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Why America’s Currency Is the World’s Problem

THE DOLLAR NOSEDIVE: Why America’s Currency Is the World’s Problem

Spiegel Online
December 3, 2007

The ailing US economy seems to be driving the exchange rate of the dollar inexorably downward, with serious consequences for the global economy. Politicians and central bankers are looking on helplessly as the economic outlook worsens by the day and European companies rack up huge losses.

It costs about four cents to produce a one-dollar bill — a pittance, compared to the greenback’s influence on the world’s economy.

The exchange rate of the dollar can boost the fortunes of companies and entire economies — or plunge them into crisis. Its rate against the euro fluctuates by a few hundredths of a cent each day. But in the past five years that fluctuation has more often than not taken the US currency on a downward trajectory, causing consternation — and now despair — among people around the world.

Last Thursday, Thomas Enders, the CEO of Airbus, gave a speech to employees in building 261 at the consortium’s production complex in Hamburg. He was there to tell them that a pain threshold had reached. The graph he had projected on the wall revealed the horrifying progression of the dollar over time. The US currency has lost 13 percent of its value against the euro since the beginning of the year. Conversely, the euro has risen in value, and for a short time last Friday it even approached the symbolic $1.50 threshold.

According to Enders, the rate at which the US currency is falling makes “reasonable processes of adjustment” a virtual impossibility. Every cent the dollar drops against the euro costs Airbus €100 million. This has even the normally optimistic Enders alarmed. “It’s life-threatening,” he told his audience.

Read Full Article Here

 

Merrill Lynch Predicts Recession

Silicon Alley Insider
December 5, 2007

Two major Wall Street firms have finally thrown in the towel and are now calling for a recession. For a variety of reasons, Wall Street is usually late to call downturns, so this probably means that 1) we’re already beginning to come out of the recession, or 2) this recession is going to be a doozy (the more likely explanation, in our opinion).

The pessimism of Jan Hatzius at Goldman prompted Ben Stein to call him a lightweight, conflicted shill who was just “selling fear” to help Goldman’s proprietary trading desk. We therefore look forward to Stein’s explanation for the pessimism of Merrill Lynch economist David Rosenberg:
“The US consumer is on the precipice of experiencing its first recessionary phase since 1991 – the last time we had the combination of high, punishing energy prices; weakening employment conditions; real estate deflation and tightening credit conditions…

We reiterate that real estate deflations are unique and have never ended well for the consumer, the credit market or the economy. We can identify only five periods post WWII when the real value of housing assets turned negative on a year-on-year basis. All of these time periods inevitably included a consumer downturn. Maybe it will be different this time, but we fail to see why.”

Related News:

Liquidity in European Government Bonds Evaporating
http://www.nakedca….ropean-government-bonds.html

Who got rich off the mortgage mess? : Deep recession ahead
http://articles.moneycentral.msn.com/I…?page=all

The dollar’s perfect storm worsens
http://articles.moneycentral.msn.com….px?page=all

Foreclosure rescue: No help for you
http://money.cnn.com/2007…on=2007120318

Goldman Pushed, Shorted Mtge Junk Simultaneously
http://mparent7777-2.blogspot.co…mtge-junk.html

Bush says economic fundamentals are good
http://www.reuters.com/article/domesticNews/idUSWBT00802120071204

Credit and economic woes sink Wall Street
http://www.reuters.com/article/hot…54763720071204

Pound Falls to 6-Week Low Against Dollar as House Prices Slide
http://www.bloomberg.com/apps/ne…CLye4&refer=uk

Paulson Crafts Subprime Deal to Prevent Second Bush Recession
http://www.bloomberg.com/a…4wSM&refer=home

AMF Urges Dollar Depegging
http://www.arabnews.com/?pag…d=1&m=12&y=2007

World Food Prices To Rise
http://finance.myway.com/jsp/nw/nwdt_rt.jsp?…date=20071204

Banks Ask UK Clients Not to Borrow
http://www.nakedcapitalism.c…s-not-to-borrow.html

UK: House prices ‘will plummet by 10pc over the next year’, says banking chief economist
http://www.dailymail.co.uk/pages/live/articl…=1770&ct=5

The Fed has sold us out one and all for the benefit of a small cabal of credit addicted privileged insiders
http://www.stockmarketimplode.com/2007/12/short-it-blind.html

Market bears’ gloomy growl being echoed by big players
Krugman: Financial Crisis
Subprime Mess To Get Worse
Epidemiology of the Credit Crunch
Soft landing of U.S. economy could support dollar, according to Thomson Research
Dollar climbs as higher stocks boost risk appetite
Housing mess forces Bush admin change
Real Estate Foreclosures Topping Great Depression
Bernanke Clears Way For Fed Rate Cut
Paulson’s Plan to Punish the Public
SIV watch: Citi’s Sedna edges closer to liquidation
Price tag in mortgage crisis is looking like real money
Foreclosure fallout: Renters forced out of lost homes
Shadow Mortgage Bailout Already in Progress
U.S. Government, Banks Near a Plan to Freeze Subprime Rates
UK: Trouble ahead for the economy
IMF Warns Of UK Recession
Video: “Food Banks Nationwide Face Shortages”
In the long run, value of paper currencies is zero
More bad news for the dollar as the UAE gets ready to dump it
China’s attempt to convert its U.S. Treasury holdings into euros
Growth in Consumer Spending Slows While Construction Activity Drops Sharply
Goldman Sachs Says To Short Gold In 08
Treasury Close to Subprime Aid Plan
Morgan Stanley may face $5.7 billion Q4 writeoff
New Home Prices: Worst Drop In 37 Years
More than 50,000 Lost Their Homes in October

U.S. Economic Collapse News Archive

 


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