, can get a foot in the door - and he has to cut his other two guys loose. The older one lost his pension, the younger one(whose wife is from Siberia) is heading to Russia - which is booming on construction.

I never thought I'd live to see THAT.

Our GP is a woman my age. Her daughter has a good bank job, her son - who decided to spend his college years as a "free spirit", is going to have to leave the state to find work.

A large number of young people from here headed out West to Arizona and Las Vegas - but they are starting to filter back as the inevitable building boom is causing things to slow down at the labourer level.. Those little-box 'burbs you see on the aerial views on CSI Las Vegas are sitting 80% empty...which doesn't mean they have stopped building them.

I'd be interested to hear what's happening elsewhere...

P.S. to AJRC. I SO hope you are right, but my faith is kinda shaky right now. :sigh:
User avatar
OLDMD
 

Re: The Economy

Postby Yogi » 20 Sep 2007, 18:18

A slowdown of the US economy has repercussions on many levels, both domestic and abroad. The devaluation of the dollar should make it easier for us to export items, and thus even out any trade imbalances. At least that is the theory.

The potential crisis, however, is rooted in none of the above. Right now China, Japan, Saudi Arabia, Great Britain, and even Russia are scooping up treasury bonds, thus allowing our government to remain liquid. If any of these people decide they can get more for their investment elsewhere than they can by underwriting our debt, it's curtains for us. Recession will be the least of our worries, and the depression of the twenties will look like a cake walk.
User avatar
Yogi
Oracle Class Poster
Oracle Class Poster
 
Posts: 7013
Joined: 04 Aug 2007, 19:37
Location: Chicagoland

Re: The Economy

Postby van » 21 Sep 2007, 04:26

Kia ora

A website I have followed for some time

http://urbansurvival.com/week.htm

Over here things are buoyant, plenty of work, development etc, yet when it turns to custard and the investment dries up, we'll be left with nothing, "Boom and Bust" all over again

Arohanui
Shalom
Bill
van
Brainiac Class Poster
Brainiac Class Poster
 
Posts: 2346
Joined: 25 Aug 2007, 03:27

Re: The Economy

Postby OLDMD » 21 Sep 2007, 05:36

Value of Dollar Falls to New Low Against the Euro

By VIKAS BAJAJ and IAN AUSTEN
Published: September 21, 2007

Investors dumped dollars yesterday, sending the euro to a record high and putting the American currency at par with the Canadian dollar for the first time in more than 30 years.

In practical terms, the recent drop in the dollar’s value is making Boeing jetliners and Manhattan pieds-à-terre a lot cheaper for Europeans and Canadians, while Americans will have to pay more while on vacation in Paris or when buying snowmobiles made in Quebec.

While the dollar has generally been drifting down against both currencies, along with the British pound, for much of this decade, its fall has gathered pace in recent weeks as traders foresee a slowing American economy while expecting more robust growth overseas.

More...

http://www.nytimes.com/2007/09/21/busin ... qz8eVRcCHQ

Thanks for the urban survival link, "van"! 8-)
Last edited by OLDMD on 23 Sep 2007, 04:41, edited 1 time in total.
User avatar
OLDMD
 

Re: The Economy

Postby AJRC » 22 Sep 2007, 03:48

Yogi wrote:Right now China, Japan, Saudi Arabia, Great Britain, and even Russia are scooping up treasury bonds, thus allowing our government to remain liquid. If any of these people decide they can get more for their investment elsewhere than they can by underwriting our debt, it's curtains for us.


That's just a little scary as China and Russia has started sabre rattling again. So in essence China could destroy the US without firing a single shot. That's a sobering thought! I wonder what other nations treasury bonds they're buying? And what their motives are for buying them. Me thinks keep the US economy afloat will be low on China's list.
User avatar
AJRC
Oracle Class Poster
Oracle Class Poster
 
Posts: 5108
Joined: 22 Aug 2007, 03:34
Location: Newcastle Upon Tyne, England

Re: The Economy

Postby OLDMD » 22 Sep 2007, 05:37

Currency Parity Brings Canadian Shoppers South

EXERPT:The weakness of the American dollar worries some Canadian investors as well as businesses that rely on American customers. It is also not helping American tourism in Canada, where the number of visitors from the United States has been declining since before the terrorist attacks of Sept. 11, 2001.

The rush to cross into the United States is complicated by new restrictions at the border, where proof of nationality is increasingly expected and passports are set to become mandatory as early as January.

http://www.nytimes.com/2007/09/22/us/22 ... ref=slogin

Some "concrete backup"* for my personal observations here at the border.

(*Unless you've reached the stage of not believing anything you read in the mainline press. [*] ;)

Our "kids" farm potatoes (1100 acres) in Canada and have major sales to the U.S. It's been an expensive year with the lack of rain in July (40,000 l. of diesal a week for the irrigation pumps)...this won't help; however, at least they HAVE a crop. The corn and soybean farmers won't have much of anything AND that'll hit our store prices this winter.
User avatar
OLDMD
 

Re: The Economy

Postby OLDMD » 22 Sep 2007, 18:37

The Era of Global Financial Instability
By MIKE WHITNEY

Bernacke, Rate Cuts and the "Greenspan Put"

Wall Street loves cheap money. That's why traders were celebrating on Tuesday when Fed chief Ben Bernanke announced that he'd drop interest rates from 5.25% to 4.75%. The stock market immediately zoomed skyward adding 336 points before the bell rang. The next day the giddiness continued. By mid-morning the Dow was up another 110 points and headed for the stratosphere. Everyone on Wall Street loves Bernanke. He brings them candy and sweets and lets the American worker pay the bill.

So far, the scholarly-looking Bernanke has shown that he is no different than his predecessor Alan Greenspan. Facing his first crisis, the new Fed chief chose to reward his fat-cat friends at the hedge funds and investment banks by savaging the dollar. As soon as he announced his plan to cut the Fed funds rate by .50 basis points; gold soared to $736 per ounce, oil shot up to $82 per barrel, and the euro climbed to a new high of $1.40. These are all the predictable signs of inflation. Food and energy prices will surely follow. The bottom line is that the investor class has been bailed out at the expense of everyone else who trades in dollars.

Bernanke invoked the "Greenspan put", which means that he used his power to protect his friends from the losses they should have incurred from their bad bets. Now, the big market players know that he can be counted on to bail them out whenever they make poor investment decisions. He's also lived up to his nickname, "Helicopter Ben"; ready to deal with every new calamity by tossing trillions of freshly-minted US greenbacks into the jet-stream over the NYSE so elated traders can jack-up their PEs and fatten their bottom line . We think Bernanke should abandon the helicopter altogether and personally deliver pallet-loads of $100 bills to Wall Street's doorstep, just like Bush does with contractors in Iraq. That way the fund managers can keep stoking the market with cheap cash without dawdling at the Fed's Discount Window.

Despite the merriment on Wall Street, there is a downside to Bernanke's actions. The Fed chief has shown foreign investors that he WILL NOT DEFEND THE DOLLAR. That is a powerful message to anyone who hopes to profit by investing in the US. It alerts them to the fact that the "strong dollar" policy is a fraud and that they're better off getting out of US Treasuries and dollar-backed assets. Apparently, many have already gotten the message. Last month, foreign central banks and investors dumped $9.4 billion of US Treasuries and bonds compared to net purchases in June of $24.7 billion. That means that foreigners have stopped buying our debt which is currently $800 billion per year. That's the last leg holding up the wobbly greenback. The dollar will undoubtedly fall precipitously.

So, why would Bernanke weaken the dollar even more by lowering rates 50 basis points?

Is he crazy or did he panic?

More...

http://www.counterpunch.org/whitney09222007.html
Last edited by OLDMD on 29 Sep 2007, 07:00, edited 1 time in total.
User avatar
OLDMD
 

Re: The Economy

Postby OLDMD » 23 Sep 2007, 04:38

War Costing $720 Million Each Day, Group Says

By Kari Lydersen
Washington Post Staff Writer
Saturday, September 22, 2007

CHICAGO, Sept. 21 -- The money spent on one day of the Iraq war could buy homes for almost 6,500 families or health care for 423,529 children, or could outfit 1.27 million homes with renewable electricity, according to the American Friends Service Committee, which displayed those statistics on large banners in cities nationwide Thursday and Friday.

The war is costing $720 million a day or $500,000 a minute, according to the group's analysis of the work of Nobel Prize-winning economist Joseph E. Stiglitz and Harvard public finance lecturer Linda J. Bilmes.

The estimates made by the group, which opposes the conflict, include not only the immediate costs of war but also ongoing factors such as long-term health care for veterans, interest on debt and replacement of military hardware.

"The wounded are coming home, and many of them have severe brain and spinal injuries, which will require round-the-clock care for the rest of their lives," said Michael McConnell, Great Lakes regional director of the AFSC, a peace group affiliated with the Quaker church.

The $720 million figure breaks down into $280 million a day from Iraq war supplementary funding bills passed by Congress, plus $440 million daily in incurred, but unpaid, long-term costs.

More...

http://www.washingtonpost.com/wp-dyn/co ... 74_pf.html
User avatar
OLDMD
 

Re: The Economy

Postby mamie » 23 Sep 2007, 07:14

User avatar
mamie
Brainiac Class Poster
Brainiac Class Poster
 
Posts: 3720
Joined: 10 Aug 2007, 18:17
Location: Maine USA

Re: The Economy

Postby OLDMD » 25 Sep 2007, 06:13

UAW Says Strike Is About Job Security

TOM KRISHER and DEE-ANN DURBIN | September 24, 2007 08:22 PM EST | AP

DETROIT — In the end, the first nationwide strike against General Motors Corp. in 37 years came because the United Auto Workers want something that GM will find difficult to promise: Job security.

UAW officials said the 73,000 UAW members who work at about 80 U.S. facilities for the nation's largest automaker didn't strike Monday over what many thought would trip up the talks: A plan to shift the retiree health care burden from the company to the union. They said they also didn't strike over wages.

They said union members walked out because they want GM to promise that future cars and trucks such as the replacement for the Chevrolet Cobalt small car or the still-on-the-drawing board Chevrolet Volt plug-in electric car will be built at U.S. plants, preserving union jobs.

The strike puts GM, which is restructuring so it can better compete with Asian automakers, in a bind as some of its new products begin to catch on with consumers. But it also means workers are taking a big risk _ giving up pay and slowing down GM in an uncertain economy.

More...

http://www.huffingtonpost.com/huff-wire ... uto-talks/
User avatar
OLDMD
 

Re: The Economy

Postby Bedford » 25 Sep 2007, 10:45

American auto companies have been so forced by unions to give ridiculous boons, especially in insurance, that I will be survived if either GM or Ford last another 10-20 years.
User avatar
Bedford
Advanced Degree Poster
Advanced Degree Poster
 
Posts: 1001
Joined: 21 Aug 2007, 18:57
Location: CSA Embassy, Falkland Islands

Next

Return to Political Issues

Who is online

Users browsing this forum: No registered users and 0 guests

cron