deskflier
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US$ Vs Euro

Sun Nov 25, 2007 9:59 am

In a recent video, rapper Jay-Z flaunts, not dollar bills, but Euro banknotes. This to show his wealth. Supermodel Giselle Bundchen refuses to sign deals in US$. Actually the rate of dollars to other currencies is plummeting at a speed never before seen.

Is the US$ being replaced by the Euro as a currency for world trade? Will the dollar come back? Or will we see a world where several currencies share a leading position as tender for international trade?
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CaptOveur
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RE: US$ Vs Euro

Sun Nov 25, 2007 10:11 am



Quoting Deskflier (Thread starter):
Will the dollar come back?

Most likely.. All that has to happen is the government has to decide it wants the dollar to be worth more than charmin.

Quoting Deskflier (Thread starter):
Or will we see a world where several currencies share a leading position as tender for international trade?

this is possible.. and not necessarily a bad thing.
Things were better when it was two guys in a dorm room.
 
Klaus
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RE: US$ Vs Euro

Sun Nov 25, 2007 10:20 am

There seems to be a progressive shift away from the Dollar towards the Euro on several fronts, but the extreme dominance of the Dollar in the latter half of the past century will probably remain an exception which will not be repeated with the Euro, even if it should actually surpass the Dollar in reserve volume at some point.

The current Dollar weakness will most probably be overcome again, but it will take some time and especially some policy changes.

The positive example of the Euro has apparently motivated asian leaders to contemplate a common asian currency; Especially if that should be realized I would indeed expect a situation with multiple reserve currencies in play with none really dominant, but that's definitely speculation at this point.
 
baroque
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RE: US$ Vs Euro

Sun Nov 25, 2007 11:17 am



Quoting Klaus (Reply 2):
The positive example of the Euro has apparently motivated asian leaders to contemplate a common asian currency; Especially if that should be realized I would indeed expect a situation with multiple reserve currencies in play with none really dominant, but that's definitely speculation at this point.

Such a situation would be likely to be more stable than the present confusion.

There are some odd things happening. It appears that one of the factors pushing the NZ$ and the Aus$ first up and now down has been trading (for some bizarre reason mainly by women) out of Japan on the difference between interest rates in the two countries. However, every time there is a problem in relation to the US subprime market, the NZ$ and Aus $ have sunk like a stone as those investors pulled out for some reason that nobody states clearly but apparently related to the US sub prime troubles - maybe they are borrowing in the US for the trades.

And of course the A$ has gone from close to 0.63E about 3 weeks ago to under 0.58E last time I looked.

The Euro does not seem to be helping Airbus either.
 
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Aaron747
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RE: US$ Vs Euro

Sun Nov 25, 2007 12:03 pm



Quoting Klaus (Reply 2):
The positive example of the Euro has apparently motivated asian leaders to contemplate a common asian currency

It is being discussed but unlikely to come to fruition anytime soon. The political hinderances to establishing a common Asian currency are potentially larger than what Europe experienced (and still has, to some extent). Unless central banking policies change in Japan, Singapore and Hong Kong and the Chinese make a real effort to establish a strong banking market free of most state interference, this will only be talk for some time.
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Klaus
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RE: US$ Vs Euro

Sun Nov 25, 2007 12:44 pm



Quoting Baroque (Reply 3):
The Euro does not seem to be helping Airbus either.

No doubt... with a duopoly-ruled market the relative cost structure matters. But the 787 outsourcing is probably cutting into Boeing's margins as well, unless the currency fluctuations are compensated by subsidies (as probably in Japan's case).

Quoting Aaron747 (Reply 4):
The political hinderances to establishing a common Asian currency are potentially larger than what Europe experienced

Definitely. We've had decades of EU integration as a basis for the Euro; Asia is in a completely different situation by comparison.
 
JA732A
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RE: US$ Vs Euro

Sun Nov 25, 2007 2:55 pm



Quoting Deskflier (Thread starter):
In a recent video, rapper Jay-Z flaunts, not dollar bills, but Euro banknotes. This to show his wealth. Supermodel Giselle Bundchen refuses to sign deals in US$.

When Jay-z and Giselle start making FOREX speculations, you know its time to buy dollars. My family had some money in European bank accounts which we used to buy dollars a few days ago.

Like all currencies, they go up and they all go down. I've had to keep my travels out of Europe for a while now because of the weak dollar but instead have gone to Japan and Hong Kong becayse the the yen and hkd has remained relatively unchanged.
 
flipdewaf
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RE: US$ Vs Euro

Sun Nov 25, 2007 3:08 pm

When my house mate went to sri lanka to watch some cricket many of the traders off the street wouldnt accept dollars as they used to and wanted Euros instead, He was really shocked by this as he had taken dollars (he visits every year). He studies economics and politics at uni so when he got back he wrote a small report on it for one of his subjects.

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tb727
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RE: US$ Vs Euro

Sun Nov 25, 2007 3:25 pm



Quoting Deskflier (Thread starter):
Will the dollar come back?

Hopefully, but it sure isn't going to be until after 1-20-2009. The End of an Error in US history.
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Flighty
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RE: US$ Vs Euro

Sun Nov 25, 2007 5:04 pm



Quoting JA732A (Reply 6):

When Jay-z and Giselle start making FOREX speculations, you know its time to buy dollars.

HUGE CHECKMARK.


What saddens me is that the fools out there are going to sell dollars and buy Euros NOW, and get double-screwed. There's no way in the world I would buy Euros now. There is some hysteria powering this currency shift. Put simply, Europe should not be so appreciated vs Japan and China. Those relationships will cause the Euro to depreciate too, for the same reasons as the US. Europe is no economic dynamo. The US will continue to beat it in growth, as it has for 150 years.

I wish Europe well, and hope they enjoy shopping while things are cheap. Their temporary appreciation vs the dollar zone will not be sustainable very long... since the dollar zone essentially includes Japan and China. Appreciating vs them is a fool's errand.
 
Klaus
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RE: US$ Vs Euro

Sun Nov 25, 2007 5:54 pm



Quoting Flighty (Reply 9):
I wish Europe well, and hope they enjoy shopping while things are cheap. Their temporary appreciation vs the dollar zone will not be sustainable very long... since the dollar zone essentially includes Japan and China. Appreciating vs them is a fool's errand.

Prices do of course matter, but so does product and service quality. We've been exporting primarily based on the latter. We couldn't compete with China on price alone anyway, so whether we're ten times more expensive or fifteen times is not really that much of a difference in practice.
 
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Aaron747
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RE: US$ Vs Euro

Mon Nov 26, 2007 12:20 am



Quoting Klaus (Reply 10):
We couldn't compete with China on price alone anyway, so whether we're ten times more expensive or fifteen times is not really that much of a difference in practice.

Even so, there will always be a point where price becomes determinant and unavoidably influential on the mindset of the overall market.
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Braybuddy
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RE: US$ Vs Euro

Mon Nov 26, 2007 1:18 am



Quoting Flighty (Reply 9):
There is some hysteria powering this currency shift. Put simply, Europe should not be so appreciated vs Japan and China. Those relationships will cause the Euro to depreciate too, for the same reasons as the US.

But it´s not the euro appreciating in value, it´s the dollar that´s depreciating against most currencies. Whether you buy euro now or not makes no difference at all, unless you´re buying them with US dollars.
 
apollo13
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RE: US$ Vs Euro

Mon Nov 26, 2007 8:20 am

Just think if the Mexican dollar surpassed the US dollar :0
 
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Braybuddy
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RE: US$ Vs Euro

Mon Nov 26, 2007 1:57 pm



Quoting Apollo13 (Reply 13):
Just think if the Mexican dollar surpassed the US dollar :0

Now THAT would really be something, seeing that they use pesos . . .  Big grin
 
Klaus
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RE: US$ Vs Euro

Mon Nov 26, 2007 1:58 pm



Quoting Aaron747 (Reply 11):
Even so, there will always be a point where price becomes determinant and unavoidably influential on the mindset of the overall market.

Sure, but neither Europe nor the USA could compete with China on price alone, so any attempt to do that is just nonsensical. Making their products uniquely attractive through innovation and excellent quality is the only way the developed countries can survive in a market swamped with cheap crap.
 
AM744
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RE: US$ Vs Euro

Mon Nov 26, 2007 4:24 pm



Quoting Apollo13 (Reply 13):
Just think if the Mexican dollar surpassed the US dollar :0

Why not? The looney did.  Big grin
 
Flighty
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RE: US$ Vs Euro

Mon Nov 26, 2007 5:16 pm



Quoting Braybuddy (Reply 12):
it´s the dollar that´s depreciating against most currencies.

Yes and no. "Most currencies," yes; "most of the world economy," probably not. The USA/Japan/China combined make up probably the majority of the world economy, if you exclude oil. And compared to that bloc, the Euro has appreciated mightily.

The fundamentals are there for a USA devaluation. But other factors are getting in the way. Japan and China's dollar pegs are getting in the way of what would be a natural US devaluation. Instead, it may not fully occur. Although the US has a huge trade deficit, that money stays within the "dollar zone," effectively making US/Japan/China a super-nation of trade vs Europe, with Dollar-Euro the only free currency float among them. It remains to be seen whether Europe can sustain an appreciation vs the dollar bloc, viewed as a whole.

If Japan and China raise there currencies 30% against the dollar, my view no longer holds. But they are very reluctant to let that happen!

Quoting Braybuddy (Reply 12):
Whether you buy euro now or not makes no difference at all, unless you´re buying them with US dollars.

Right, it is the US dollar holders (all over the world) who should be cautious about converting into Euros. The big drop is already over. Another 40% won't happen, or if it does, mainly Europe will suffer. Europe is not so much healthier than the US. However, I admire the success of the EU and the Euro modernization efforts, especially freeing Eastern Europe and bringing them into modern times.
 
Klaus
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RE: US$ Vs Euro

Mon Nov 26, 2007 6:59 pm



Quoting Flighty (Reply 17):
It remains to be seen whether Europe can sustain an appreciation vs the dollar bloc, viewed as a whole.

You're saying that as if we were actively driving it, which is not the case!

Quoting Flighty (Reply 17):
The big drop is already over.

Could be, but I wouldn't bet on it yet.

Quoting Flighty (Reply 17):
Another 40% won't happen, or if it does, mainly Europe will suffer.

And the USA will be all peachy if that should happen? I don't think so. There would be various dire consequences beyond what we've seen thus far.

Quoting Flighty (Reply 17):
Europe is not so much healthier than the US.

Depends on what you're looking at. The real estate malaise is obviously shared between the USA and Britain to some extent.

I've long said that only after that bubble has deflated and the corresponding readjustments have come into effect, Britain's accession to the Euro will make some sense, but we'll have to see how that plays out.

But other than that the most critical fundamentals which are dragging the USA down right now have no counterpart in most of Europe.
 
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Braybuddy
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RE: US$ Vs Euro

Tue Nov 27, 2007 4:06 pm

I don´t think there´s much chance of the US dollar being replaced as the world´s premier international currency just yet. If I go into a bank with my travellers´cheques and hear "No cambio aero, solo dollares" one more time I´ll scream. Cambios here will change "aero", but at a rate just 20% above "dollares". Do these people read the business pages?
 
Arrow
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RE: US$ Vs Euro

Tue Nov 27, 2007 5:05 pm



Quoting Apollo13 (Reply 13):
Just think if the Mexican dollar surpassed the US dollar :0

Peso. But don't laugh, several years ago when the loonie was at US0.65 and sinking, the Wall Street Journal published a damning editorial on Canada's out of control debt/deficit and called the loonie "the peso of the north."

A big part of the loonie's resurgence can be tied to the fact that after the WSJ piece, Ottawa got the message. No more deficits, and a debt that is going down rather than up. Dubya might want to think about that, but with the Dems about to take over, the prospects for sound fiscal management aren't great.
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ryanb741
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RE: US$ Vs Euro

Tue Nov 27, 2007 5:38 pm

Guys the dollar is only going to get stronger from now on. A lot of the current weakness has come from the sub prime debacle, but particularly Bernanke's response to lower US interest rates. As a result the dollar has dropped qorryingly (more worrying for Europeans though!) against the Euro (the £ Sterling has also dropped against the Euro) as the expectations are that the Eurozone was going to keep raising interest rates. Investors will always seek to put money in areas where they can get more return for their money (i.e. where interest rates are higher). However, with interest rate drops in the UK all but certain and in the Eurozone highly likely (as the Euro's strength is making EU exports uncompetitive) then these currencies will only devalue against the dollar moving forward. Currently £1 = $2.05. This will almost certainly drop to around $1.85 by the end of next year - and if the US economic downturn is less severe than predicted (and I don't think it's going to be all that bad BTW) and their housing 'crash' (which BTW has seen drops of on average 10% over 18 months - hardly a crash and represents about 6 months house price inflation in London this time last year) then the dollar could end up around $1.70 to the pound.

Anyone wanting to invest from overseas in the USA (propertly etc) should do so NOW as it is an absolute bargain compared to 6 months from now. Likewise all these global economies wringing their hands over $100 oil prices - $100 today is about $75 a year back - so only the US economy takes the full brunt of the inflationary pressures. And what has the Fed done - lower rates. Very clever IMHO - as the rest of the world will now need to follow to remain competitive ( a weak dollar long term SUCKS for the global economy) and once other countries' interest rates go down then watch the dollar strengthen significantly.
I used to think the brain is the most fascinating part of my body. But, hey, who is telling me that?
 
Klaus
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RE: US$ Vs Euro

Tue Nov 27, 2007 5:50 pm



Quoting Ryanb741 (Reply 21):
Guys the dollar is only going to get stronger from now on.

It's still falling.
 
EWRCabincrew
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RE: US$ Vs Euro

Tue Nov 27, 2007 5:56 pm



Quoting Apollo13 (Reply 13):
Just think if the Mexican dollar surpassed the US dollar :0



Quoting AM744 (Reply 16):
Why not? The looney did

Damn, beat me to it.
You can't cure stupid
 
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casinterest
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RE: US$ Vs Euro

Tue Nov 27, 2007 9:14 pm



Quoting Klaus (Reply 22):
It's still falling.

And it will probably fall up until February, When the interest rate lowering is done.

However after that, the dollar will appreciate, because now the US has a manufacturing advantage of Europe. Just ask the Exporters in Europe how difficult it is to ship to the US now, and also how much more competetive US produced products are to their own.
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dw9115
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RE: US$ Vs Euro

Tue Nov 27, 2007 10:23 pm



Quoting Klaus (Reply 2):
The positive example of the Euro has apparently motivated asian leaders to contemplate a common asian currency; Especially if that should be realized I would indeed expect a situation with multiple reserve currencies in play with none really dominant, but that's definitely speculation at this point.

I wonder what countries would be stable enough to take part in a single currency in Asia. I think South Korea, Singapore, Hong Kong, Japan, Malaysia and Taiwan would probably be the only countries in the region stable enough to take part. I also wonder if they would offer New Zealand and Australia to take part.
 
baroque
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RE: US$ Vs Euro

Wed Nov 28, 2007 12:38 am



Quoting Arrow (Reply 20):
Peso. But don't laugh, several years ago when the loonie was at US0.65 and sinking, the Wall Street Journal published a damning editorial on Canada's out of control debt/deficit and called the loonie "the peso of the north."

Not wrong Arrow. The Aus $ was known as the Pacific peso (always had competition mind you) but went from 0.48 to 0.93 to the USD until it fell back about 2 weeks ago to 88c - it seems not due to the US directly, but to Japanese investors spooked by the US. So go Abu Dhabi buying part of Citibank!!
 
MD11Engineer
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RE: US$ Vs Euro

Wed Nov 28, 2007 2:25 am



Quoting CasInterest (Reply 24):
And it will probably fall up until February, When the interest rate lowering is done.

However after that, the dollar will appreciate, because now the US has a manufacturing advantage of Europe. Just ask the Exporters in Europe how difficult it is to ship to the US now, and also how much more competetive US produced products are to their own.

Actually only 5% of German exports go to the US, most is being sold inside the US. There are two branches though which are affected, Airbus and the car industry. For Airbus, the problem lies that they have to sell their planes in dollars, while their expenses (mainly wages) are in Euros and, that, except for Boeing, there exists no competition.

Jan
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pelican
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RE: US$ Vs Euro

Wed Nov 28, 2007 11:17 am

Quoting Ryanb741 (Reply 21):
As a result the dollar has dropped qorryingly (more worrying for Europeans though!) against the Euro (the £ Sterling has also dropped against the Euro) as the expectations are that the Eurozone was going to keep raising interest rates. Investors will always seek to put money in areas where they can get more return for their money (i.e. where interest rates are higher). However, with interest rate drops in the UK all but certain and in the Eurozone highly likely (as the Euro's strength is making EU exports uncompetitive) then these currencies will only devalue against the dollar moving forward.

Well with recent inflation a drop of interest rates in the Eurozone is everything but highly likely. The ECB is in a very difficult situation. Normally they should raise the interest rates when inflation rises. But that would risk a major economic downswing.


pelican

[Edited 2007-11-28 03:42:43]
 
MD11Engineer
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RE: US$ Vs Euro

Wed Nov 28, 2007 11:28 am



Quoting MD11Engineer (Reply 27):
Quoting CasInterest (Reply 24):
And it will probably fall up until February, When the interest rate lowering is done.

However after that, the dollar will appreciate, because now the US has a manufacturing advantage of Europe. Just ask the Exporters in Europe how difficult it is to ship to the US now, and also how much more competetive US produced products are to their own.

Actually only 5% of German exports go to the US, most is being sold inside the US. There are two branches though which are affected, Airbus and the car industry. For Airbus, the problem lies that they have to sell their planes in dollars, while their expenses (mainly wages) are in Euros and, that, except for Boeing, there exists no competition.

Jan

It should read "...most is being sold inside the EU"  banghead 

Jan
Je Suis Charlie et je suis Ahmet aussi
 
ryanb741
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RE: US$ Vs Euro

Wed Nov 28, 2007 11:33 am



Quoting Klaus (Reply 22):
It's still falling.

Only against the Euro, as there is still sentiment that the ECB will be slower to cut interest rates than the Bank of England etc. But a strong Euro is NOT good news for EU exporters and with the threat of a recession watch the EU governments pressure the ECB into dropping interest rates despite the inflationary risks. Then the Euro will drop relative to the dollar.
I used to think the brain is the most fascinating part of my body. But, hey, who is telling me that?
 
ryanb741
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RE: US$ Vs Euro

Wed Nov 28, 2007 11:43 am



Quoting Pelican (Reply 28):
Well with recent inflation a drop of interest rates in the Eurozone is everything but highly likely. The ECB is in a very difficult situation. Normally they should rise the interest rates when inflation rises. But that would risk a major economic downswing.

Well the FED dropped interest rates despite inflationary pressures which are more acute in the US than in Europe due to the devaluing dollar. Inflation is a major risk when economies are booming as price increases usually accompany this. At the moment the main inflationary pressures are oil prices (again not so bad outside of the US as oil is priced in dollars and the dollar has plummeted) and food prices which have been hit this year by droughts and flooding. But if the economy contracts, people have less money to spend, retailers start dropping prices and inflation decreases. The big worry is if Chinese inflation remains high as they effectively 'export' their inflation to the West. But in any scenario, if the economy starts suffering big time then watch interest rates go down or risk a major recession. The Fed has got it spot on IMHO, the Bank of England will follow and then so will the ECB mid 2008. In some ways high inflation in the US might help some people - those heavily in debt (which is about 60% of the US population!) as inflation effectively 'erodes' that debt in real terms. Not saying that is what Bernanke was thinking but in real terms, the combination of high inflation and a weak dollar means that the US as a whole 'owes' less to the rest of the world (particularly China) than it did a year ago
I used to think the brain is the most fascinating part of my body. But, hey, who is telling me that?
 
pelican
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RE: US$ Vs Euro

Wed Nov 28, 2007 11:51 am



Quoting Ryanb741 (Reply 30):
But a strong Euro is NOT good news for EU exporters and with the threat of a recession watch the EU governments pressure the ECB into dropping interest rates despite the inflationary risks. T.

And high inflation is no good news for consumers. I don't see the ECB lowering interest rates during the next few month. Inflation reached a 13-year high in Germany this month... Knowing this how could the ECB lower interest rates now?

pelican
 
Klaus
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RE: US$ Vs Euro

Wed Nov 28, 2007 11:54 am



Quoting Ryanb741 (Reply 31):
In some ways high inflation in the US might help some people - those heavily in debt (which is about 60% of the US population!) as inflation effectively 'erodes' that debt in real terms.

That doesn't help the US consumers at all, since they're getting paid in US$ as well. And they still have to pay the rising energy costs at the same time.
 
ryanb741
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RE: US$ Vs Euro

Wed Nov 28, 2007 12:12 pm



Quoting Klaus (Reply 33):
That doesn't help the US consumers at all, since they're getting paid in US$ as well. And they still have to pay the rising energy costs at the same time.

It doesn't help US consumers with cash in the bank, no, as their wealth goes down in real terms relative to the rest of the world. But it does help those in debt, as the US debt as a whole goes down in real terms. Also, even though US consumers are paid in USD, high inflation means higher wage rises as CPI is one of the things taken into account when working out what wage increases are going to be. So their debt stays the same but their ability to service it goes up.

Don't forget in the dark days of the 1970's when UK inflation was at 10%, wage increases were around that level as well. High inflation with static wages (or stagflation) is a nightmare though.
I used to think the brain is the most fascinating part of my body. But, hey, who is telling me that?
 
Klaus
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RE: US$ Vs Euro

Wed Nov 28, 2007 12:46 pm



Quoting Ryanb741 (Reply 34):
But it does help those in debt, as the US debt as a whole goes down in real terms.

"Real" terms for a consumer are the local ones within his own currency region, not the ones on the world market.

And no, it doesn't help them at all.

Quoting Ryanb741 (Reply 34):
Also, even though US consumers are paid in USD, high inflation means higher wage rises as CPI is one of the things taken into account when working out what wage increases are going to be. So their debt stays the same but their ability to service it goes up.

In a troubled economy there is considerable resistance against rising wages, but any variable interest will of course be going upwards in addition to rising fuel costs - the effective debt doesn't "stay the same". I don't see any positives for the indebted US consumer there.
 
baroque
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RE: US$ Vs Euro

Wed Nov 28, 2007 1:54 pm



Quoting MD11Engineer (Reply 29):
It should read "...most is being sold inside the EU"

I think I am out of here Jan, I read it as you meant and not what you wrote. So this discussion must be getting to me.  Wow!  Wow!
 
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casinterest
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RE: US$ Vs Euro

Wed Nov 28, 2007 9:41 pm



Quoting MD11Engineer (Reply 29):




It should read "...most is being sold inside the EU"

Right,
But the exports to the other EU countries will be Jeopardized by the now less costly US/China/India imports.
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