The World Votes for America
August 16th, 2008 at 04:42pm Mark Noonan
With its money:
The dollar surged to a two-year high against the pound and a six-month peak against the euro on Friday, as fears about spreading economic gloom triggered a sell-off in commodities.
Against sterling, the US currency notched up its 11th consecutive day of gains – its longest uninterrupted rise in more than 35 years – as markets became increasingly convinced that the US was best-placed to weather the global downturn.
The strong dollar rebound undermined sentiment in the gold market, where prices fell below $800 for the first time this year to $774.90 a troy ounce, almost a quarter lower than early March’s record $1,030.80.
Prices for crude oil, platinum, copper, aluminium, corn and soyabeans have also retreated from records hit this year, prompting speculation that commodity prices have reached a turning point.
“The golden age when commodity prices could only go up is gone,” said Marco Annunziata, chief economist at Unicredit.
Military tensions between Russia and Georgia have offered little support to the price of gold, while oil prices have continued to fall in spite of interruptions to two key pipelines carrying crude from the Caspian sea to Turkey.
The long-running surge in commodities and resulting inflationary pressures had been a main factor in slowing global economic activity – playing a bigger role than global financial turmoil, for instance, in the eurozone. The eurozone economy shrank in the second quarter for the first time since the launch of the euro in 1999, while Japan’s economy contracted 0.6 per cent, its worst performance for seven years. The US staged at least a modest recovery in the same period.
Uh, lefties, its because our taxes are lower and our welfare system less fabulously expensive.
What we need to get out of this slump is just more of the same - lower taxes, more personal responsbility, more reliance upon faith-based groups to provide welfare…McCain offers this; Obama offers the complete failures of Johnson and Carter as the “remedy” for what ails us…
Entry Filed under: Campaign 2008, Democrats, Economy, Republicans
11 Comments
1. brian (Boston) | August 16th, 2008 at 5:35 pm
“Uh, lefties, its because our taxes are lower and our welfare system less fabulously expensive. ”
You have no understanding of the situation, absolutely none.
The Dollar lost around 45 % of its value during this Administration, and it had nothing to do with low taxes or paying less for social programs. Now that the Dollar has gained 4%, a net loss of 41%, you are equating that to lower taxes.
http://www.fundmasteryblog.com/2008/07/14/gross-likes-dollar-vs-euro-for-first-time-in-years/
2. Rana Quijotesca | August 16th, 2008 at 6:01 pm
uh… no mark… no…
The dollar is rising because the dollar was so weak, it spurred imports to rise… It’s called the it’s kinda like the Price specie flow mechanism, except with general price levels and not any metal standard…
3. 42 | August 16th, 2008 at 6:02 pm
“Uh, lefties, its because our taxes are lower and our welfare system less fabulously expensive.”
I would love to see you explain that Noonan…
go for it (and try not to include “42 you just hate America)
4. The World Votes for Ameri&hellip | August 16th, 2008 at 6:06 pm
[...] Original post by unknown [...]
5. Canuckguy | August 16th, 2008 at 7:45 pm
Mark:
–Don’t start crowing yet about the economy. It could be just the calm when in the eye of the hurricane, worse may yet come.
–The USA still has a huge monstrous debt and is still spending like a drunken sailor.(no offense meant to any sailors here)
–Some day you will have to eat crow.
6. neocon | August 16th, 2008 at 8:04 pm
I don’t think so Canuck, I think we’ve weathered the brunt of the storm. Oil and other overall commodity prices are falling, easing inflation, and according to Cramer, the housing market has hit bottom. Fannie Mae took a $2.8 billion dollar loss this quarter and so far their stock prices have survived, Freddie Mac will probably follow with a big hit in the Q4 paving the way for the beginning of a long road back to recovery in 09.
Our financial commitment to Iraq will lessen, which will help, and provided that investment taxes remain low, with a pro-growth agenda and a balanced budget, and we will once again buy back our foreign debt. We’ve done it before.
7. yekepyt | August 17th, 2008 at 10:19 am
Look at how the value of the dollar tracked against the euro and the British pound during Bush’s tenure as President. Call up a chart on Yahoo or something, and compare currency rates from 2000 through today.
Now Mark is pointing out that the dollar is enjoying a recent climb — it’s nowhere near approaching the value it held before Bush took office, but perhaps it is gaining value now that currency traders realize that Bush’s tenure is nearing its end.
I hope that the “Bush will be gone soon and McCain looks like a loser” bump in the dollar’s value continues!
8. neocon | August 17th, 2008 at 10:29 am
You’ll need to hope for a lot of things yekypt, because Obama is going to have his ass handed to him in November.
9. yekepyt | August 17th, 2008 at 7:10 pm
Thanks, neocon - have a nice day!
10. cam | August 18th, 2008 at 8:22 pm
neocon,
One of the factors that affects the value of the Dollar is the money supply. Starting in 2006 the M3 a component of the money supply was no longer published. I will not even pretend to fully understand the complexities of the money supply.
However, I do know that like any commodity, the greater the supply, the less value it has. Because the data on the money supply is not available, one can only guess what the cumulative money supply is.
However, we can look at the relative weakness the Dollar has in comparison to the Euro or other world currencies.
While various factors can contribute to the strength or weakness of the Dollar, one thing is sure, on a global basis, as the Dollar declines the value of the goods that Americans can purchase with the Dollar declines with a declining Dollar.
Now, I am aware of the strong opposition to increases in taxes. However, I do not see a difference in a declining Dollar as opposed to a tax cut. Either way consumers’ buying power is decreased.
From 1/17/01 to 8/18/08 the Dollar has dropped 37%. So in 2001 Dollars, every Dollar is now worth 63 cents as compared to the Euro. As such it is as though everyone who holds Dollars has lost. This is no different than a tax hike in real terms. What is different though is that this loss of value cannot be easily realized by average voters. It is like having the framing of your house entirely eaten by termites while the real damage remains hidden from view.
11. cam | August 18th, 2008 at 8:31 pm
neocon,
You wrote “..and according to Cramer, the housing market has hit bottom.”
Is that Kramer from Sienfeld or Jim Cramer, the financial advisor who famously said that anyone holding Bear Stearns stock had nothing to fear, that shorty before it crahsed and burned a few days later.
As a homeowner, I hope it has hit bottom, but there is no telling. I for one will be strapping in for a hard landing. Whoever takes the reins from Bush will likely be flying blind in a craft shot up by Bush policies.