olle
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 12:56 pm

2004 to 2006 was the first time since dollar started to become the main international trade currency in the late 1920 that there was 2 alternatives of currency.

In a few years the number of trade agreements using %u20AC instead of $ has moved from around 10/60% to 39/43%. Greenspan consider that the greenback has lost a lot of its advantage it had only a few years ago over other currencies.

Source: http://www.commodityonline.com/news/topstory/newsdetails.php?id=3381

In the same time the usage as a reserve currency has changed from 18/71% to 25/67% (1999 to 2006).

Source: http://en.wikipedia.org/wiki/United_...jor_international_reserve_currency

These changes does not look huge but it means that the euro areas can buy goods with out paying and US needs to pay for things they purchased long time ago.

The big quesion must be the following: Will the rest of the world sell USD and purc hase Euro until we have around 40% of each as the trade usage or will it stop before?

For US people this is a big question while if the answer is yes it need to handle the exchange of all this money before we see stability. Today noone rises prices for export to US because loss of market share would be huge, but the raise of oil is the first example. Then it will for the first time it the wallets of normal US people.
 
AeroWesty
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 1:25 pm



Quoting Civilav (Reply 26):
Gsosbee, you are roughly my age and, as an Economist, I must correct you: the US dollar was mightiest between Feb - Dec 1985 during the Reagan years and the lowest the Pound was against the dollar was 1 GBP = USD 1.48. Never ever has the US dollar been on a par with the British Pound at any time in history.

According to the U.S. Federal Reserve, it did almost that. Go to this link and scroll down to February 1985:

http://www.federalreserve.gov/Releases/h10/Hist/dat89_uk.htm

It looks like the lowest the pound was against the dollar was GBP1.052 to USD1, according to the Fed.

The BBC claims it was $1.03 in January 1985:

http://news.bbc.co.uk/2/hi/business/7091089.stm
International Homo of Mystery
 
jcavinato
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 1:36 pm

In mid U.S. air deregulation and airline evolution and frenzy, I took my sister to London for four days in December 1984 to do Christmas shopping. The Pound was at about $1.06/07 or near, and Continental had a one way New York-London (LGW) fare of $98 plus taxes. I believe it was DC-10s on that route.

In the fixed currency era the Pound was $4.80; then some time in the 1960s it was adjusted to $2.40.
 
gsosbee
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 2:33 pm



Quoting Civilav (Reply 26):
Gsosbee, you are roughly my age and, as an Economist, I must correct you: the US dollar was mightiest between Feb - Dec 1985 during the Reagan years and the lowest the Pound was against the dollar was 1 GBP = USD 1.48. Never ever has the US dollar been on a par with the British Pound at any time in history.

Civilav, the low point was 0.771 (1.30 in 1985):

1983 £ 0.6596306068 British Pound
1984 £ 0.7479431563 British Pound
1985 £ 0.7710100231 British Pound
1986 £ 0.6811989100 British Pound
1987 £ 0.6097560975 British Pound

I was there, 1.30 seemed to be near parody. Otherwise good post.

Not only is the US the largest economic block, its economic fundamentals are still the strongest. As several have pointed out, exchange rates are commodity driven and will generally follow interest rates. People make a ton of money trading on the differential.
 
Buddys747
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 2:56 pm



Quoting Stitch (Reply 6):
The main problem with the USD right now is the economic and political policies of the current US administration, and yet that administration is only a year away from leaving office to be replaced by something much different (and that will be true even if another Republican administration takes office).

 bigthumbsup 
 
speedbird2263
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 3:03 pm

So I take it Nobody's ever heard of the Amero?  stirthepot   devil 

http://www.youtube.com/watch?v=6hiPrsc9g98
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iwok
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 4:45 pm



Quoting DistantHorizon (Thread starter):
Much has been said lately about the dollar decline against all major currencies, and the "beyond the pain barrier" problems felt by Airbus.
But that is only a small part of the bigger picture, and as far as I can tell, very little has been said about the effects of the currency issue on the industry.

These things always ebb and flow. I recall back in the late 90's, when I went to Europe I felt like a rich man because it was 2.2DM to the Dollar back then. Now its almost reversed. Back then, Boeing was singing the same song that Airbus is singing now, but at the end of the day they always pull in profits outside of extraordinary items such as the delays which have nothing to do with the currency rates.

I say ride it out. The dollar will be back in a couple of years.

iwok
 
georgiaame
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 5:09 pm

The primary cause of the dollar's perceived weakness is the very low interest rates at home. In spite of the media trying very hard to hawk its stories of the collapsing American economy, it is and remains a juggernaut. We produce more, more efficiently, and more productively than any other nation on earth. We have virtually 100% employment, minimal if any inflation, and virtually no poverty, as would be defined by the UN or a third world nation. This being the case, investing foreign currency into our market produces a fairly low rate of return: put another way, if you invest in a weaker economy such as Europe with massive unemployment, and horrendously poor efficiency, you get a better return in the form of interest. But you could also lose your shirt at almost a moment's notice if France devolves into massive strikes, Italy tanks, or there are mass political attacks in the Netherlands. Unlikely, but far from impossible in today's climate.

Oil prices reflect this "imbalance". We import a huge amount of material and pay for it in our dollars. In other words, we get tangible stuff for printed paper, not a bad deal. So our balance of trade is off, which is not a bad thing, when you think about grocery shopping: your family's balance of trade with the local supermarket is horrendous: you keep bringing stuff home, and paying for it with printed money. Not a good situation for the supermarket, is it? They have all this stuff they are giving away for paper! There is no difference. It is this balance of trade that is driving up the price of oil, for us domestically. The value of the oil hasn't changed, the perceived value of the dollar has. All that is happening is that we are giving away more of our paper money, that could be used to buy boom boxes made in China and sold at Walmarts.

The world COULD divest itself of the dollar as the international unit of currency. But the only current alternative would be the Euro, which traders consider a better "value" at the moment, but it is backed by a relatively weak economic system. It is not likely that we will ever see a world economy based on the Ruble (although that was the idea of leading political thinkers 20 years ago, until a certain American President ended that line of thought) or the Israeli Shekel. It isn't going to happen too soon, and if it did, the American juggernaut would continue to sail along smoothly, if only on inertia, and the world would set itself up for an unprecedented economic collapse at the first sign of instability. The makers and shakers of industry, and government economic advisers are aware of this.

And to bring this back to airline issues: Is there a reason that Airbus is not selling 380s like hotcakes, and Boeing is selling 787s like there is no tomorrow? It all boils down to the economics of the individual airlines/ or economies if you will. Look at the 380 as the Euro: big, bold, quiet, but essentially impractical for everyday use. 787: efficient, sleek, much more affordable world wide, and gets the job done better. Dump the 787 and replace each with a 380? I hope the analogy comes through. Each has its place, but they are hardly equals, nor will they be for a long, long time.
"Trust, but verify!" An old Russian proverb, quoted often by a modern American hero
 
2175301
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 5:29 pm



Quoting Abrelosojos (Reply 47):
I do think that the current position of the Dollar reflects a level of uncertainty that is fundamentally connected to a weaker U.S. economy. Of course, that will change at some point and I do believe the Dollar would climb back in mid-2008. For now, I can still see the Dollar heading south to 1 Euro = 1.6 USD before it starts climbing back up.

Agreed. In fact the Euro to dollar ratio may go higher than 1.6. But short term (less than 5 year) swings in currency exchange rates are common - and are not a reason to even discuss a change in world currency.

As I pointed out in the other thread (linked in my post above) that there are real advantages to Europe by having a high Euro to Dollar exchange rate - and those advantages may be overall large enough that the substantial downsizing (or outright failure) of a few companies (Airbus being one of them) is quite acceptable as the trade-off. What overall is more important: An overall stronger national economy - or the fact that Airbus can produce competitively priced planes. The US has lost whole industries to overseas producers - and still has a robust economy in comparison to the rest of the world.

The point that most people do not understand who mention the "weak US economy"- is that while the US economy is currently a little weaker than normal (at the moment) - the real question relates to how weak is the US economy compared to other national economies in the world. If I was a long term investor (10+ years) - and I only restricted myself to a large country in the world (and I will count the European Union as a "country" for this purpose)... Where would I invest my money in. The US hands down.

There are so many intangibles that affect both the short and long term value of a currency. Overall, The US, and its Dollar, has much better long term intangibles than almost any other country in the world (size being one of them). Thus, the Dollar will continue to be the currency of choice in international trade. I will offer that perhaps the European Union might be able to get to a recognized level good long term stability in a decade or so. For those in Europe - that is what you need to be focusing on (even if it means sacrificing Airbus to get there).

I also agree that one of the reasons (one of the intangibles) that the Dollar is weak right now is the lack of trust/support internationally in the current US Government. The 2008 elections may or may not help that long term; but, should provide at least a short term boost to the dollar again.

I do understand that their is a basic difference in how the US economy operates and how the European Union economy operates (the US is much more performance & profit driven, and Europe often focuses on how to save jobs - even if there is not a good long term economic gain). Business efficiency relates to profits based on investment which relates to good national economies. The direct comparison of these differences between Europe and the US (and others) can be seen on the following linked chart:

www.nationmaster.com/graph/eco_bus_eff-economy-business-efficiency

What is really interesting is that 4 of the 5 most efficient nations based on business efficiency (can make more money per investment) - are also the in the worst 5 countries in the world for ease of doing business. Lots of regulations and restrictions on doing business (environmental, minimum wage, siting, permits, taxes, etc) as indicated by the following chart:

www.nationmaster.com/graph/eco_eas_o...economy-ease-doing-business-index.


Getting back on how this topic relates to airlines: I am dismayed by all the people who feel that Airbus deserves some kind of special break due to currency exchange rate changes. Did Airbus - and their supporters - feel that Boeing needed special breaks when the situation was reversed? Can someone show me the evidence that they argued for special support of Boeing when the exchange rates favored Airbus.

Can someone show me how providing extra support for Airbus actually long term improves the economy of Europe - which would make the Euro more stable and increase its chance of becoming more of an international currency (i.e.; is it overall worth it to save Airbus from its current mode of operation - or would Europe do better by accepting a downsized Airbus and putting the public resources into other things and other changes to improve their economy - and force Airbus to really change how it does business).

I suspect that forcing Boeing to face up to the challenges of the past years when the exchange rate was against them produced a much better Boeing.

I suspect that the best way to have a truly economically beneficial Airbus is to make them work through their current difficulties. Even if that means that Airbus only survives as a smaller company (from which they could grow again). I feel that this is the best chance that Airbus has of being a large player in the Aviation industry in 20 to 30 years (and beyond).
 
atmx2000
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 6:01 pm



Quoting 2175301 (Reply 58):
I also agree that one of the reasons (one of the intangibles) that the Dollar is weak right now is the lack of trust/support internationally in the current US Government. The 2008 elections may or may not help that long term; but, should provide at least a short term boost to the dollar again.

This is nonsense. European leaders are coming here begging for the US to do something about the exchange rate. These are the same people who loved to tsk-tsk about the US trade deficit. Their pleas are falling of deaf ears, as they should, because they did nothing to help with our concerns regarding Asian currency manipulation before, instead wanting to take advantage of their relative advantage over the US. Basically most members of both parties are favor of doing nothing to support the dollar now, and the world knows it. You can tell by the fact that few politicians are advocating for otherwise, and most want devaluations against Asian currencies as well.

Tangibles are driving the fall of the dollar, namely the trade deficit, ho-hum interest rates, and a negative feedback loop fed by the falling dollar. There are perhaps a few intangible reasons for the fall of the dollar but "lack of trust/support internationally in the current US Government" is not one of them, and none of them are significant drivers of currency exchange rates. It's no secret that the current administration is not going to engage in any currency intervention to support the dollar. But if what you say is actually true, well I prefer the effect of "the lack of trust" and "support" to the supposed "trust" of the previous administration and their idiotic 2nd term feel-good strong dollar policy that drove the dollar to ruinous heights, the effects of which will take probably a decade of a weak dollar to recover from.
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
olle
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 6:15 pm

Atmx2000: I totally agree..

US need to do something about their trade deficit. They tried to talk with China about changing the value of the currency earlier and now they using brute force to get the same effect. The best for US and Europe should be a USD / Euro on around 1,20 but while to many Asian currencies has pegged its currency against the USD they need to make something about its import from the region.

Now the Euro which is the only major currency not pegged against the dollar take all the hit.

I consider that we need to consider a few years before the situation find its balance..
 
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distanthorizon
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 6:19 pm

Glad to see some valid arguments against the "dropping dollar theory".
Sad to see so many people accusing me of "wishful thinking" and not giving any valid and serious reasons for "disagreeing" (so many adjectives regarding my person, as compensation!). Smile

Anyway, we'll find out who is right in a few years time. Hope we'll all be still around!

Regards
DH
Regards
Nelson SE
 
socalfive
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 6:57 pm

Well first of all, the Dollar is on its way out. In 2008 the dollar will crash and in the turmoil the Amero will emerge. It will encompass Canada, the United States and Mexico. That will be that, end of story.

Keep one thing in mind, who ever is in the oval office means nothing when it comes to the economic conditions of the US, the International Banking community runs the world. The US Federal reserve is a big part of that, it has nothing whatsoever to do with the US Federal Gov't. The Federal Reserve is heading the economy into the toilet on purpose and taking the dollar with it for the express intent of bringing on the Amero, just as they did in Europe. Forget watching the news boys, the real story is never in it anyway, only the versions they want you to hear. And for those of us living in the U.S., hang on, it's going to be a bumpy ride.
 
vv701
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 7:22 pm



Quoting Atmx2000 (Reply 5):
You seem to be missing something obvious. You claim the instability is in the dollar when it goes up and down versus the euro. Well the euro is just as unstable in that case.

I am sorry but what we are experiencing is a weak US Dollar. And this weakness is an absolute disaster for the economies of most countries in the world. Further it is probably more of a disaster for European than American consumers. Worse the weakness in the US $ is almost certainly going to get worse.

On a trade weighted basis the $ has lost one third of its value over the last four years. And that is exactly the same as saying that on average the $ has lost one third of its value against all other currencies in this period.

This is a disaster for the rest of us not because the US $ is the currency of the world's largest economy. It is a disaster because the US $ is still THE world's reserve currency. Central banks everywhere stock pile $s in their reserves. No less than two-thirds of all foreign exchange reserves held by central banks outside of the USA are denominated in US $s. So over the last four years these reserves have lost around. This means that the capital reserves of world outside the USA have fallen in value by over a quarter in the last four years purely because of the $'s weakness.

With the trade deficit of the USA running at 6 per cent of gross domestic product the US government policy of sitting back and doing very little has been extremely clever. Effectively this has pushed the burden of adjustment from the USA to the rest of the world to the benefit of the American consumer.

However this cannot go on for ever. Outside of the USA we are likely to see other countries taking political (rather than monetary) action to protect the falling value of their central reserves. Tensions between, for example, the EU and the USA that this will cause will be as nothing to the tensions that will grow between the USA, Russia, China and oil rich Middle East countries. The production of expensive oil or the strong exports of these countries mean they are amassing huge reserves of $s. The Chinese reserves are estimated at $1,400 billion while the Russian reserves are $450 billion. So a 10 per cent fall in the value of the $ obviously hits them hard.

So what do you think these countries will do in the near future? Do you think that they will rub their hands with glee as their piles of $s continue to grow? Or do you think the recent trend to divest their $ holding which has seen the $ decline by around 5 per cent in just a few weeks will continue? And if China and Russia want to flex their muscles as potential future super-powers do you think they will worry what happens to the American and other western economies if the accelerate their sale of $s? The only hope for any of us in the west is that they will be worried how a very much weaker $ might slow the huge expansion of their own economies.

So to those who have confidently predicted that the US £ will bounce back and soon, I really hope you are right. But if I was a gambler, which I am not, I would be selling the $ short right now. My view is that it will not recover soon and is likely to fall another 10 or 20 per cent before it does.

Quoting Civilav (Reply 26):
Gsosbee, you are roughly my age and, as an Economist, I must correct you: the US dollar was mightiest between Feb - Dec 1985 during the Reagan years and the lowest the Pound was against the dollar was 1 GBP = USD 1.48. Never ever has the US dollar been on a par with the British Pound at any time in history.

Quite wrong. In the early 1980s I was a business planner for a large American corporation (that was a constituent of the Dow Jones Index) and was producing a launch plan for a new, innovative American manufactured product for sale in the UK. At the time the $/£ exchange rate was around $1.50 = £1.00. In my plan I assumed an exchange rate of $1.45. After I had produced the plan my management appointed me the business manager for the product. I then watched the exchange rate fall through my $1.45 assumed rate. And it went on falling. I watched it fall through $1.17 at which point the plan went negative. And in February 1984 the exchange rate fell through $1.04. But, thank goodness, the weak £ did recover and eventually settled down back close to the $1.50 level for many years.
 
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kc135topboom
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 7:35 pm



Quoting Mham001 (Reply 2):
Currencies have always risen and fallen. The Euro will be no exception.

The US Dollar has, unlike any other currency in the world, the world's largest economy to back it up. It is also backed up by gold deposits in Fort Knox. The current fall of the value of the dollar is a cycle. It will go up again.
 
socalfive
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 7:50 pm



Quoting KC135TopBoom (Reply 64):
The US Dollar has, unlike any other currency in the world, the world's largest economy to back it up. It is also backed up by gold deposits in Fort Knox. The current fall of the value of the dollar is a cycle. It will go up again.

What you mean is the US is the LARGEST DEBT BASED ECONOMY in the world, it's not backed by anything tangible at all, it is NOT backed by Gold deposits--otherwise known as the Gold standard--and hasn't been since 1933. (Hence Federal Reserve notes, not Treasury Notes) In fact, there is a very large contingent of people that believe there is no longer a single bar of gold in Ft. Knox whatsoever. People in this country need to get a grip to what's really going on regarding their money, the fact is, they don't have any, just paper smoke and mirrors.
 
atmx2000
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:04 pm



Quoting Olle (Reply 60):
Now the Euro which is the only major currency not pegged against the dollar take all the hit.

No, pretty much all western countries other than the US have seen significant appreciation in their currencies.

Quoting Olle (Reply 60):
US need to do something about their trade deficit. They tried to talk with China about changing the value of the currency earlier and now they using brute force to get the same effect. The best for US and Europe should be a USD / Euro on around 1,20 but while to many Asian currencies has pegged its currency against the USD they need to make something about its import from the region.

While the long term average of USD versus the Euro and the previous ECU basket is close to $1.20, the reality is at that level US nominal per capita GDP is still way higher than the big european economies, and purchasing power parity GDP is even way higher. That long term average exchange rate undervalues European production. It is very likely that the long term exchange rate should be considerably higher than that old average, closer to today's level.

As far as Asian imports and markets go, the US and Europe will have to cooperate and agree on a course of action to force a revaluation of those currencies and opening of those markets. But they can't just sign an agreement and expect Asian countries to not do something else to maintain their advantage. In the mid 90s, the yen had achieved an ultra high valuation that put per capita GDP at a level similar to higher than US per capita GDP, eliminating the labor advantage they had. At the same time the US signed an agreement to open up the Japanese auto and parts market. US companies started to make some gains in the Japanese market, and Japanese companies found their profits squeezed due to the strong yen. The Japanese government engaged in a policy of currency devaluation to restore the advantage Japanese had. The US didn't do anything about, because you know, Japan was undergoing a period of deflation and we should be supportive.

Quoting Socalfive (Reply 62):
Well first of all, the Dollar is on its way out. In 2008 the dollar will crash and in the turmoil the Amero will emerge. It will encompass Canada, the United States and Mexico. That will be that, end of story.

So, when this doesn't happen, will you admit you are paranoid conspiracy theorist?

Quoting Socalfive (Reply 62):
The Federal Reserve is heading the economy into the toilet on purpose and taking the dollar with it for the express intent of bringing on the Amero, just as they did in Europe.

Nonsense. Why do you think the Federal Reserve is interested in such things?
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
JoeCanuck
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:08 pm



Quoting Atmx2000 (Reply 66):
Nonsense. Why do you think the Federal Reserve is interested in such things?

Because they are heavily invested in tin foil hat futures...
What the...?
 
socalfive
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:19 pm



Quoting Atmx2000 (Reply 66):
So, when this doesn't happen, will you admit you are paranoid conspiracy theorist?

Oh please, stop getting your news from CNN. Look at the bigger picture, or more importantly look at history. It is a conspiracy and anyone that can read can study history and find it out for themselves skippy.
Those that can't label those that can a Conspiracy theorist as a negative connotation.

Quoting Atmx2000 (Reply 66):
Nonsense. Why do you think the Federal Reserve is interested in such things?

The Fed has done nothing but create debt through fractional reserve practices for their own fun and profit since 1913 when they were put into power. That's when inflation began and the dollar has slid ever since. When this crash comes as it did in the 30s, the Fed and the banks profit huge because they're the only source of liquidity and in the desperation of the moment they buy up assets and debt for pennies on the dollar and then relax the money supply where eventually the economy recovers, even more dependent on the Federal Reserve than before. This has been going on for almost 100 years. Do you or anyone on this board believe that privately held banking concerns should be in total control of any government's money supply? Because that's exactly the case with any central bank. Don't be naive, this is a global monetary system now completely controlled by less than 300 individuals.
 
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mariner
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:26 pm



Quoting DistantHorizon (Reply 21):
Already did: the oil industry - probably the most impostant one.

It has already been discussed by OPEP in the past, and the issue in again on the table. You can see news about it in every news agency (and please, it does go far beyond some politicall games).

There is no serious move by the oil industry - OPEC or anyone else - to uncouple from the US$.

The Venezuelan president may be asking a valid question - but he is seeing the answer through a very limited political and economic prism.

It may happen at some point in the future, but I don't expect to see it in my life-time - always barring some unforeseen circumstance. Such a move would cause chaos in the financial markets, which is the thing the financial markets fear most.

There may be in individual cases of decoupling and some currencies may be forced to revalue - but that is part of the shifting balance. Seven years ago, I was advised to put money into Russia - and I have done extremely well from that - but now I advised to take that money out of Russia.

Nor am I sure what you mean by "political games". Some of the reasons for retaining the dollar as the reserve currency are political - but they are not games.

The world searches for financial stability, and the US - generally - represents that. Many people outside the US may be confused about present US economic policy, some are wondering about the elephant in the room - how the US funds a war while cutting taxes, for example - but there is also a basic belief that these questions will be resolved, and balance will be restored.

It is certainly true that the present weakness in the US$ is causing serious problems for some other countries, but the rise in the price of oil cannot be disconnected from this, especially for the poorer countries. Many believe - I do - that the price of oil has become disconnected from the actual laws of supply and demand and that it must eventually right itself - at whatever level, whatever the "new normal" is.

Nothing has ever grown to the sky.

The surge of the AU$ towards parity is as much, or more, caused by the extraordinary strength of the Australian economy, the envy of much of the world - bringing about the tandem risk of high inflation. The AU$ has backed off from its highs, although the US$ continues to decline.

All the economies face this similar problem - managing growth without (serious) inflation. China is looking straight down the barrel of this, but China wants its place at the economic table and is attempting to find solutions without overturning the table.

mariner
aeternum nauta
 
jfk787nyc
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RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:31 pm



Quoting VV701 (Reply 63):
Quoting Atmx2000 (Reply 5):
You seem to be missing something obvious. You claim the instability is in the dollar when it goes up and down versus the euro. Well the euro is just as unstable in that case.

I am sorry but what we are experiencing is a weak US Dollar. And this weakness is an absolute disaster for the economies of most countries in the world. Further it is probably more of a disaster for European than American consumers. Worse the weakness in the US $ is almost certainly going to get worse.

On a trade weighted basis the $ has lost one third of its value over the last four years. And that is exactly the same as saying that on average the $ has lost one third of its value against all other currencies in this period.

This is a disaster for the rest of us not because the US $ is the currency of the world's largest economy. It is a disaster because the US $ is still THE world's reserve currency. Central banks everywhere stock pile $s in their reserves. No less than two-thirds of all foreign exchange reserves held by central banks outside of the USA are denominated in US $s. So over the last four years these reserves have lost around. This means that the capital reserves of world outside the USA have fallen in value by over a quarter in the last four years purely because of the $'s weakness.

With the trade deficit of the USA running at 6 per cent of gross domestic product the US government policy of sitting back and doing very little has been extremely clever. Effectively this has pushed the burden of adjustment from the USA to the rest of the world to the benefit of the American consumer.

However this cannot go on for ever. Outside of the USA we are likely to see other countries taking political (rather than monetary) action to protect the falling value of their central reserves. Tensions between, for example, the EU and the USA that this will cause will be as nothing to the tensions that will grow between the USA, Russia, China and oil rich Middle East countries. The production of expensive oil or the strong exports of these countries mean they are amassing huge reserves of $s. The Chinese reserves are estimated at $1,400 billion while the Russian reserves are $450 billion. So a 10 per cent fall in the value of the $ obviously hits them hard.

So what do you think these countries will do in the near future? Do you think that they will rub their hands with glee as their piles of $s continue to grow? Or do you think the recent trend to divest their $ holding which has seen the $ decline by around 5 per cent in just a few weeks will continue? And if China and Russia want to flex their muscles as potential future super-powers do you think they will worry what happens to the American and other western economies if the accelerate their sale of $s? The only hope for any of us in the west is that they will be worried how a very much weaker $ might slow the huge expansion of their own economies.

So to those who have confidently predicted that the US £ will bounce back and soon, I really hope you are right. But if I was a gambler, which I am not, I would be selling the $ short right now. My view is that it will not recover soon and is likely to fall another 10 or 20 per cent before it does.

Quoting Civilav (Reply 26):
Gsosbee, you are roughly my age and, as an Economist, I must correct you: the US dollar was mightiest between Feb - Dec 1985 during the Reagan years and the lowest the Pound was against the dollar was 1 GBP = USD 1.48. Never ever has the US dollar been on a par with the British Pound at any time in history.

Quite wrong. In the early 1980s I was a business planner for a large American corporation (that was a constituent of the Dow Jones Index) and was producing a launch plan for a new, innovative American manufactured product for sale in the UK. At the time the $/£ exchange rate was around $1.50 = £1.00. In my plan I assumed an exchange rate of $1.45. After I had produced the plan my management appointed me the business manager for the product. I then watched the exchange rate fall through my $1.45 assumed rate. And it went on falling. I watched it fall through $1.17 at which point the plan went negative. And in February 1984 the exchange rate fell through $1.04. But, thank goodness, the weak £ did recover and eventually settled down back close to the $1.50 level for many years.

Russia-
You are right on a number of points. Here is the difference, I am a New Yorker but my business is in the former Soviet Union. I know what is going on there. Here is how it will look little by little. For example Russia is building up large amounts of Dollars but they are going to go back into building up of Skyscrapers and other big diplomatic industries. They will be building massive factories to produce all kinds of startegic things like tanks, planes titanium producers dumb stuff that they feel gives Russia diplomatic power through out the world. In the United States when a Russian company decides they would like to purchase something in the United States there is right away problems. The United States does not want any Russian money invested into the economy because they know if they ever become a powerful company Russia will use the power card on the United States. So they turn around and look at Europe they are investing heavily into the EURO, The country is not pegged at the Dollar at all anymore only the EURO. Everything in Moscow is priced in Dollars, from plane tickets to televisions. The only Russian goods that are sold in dollars are Metals & Oil because these items are world materials, 1) These items are priced in Dollars and that is the bottom line. Until every single country in the world at the same time decides to take EUROs for these items instead of Dollars they can not change. 2) The United States is the worlds largest customer for all metals & oil so obviously the Dollar peg cannot change.

China -
This country on the other hand has 1.4 Trillion dollars and there new philosophy is start spending it, They do not change Dollars to different currencies. There new plan is running around the world purchasing mines, oil refineries, metal producers, brokerage houses and other industries that will complement China in 20 years. They purchase these compaines in countries that have stable investment climets. They invest money in countries that are either dollar pegged or countries that currencies are valued just a bit lower than the US Dollars. The US government does not care that China is investing in our economy because they want China to be dependent on the Dollar for the next 100 years. China can talk as much as it wants the US & China are partners and the US is using there new investment model to there advantage. They know that in 20 years China and the US will have exactly the same amount of power through out the world, it may even be possible that China will have more. But, China will be dependent on the US to much by then.

China is currently heavily investing in the United States, Canada, Austraila, Those are there three main investment countries because those countries are almost on par financially and they are all stable governments, They know they will never loose there money there and if inflation goes up than there Dollar amount goes up in these countries. So technically they are investing in the fact that the United States is about to go into Hyper Inflation and China does not want to sit on there dollars anymore.

China is also investing in Kazakhstan - Oil rich bordering country with growing tensions with Russia, China does not want Russia feeling they are hand in hand partners with them. They understand Russia's policies very well and know eventually they will get hit. Kazakhstan is the only country in the Former Soviet Union that has the power to go up against Russia. Russia is currently starting to feel pressure from Kazakhstan and it is very hard for Russia to show there power against them. The United States is currently very heavily involved in Kazakhstan. Kazakhstan does not want to be dependent on Russia anymore, Russia was making billions of dollars yearly because Kazakhstan has to transfer all Oil & Gas through pipelines going through Russian soil to Europe, This will soon not be the case they are building a pipeline directly to EUROPE by passing Russia. Russia also feels that Kazakhstan may become a future United States, European or even a Chinese attack location, So Russia needs to keep good diplomatic ties with this country.


China is also investing very small amounts of money in Africa - They have announced that they will be investing 10 Billion dollars into Congo, Congo is very rich with startegic minerals but the 10 Billion that is a fortune to Congo is nothing for China chump change.
 
jfk787nyc
Posts: 479
Joined: Sun Apr 29, 2007 9:59 am

RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:45 pm



Quoting Socalfive (Reply 65):
Socalfive From United States, joined Mar 2001, 473 posts, RR: 1
Reply 65, posted Sun Nov 25 2007 14:50:58 your local time (41 minutes 2 secs ago) and read 244 times:



Quoting KC135TopBoom (Reply 64):
The US Dollar has, unlike any other currency in the world, the world's largest economy to back it up. It is also backed up by gold deposits in Fort Knox. The current fall of the value of the dollar is a cycle. It will go up again.

What you mean is the US is the LARGEST DEBT BASED ECONOMY in the world, it's not backed by anything tangible at all, it is NOT backed by Gold deposits--otherwise known as the Gold standard--and hasn't been since 1933. (Hence Federal Reserve notes, not Treasury Notes) In fact, there is a very large contingent of people that believe there is no longer a single bar of gold in Ft. Knox whatsoever. People in this country need to get a grip to what's really going on regarding their money, the fact is, they don't have any, just paper smoke and mirrors.

http://en.wikipedia.org/wiki/Official_gold_reserves

1 United States of America 8,133.5 tonnes
That is approximately 261'492'025 ounces.

Which means as of Friday's price the United States has 218 Billion dollars in Gold. The United States does not peg the dollar against gold values since NIXON, the United States does have this Gold.

This also does not include how much gold are in the hands of the people in the United States.
 
itsnotfinals
Posts: 1573
Joined: Sun Mar 04, 2007 8:51 am

RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:51 pm

Quoting JFK787NYC (Reply 71):
Which means as of Friday's price the United States has 218 Billion dollars in Gold

218 Billion of gold would not pay to operate our bloated government for more than 28 days.


the US budget is 2.8 Trillion dollars

http://en.wikipedia.org/wiki/United_States_federal_budget,_2007


As a matter of fact the gold couldn't even pay for 6 month of the war:

"U.S. Military Budget - War on Terror Base Spending : The War on Terror (WoT) incurs additional costs by other departments. When added to the DoD base spending, the amount comes to: $474 billion in FY 2006, which is 56% of net discretionary spending, $505 billion in FY 2007, and $554 billion in FY 2008, nearly 60% of discretionary spending."

[Edited 2007-11-25 13:00:23]
Speedbird 178 Heavy, FINAL runway 27L
 
Alessandro
Posts: 4961
Joined: Wed Sep 12, 2001 3:13 am

RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:54 pm

On a more serious note, does the low US$ cause delays among subcontractors to both A and B, due to losses?
Could it lead to subcontractors going bankrupt and force A and B to buy them?
From New Yorqatar to Califarbia...
 
atmx2000
Posts: 4301
Joined: Wed Oct 13, 2004 4:24 pm

RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 8:55 pm



Quoting VV701 (Reply 63):
I am sorry but what we are experiencing is a weak US Dollar. And this weakness is an absolute disaster for the economies of most countries in the world.

What we are experiencing is a weak dollar zone, so that the unpegged western currencies are forced the bear the burden of revaluation.

[quote=VV701,reply=63]On a trade weighted basis the $ has lost one third of its value over the last four years. And that is exactly the same as saying that on average the $ has lost one third of its value against all other currencies in this period.

The Federal Reserve's dollar index had its all time peak in Feb 2002 at 129.5275. Currently it around 98, so the dollar has fell by around 25%. It was at this level 10 years ago, and before that it was always below that level by a significant amount.

Quote:
Further it is probably more of a disaster for European than American consumers. Worse the weakness in the US $ is almost certainly going to get worse.

It's good for European consumers, bad for European workers. The consumers are getting great deals that could not be had before due to high European consumption taxes.

Quoting VV701 (Reply 63):
However this cannot go on for ever. Outside of the USA we are likely to see other countries taking political (rather than monetary) action to protect the falling value of their central reserves. Tensions between, for example, the EU and the USA that this will cause will be as nothing to the tensions that will grow between the USA, Russia, China and oil rich Middle East countries. The production of expensive oil or the strong exports of these countries mean they are amassing huge reserves of $s. The Chinese reserves are estimated at $1,400 billion while the Russian reserves are $450 billion. So a 10 per cent fall in the value of the $ obviously hits them hard.

Well, these countries have undervalued their currencies to give their industries an advantage. Should Russia and China really be so concerned about devaluation of their reserves when they devalued their countries' assets intentionally and drastically during the 90s? Fundamentally they have just exported their devaluation. Perhaps they should just realize it is the cost of lifting themselves out of poverty.

Quoting VV701 (Reply 63):
So what do you think these countries will do in the near future? Do you think that they will rub their hands with glee as their piles of $s continue to grow? Or do you think the recent trend to divest their $ holding which has seen the $ decline by around 5 per cent in just a few weeks will continue? And if China and Russia want to flex their muscles as potential future super-powers do you think they will worry what happens to the American and other western economies if the accelerate their sale of $s? The only hope for any of us in the west is that they will be worried how a very much weaker $ might slow the huge expansion of their own economies.

They've made their bed by trying to lock in a favorable exchange rate. Selling their dollar reserves doesn't do anything to that exchange rate. If they want the US to do something about it, it will hurt them no matter what, because realistically the only options are to implement drastic quotas or tariffs. Incidently this will eventually lead to a collapse in the price in oil, with the drastic reduction in world trade leading to a worldwide recession.
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
socalfive
Posts: 474
Joined: Sat Mar 10, 2001 5:37 am

RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 10:40 pm



Quoting Atmx2000 (Reply 75):
The Federal Reserve's dollar index had its all time peak in Feb 2002 at 129.5275. Currently it around 98, so the dollar has fell by around 25%. It was at this level 10 years ago, and before that it was always below that level by a significant amount.

Based in comparison to other currency averages that in whole are also falling maybe but certainly not in comparison to it's own performance. Inflation didn't recently begin, inflation is based on debt and money supply. The more money pumped into the economy to cover debt drives down the value of the dollar. Again, this has been going on since 1913. It was then that inflation essentially began as an art form and since that time the dollar has fallen approx 98% in value as the United States became a debtor nation to the private banks. Other currencies have also fallen as they too are under the same debt influences.

And regardless of what's in Ft Knox, it's not nearly enough even with fractional reserve theology to cover or substantiate the tpta; debt and again, none of that matters due to the fact that the United States is not on a gold standard, we're on a debt standard. As for the economy crashing, we've only begun to see the foreclosures that we're going to see, and that's going to be the final tilting point to put us over the edge completely and totally and then the Amero is on the horizon in a few years..

And don't get your facts from Wiki, anybody can write anything and put it into a wiki.
 
osiris30
Posts: 2681
Joined: Sat Sep 30, 2006 10:16 am

RE: When Will The Industry Drop The Dollar?

Sun Nov 25, 2007 11:01 pm

I have to ask, why would switch to the Euro help the aviation industry?

I'm a little bit confused... Let's say all prices were in Euro's for all existing contracts in the market place today. Every single Airbus and Boeing order. Ok great. But all that would mean is either a) profits at Boeing would be ENORMOUS enabling them to push R&D harder and faster or b) Boeing would cut their prices to a point that Airbus would be in large amounts of pain anyway...

The currency involved isn't the real issue here. Anyone with a hint of common sense can see it doesn't matter if people are being paid in beads, USD, Euros, or any other form or currency. What's hurting Airbus is what's going on with the dollar, but NOT the dollar itself as a form of tender.

Right now Boeing is going to do well due to the currency imbalance regardless of what the preferred currency of international contracts is. The cost of doing business in the US is just lower than it is in Europe right now. 10 Euros buys an hour of labor in Europe and an hour and a half in the US.. doesn't matter if it's 10 EU, or 15USD.

It's no different than when American companies compete against foreign companies with a cheaper cost of doing business. Doesn't matter if the business is done in USD or not, cheaper is cheaper. That's all that matters.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
mham001
Posts: 5677
Joined: Thu Feb 03, 2005 4:52 am

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 12:02 am



Quoting DistantHorizon (Reply 21):
Already did: the oil industry - probably the most impostant one.

It has already been discussed by OPEP in the past, and the issue in again on the table. You can see news about it in every news agency (and please, it does go far beyond some politicall games).

Another example: the tourism industry. Many agencies do not accept payments in dollars anymore.

Distant horizon, you've based you entire scenario and this thread on a canard. You claimed "many industries" but have failed after repeated requests to provide any proof of any industry dumping the dollar. Because you say it's so does not make it so.
 
NAV20
Posts: 8453
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 12:12 am

Like some others on here I had always, while I was in business, to take international exchange rates into account. But there was a 'sea-change' in the field in the early 1980s.

Prior to that, the majority of exchange rates were 'fixed,' in the sense that central banks set and 'defended' the value of their currencies by buying and selling them. But this eventually became impractical, mainly because of the growth of speculation.

In the 1970s less than 10% of currency trading was carried out by speculative traders - the other 90%-plus was 'real,' importing or exporting companies buying and selling other currencies only when they needed them for their normal day-to-day business activities. Nowadays something over 90% of currency trading is speculative. No central bank, not even the Fed., has the sort of money that would be required to defend completely-pegged exchange rates in that (by past standards, incredibly volatile) climate.

So, inevitably, we now have a situation where virtually all currency rates are 'floating,' responding to market transactions by rising or falling on a day-to-day basis. But most central banks still intervene to 'manage' the rates, either by manipulating interest rates or by buying and selling their currencies to 'smooth' the more violent swings. The best description of the status of most currencies is that they are subject to 'dirty floats.' Technically currency rates are free to respond to buying and selling in the currency markets - in practice there are constant daily, or even hourly, contests between different groups of speculators and the various central banks, each trying to outwit the other.

The exception to this rule appears to be the Euro. The European Central Bank appears to be making no attempt to regulate the value of the Euro - unlike any other major world trading currency, it appears to be free to 'float' in the true sense. As such, it is 'the answer to the speculators' prayers,' a currency that they can manipulate freely because 'it stays where it is put' by the market, instead of the relevant central bank stepping in to use its muscle to spoil the fun........

This has four main effects:-

1. The speculators are free to operate on an increasingly-profitable scale.

2. The relative values of the major world currencies are fluctuating much more widely and frequently than ever before.

3. It is virtually impossible for European exporters and importers to plan their operations even a day in advance, leave alone plan sensibly on the four- or five-year timescale which is the essential need of companies like EADS/Airbus.

4. Inevitably, because it is the 'vehicle' for much profitable speculation, the Euro is likely to continue to rise in relative value. This will have the effect of holding down the cost of imported goods sold within Europe, but on the other hand it will increasingly make European exporters uncompetitive.

So there is no solution available to Airbus other than to move production off-shore as much as it can. The ONLY solution to the larger problem is for the EU to 'get sensible' and authorise its central bank to 'manage' its currency, the way all other major trading nations do.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
PolymerPlane
Posts: 832
Joined: Thu May 11, 2006 1:12 am

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 12:14 am



Quoting Socalfive (Reply 77):
Based in comparison to other currency averages that in whole are also falling maybe but certainly not in comparison to it's own performance. Inflation didn't recently begin, inflation is based on debt and money supply. The more money pumped into the economy to cover debt drives down the value of the dollar. Again, this has been going on since 1913. It was then that inflation essentially began as an art form and since that time the dollar has fallen approx 98% in value as the United States became a debtor nation to the private banks. Other currencies have also fallen as they too are under the same debt influences.

And regardless of what's in Ft Knox, it's not nearly enough even with fractional reserve theology to cover or substantiate the tpta; debt and again, none of that matters due to the fact that the United States is not on a gold standard, we're on a debt standard. As for the economy crashing, we've only begun to see the foreclosures that we're going to see, and that's going to be the final tilting point to put us over the edge completely and totally and then the Amero is on the horizon in a few years..

And don't get your facts from Wiki, anybody can write anything and put it into a wiki.

So what? why do you think gold is so precious? do you think you can buy anything with gold? well thousands of years ago you can buy stuff with clam shells. Try bring your gold and get a subway ticket in NYC. I'd like to see the result of it. The fact is that the US dollars is a legal tender in the US, this means you can bring your piece of paper to any of US store and buy anything you want as long as you have enough of it. This means you can trade anything in your possessions with other $10 trillion goods and services created in the US.

You are babbling about 98% inflation rate, yet the standard of living today is much much better than 1913. If you were to give me a choice, I'd rather live in the 2007 than 1913. Inflation rate is sometimes over rated. As long as you can create goods or services that is on par with the currency value, you are OK, unless you put your pieces of paper under your pillow and eat-and-sleep throughout your life.

Gold is only valuable because everybody thinks they are valuable, just like any other currency in the world.

US's problem right now is that it dollar is overvalued, given the trade deficit it's facing for a while now.

Cheers,
PP
One day there will be 100% polymer plane
 
socalfive
Posts: 474
Joined: Sat Mar 10, 2001 5:37 am

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 12:42 am



Quoting PolymerPlane (Reply 81):
So what? why do you think gold is so precious? do you think you can buy anything with gold? well thousands of years ago you can buy stuff with clam shells. Try bring your gold and get a subway ticket in NYC. I'd like to see the result of it. The fact is that the US dollars is a legal tender in the US, this means you can bring your piece of paper to any of US store and buy anything you want as long as you have enough of it. This means you can trade anything in your possessions with other $10 trillion goods and services created in the US.

You are babbling about 98% inflation rate, yet the standard of living today is much much better than 1913. If you were to give me a choice, I'd rather live in the 2007 than 1913. Inflation rate is sometimes over rated. As long as you can create goods or services that is on par with the currency value, you are OK, unless you put your pieces of paper under your pillow and eat-and-sleep throughout your life.

Gold is only valuable because everybody thinks they are valuable, just like any other currency in the world.

US's problem right now is that it dollar is overvalued, given the trade deficit it's facing for a while now.

Well, first of all I'm not "babbling" about anything Skippy boy. GOLD in the real world was used by the government to back to value of the currency, this means that the Government had REAL MONEY in reserve to back the paper. This might confuse you because it's elementary high-school type economics. So the reason GOLD was mentioned in this conversation is that it simply puts a value to the dollar based on how many dollars are in circulation and how much gold is on deposit. Which again, means nothing because our currency isn't backed by anything tangible and therefore is essentially worthless. Read any note and it reads "Federal Reserve Note" which means it's the government's promise to pay the face amount, this is nothing but an abbreviated, mass produced loan document. And indeed, that's exactly what it is because when the Government can't pay, and it never can because there is no money whatsoever in reserve, then the Federal Reserve BANK loans the money to the government to pay the debt.

Now unless you were alive in 1913 and obviously you weren't, no one in their right mind would take your word for the quality of life today being better than it was then. The fact of the matter is, you're speaking in terms of technology and you're right, there weren't any game boys in 1913. But, there wasn't any income tax either, income tax created to do nothing more than pay the interest on the debt the Federal Reserve created in and for their personal profit. The United States virtually had no debt, government was much smaller, and the individual citizen had very little-if any-debt.

Now let's take this a step further and something everyone will argue until you're smart enough to put pen to paper. If you think you buy a house, finance it 20-30 years (or more) and sell it in 35 years and make a profit, you're sadly mistaken. A house bought 30 years ago for say 25K and sold today for 350K hasn't made any profit at all, none ever do. A prudent investor takes that 350K and values it at the value of the dollar at the time he made the investment, in this case 1977. Google an inflation calculator and see what that's really worth. Then subtract in the down payment and the interest paid, not to count maintenance and taxes and even you, skippy, might be surprised.

Any monetary system that exists within the realm of a central bank is an illusion. I'm a historian on this very subject and until you STUDY the history of central banks going back to the mid 1700's and understand the fundamentals, don't pretend to come on here and talk like a paper tiger because you don't have the intellectual ammunition to debate it, you're speaking from a Sesame Street pie in the sky perspective.
 
2175301
Posts: 1633
Joined: Wed May 16, 2007 11:19 am

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 1:05 am



Quoting NAV20 (Reply 80):
The exception to this rule appears to be the Euro. The European Central Bank appears to be making no attempt to regulate the value of the Euro - unlike any other major world trading currency, it appears to be free to 'float' in the true sense. As such, it is 'the answer to the speculators' prayers,' a currency that they can manipulate freely because 'it stays where it is put' by the market, instead of the relevant central bank stepping in to use its muscle to spoil the fun........

I disagree with this: The European Union has worked very hard for many years to raise the value of the Euro. That has been a long stated goal of theirs.

There are tremendous advantages to that (even if there are some disadvantages).

Most European nations are much more in debt. Most of that debt is in dollars. By having a higher valued Euro they can pay off their international debts much faster. They can also import more stuff that is priced in Dollars. Because the Euro is now at a high value (and a high value against many other currencies) the effective cost of oil is now less in Europe.



Here is some excerpted data from a post in the previous & now locked: Airbus plans Radical Measures thread. The link is:

www.airliners.net/discussions/general_aviation/read.main/3716577/

There is a lot of information in that thread worth reading.


GDP is a standardized Gross Domestic Product and easily found by Googling GDP and a countries name,

---- Start of Excerpt ---

Total Debt Service owed to outside of country (Government and Private debt):


The following chart is based on individual nations and really interesting: I do not have time to add it up today (and have not found an equivalent chart for the entire EU at this time).

www.nationmaster.com/graph/eco_deb_ext-economy-debt-external

The US total external debt: $10 Trillion (GDP of $13.1 Trillion)

United Kingdom (England): $8.3 Trillion (GDP of $1.9 Trillion)

Germany: $3.9 Trillion (GDP of $2.6 Trillion)

France: $3.5 Trillion (GDP of $1.9 Trillion)

Italy: $2 Trillion (GDP of $1.8 Trillion)

Netherlands: $1.9 Trillion (GDP of $0.5 Trillion)

Spain: $1.6 Trillion (GDP of $1.1 Trillion)

Ireland: $1.4 Trillion (GDP of $0.2 Trillion)

Switzerland: $1.1 Trillion (GDP of $0.3 Trillion)

Belgium: $ 1.1 Trillion (GDP of $0.3 Trillion)

Total outside of country debt service for the world is about $44 Trillion: (So much for a gold standard if there is only several $Trillion of gold, or so, in the entire world).


Overall: The nations of the European Union are far more in debt (public and private) than the US. While I am sure that some of that will be debt between each other. I suspect that a lot of it will not be due to the fact that the EU imports about the same amount of oil as the US - and has a smaller per capita income.

------ End of Excerpt --

Please stop blaming the current issues on the Dollar. Part of the problem - if there is a problem - is that the Euro has also gone up.

Please stop claiming there is a crisis. For every "bad" thing that happens during currency fluctuation's... a matching "good" thing happens.

My opinion is that Airbus likes to claim everyone else is responsible for their problems. I think it really shows how ineffective their management is (structure and people).

Lastly, the US Dollar is not in crisis - and the world is not looking to go away from a Dollar standard (although a few countries may be).
 
atmx2000
Posts: 4301
Joined: Wed Oct 13, 2004 4:24 pm

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 1:35 am



Quoting NAV20 (Reply 80):
The exception to this rule appears to be the Euro. The European Central Bank appears to be making no attempt to regulate the value of the Euro - unlike any other major world trading currency, it appears to be free to 'float' in the true sense. As such, it is 'the answer to the speculators' prayers,' a currency that they can manipulate freely because 'it stays where it is put' by the market, instead of the relevant central bank stepping in to use its muscle to spoil the fun........

I certainly wouldn't say that. The ECB like the Fed knows the effects of interest rate hikes on their currency. ECB, like the Fed, are interested in combating inflation, which is partly reflected by increases in prices of goods and raw materials. One of the major ways interest rate hikes combat inflation is by increasing the inward flow of foreign money and thus increasing currency valuation and reducing price of imported goods and raw materials. If the continued increase in euro valuation leads to a situation where the Eurozone starts to experience deflation, or even extremely low inflation, they will respond.
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
PolymerPlane
Posts: 832
Joined: Thu May 11, 2006 1:12 am

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 2:00 am



Quoting Socalfive (Reply 82):
Well, first of all I'm not "babbling" about anything Skippy boy. GOLD in the real world was used by the government to back to value of the currency, this means that the Government had REAL MONEY in reserve to back the paper. This might confuse you because it's elementary high-school type economics. So the reason GOLD was mentioned in this conversation is that it simply puts a value to the dollar based on how many dollars are in circulation and how much gold is on deposit. Which again, means nothing because our currency isn't backed by anything tangible and therefore is essentially worthless. Read any note and it reads "Federal Reserve Note" which means it's the government's promise to pay the face amount, this is nothing but an abbreviated, mass produced loan document. And indeed, that's exactly what it is because when the Government can't pay, and it never can because there is no money whatsoever in reserve, then the Federal Reserve BANK loans the money to the government to pay the debt.

Yes, gold WAS used to back up money, because around that days gold WAS the standard. but it WAS not practical anymore to do transaction with tons of gold.

Why do you think gold was the standard? Because it was rare, and you can't easily make it. Same thing with currency. You don't have to give me a lecture about elementary high-school type economics. I know a lot more economics then you imagine.

So what are your suggestions? we are back into barter trading? bring your potatoes to your dentist to get your tooth fillings?

The fact is that people trust dollar, just like people used to trust gold as the legal currency, as such, I can easily trade my services and goods with other services and goods. Simple as that.

Quoting Socalfive (Reply 82):
Now let's take this a step further and something everyone will argue until you're smart enough to put pen to paper. If you think you buy a house, finance it 20-30 years (or more) and sell it in 35 years and make a profit, you're sadly mistaken. A house bought 30 years ago for say 25K and sold today for 350K hasn't made any profit at all, none ever do. A prudent investor takes that 350K and values it at the value of the dollar at the time he made the investment, in this case 1977. Google an inflation calculator and see what that's really worth. Then subtract in the down payment and the interest paid, not to count maintenance and taxes and even you, skippy, might be surprised.

why do you even have to give an example about house? The value of that house is just as good as the value of the house to the people around it. I can easily give you an example contrary to what you are saying. You could buy a house in Redmond,WA area 2-3 years ago for $200k. The values of that house is now about $400k. I'd say $200k difference in 2-3 years should be enough to call a profit? On the other end, you can buy a house in Florida last year, and see the price of your house tank this year.

You do not even consider the economic benefits of USING the house. If you just let the house sit there and rot, of course it's going to be a waste. The fact is you can RENT the house to somebody else or USE your own house and thus not paying rent worth something more than what you have just illustrated.

BTW I took the liberty of calculating the monetary values of the money made in payment of your scenario. For $25,000 mortgage and 5% mortgage interest rate, after inflation adjustment, the future value of all the payments in 2007 is $82,366.10. Even at 10% mortgage rate, the future value is $134,314.23. If I can get 350K for that investment, I'd say it's a good investment.

The fact is that I do not want to have to carry 3 tons of wheat and find a home owner that would want to take that in return for a house, I'm happy enough with the current monetary method.

Quoting Socalfive (Reply 82):
Any monetary system that exists within the realm of a central bank is an illusion. I'm a historian on this very subject and until you STUDY the history of central banks going back to the mid 1700's and understand the fundamentals, don't pretend to come on here and talk like a paper tiger because you don't have the intellectual ammunition to debate it, you're speaking from a Sesame Street pie in the sky perspective.

And I have a degree in economics and I graduated with distinctions. Do you want me to show you my transcript now?

I think that you know the history that people used to use clam shell as currency? I hope by being a historian, you know that we don't want to go back to that era. Maybe you would, but I certainly would not.

Cheers,
PP
One day there will be 100% polymer plane
 
atmx2000
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 2:14 am



Quoting Socalfive (Reply 82):
Which again, means nothing because our currency isn't backed by anything tangible and therefore is essentially worthless.

It's backed by the productive capacity of a country.

Quoting Socalfive (Reply 82):
Now let's take this a step further and something everyone will argue until you're smart enough to put pen to paper. If you think you buy a house, finance it 20-30 years (or more) and sell it in 35 years and make a profit, you're sadly mistaken. A house bought 30 years ago for say 25K and sold today for 350K hasn't made any profit at all, none ever do. A prudent investor takes that 350K and values it at the value of the dollar at the time he made the investment, in this case 1977. Google an inflation calculator and see what that's really worth. Then subtract in the down payment and the interest paid, not to count maintenance and taxes and even you, skippy, might be surprised.

The inflation calculator says it the $25,000 is worth under 100,000. And sure you spent money on interest and maintenance, but you know what? You had to live somewhere, and you would have paid rent comparable to all that money you spent on interest, maintenance, taxes and other fees if you lived in a comparable property. In fact you would continue paying rent even after you could have paid off your 15 to 25 year mortgage. And you would have built zero assets from paying that rent. So if the choice is investing in an asset that outstrips inflation by 2.5 fold, and paying rent that includes the land lords cost of interest, taxes and maintenance, I choose the former.

Quoting Socalfive (Reply 82):
Well, first of all I'm not "babbling" about anything Skippy boy. GOLD in the real world was used by the government to back to value of the currency, this means that the Government had REAL MONEY in reserve to back the paper.

The reason why gold was used was because in a world where transportation was slow and communications links non existance no one around the world would have any idea what a currency unit would be worth without a common reference. They would know how much gold was worth though. In the modern era, information regarding what a unit of currency will buy you is easily found anywhere on the planet. Money is pretty much simply a measure and medium of temporary storage of value. An economy could function without any currency by operating on a purely barter basis, but transactions would be more complicated when someone wants something but doesn't have something to offer immediately that the vendor wants. Money (whether a currency controlled by a government or some precious metal or rare item) just facilitates such transactions. The problem with gold is the supply is fairly fixed, whereas the productivity continues to increase leading to more goods for sale. A gold based economy will pretty much favor "old money." I don't think we would have seen 1/10th of the advances we have seen in the last 40 years if we were operating on a gold standard because deflation would be the rule, and economies that are deflating move at a slower rate.
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jfk787nyc
Posts: 479
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 2:18 am



Quoting Socalfive (Reply 82):
User currently onlineSocalfive From United States, joined Mar 2001, 475 posts, RR: 1
Reply 82, posted Sun Nov 25 2007 13:42:52 your local time (1 hour 10 minutes 4 secs ago) and read 109 times:



Quoting PolymerPlane (Reply 81):
So what? why do you think gold is so precious? do you think you can buy anything with gold? well thousands of years ago you can buy stuff with clam shells. Try bring your gold and get a subway ticket in NYC. I'd like to see the result of it. The fact is that the US dollars is a legal tender in the US, this means you can bring your piece of paper to any of US store and buy anything you want as long as you have enough of it. This means you can trade anything in your possessions with other $10 trillion goods and services created in the US.

You are babbling about 98% inflation rate, yet the standard of living today is much much better than 1913. If you were to give me a choice, I'd rather live in the 2007 than 1913. Inflation rate is sometimes over rated. As long as you can create goods or services that is on par with the currency value, you are OK, unless you put your pieces of paper under your pillow and eat-and-sleep throughout your life.

Gold is only valuable because everybody thinks they are valuable, just like any other currency in the world.

US's problem right now is that it dollar is overvalued, given the trade deficit it's facing for a while now.

Well, first of all I'm not "babbling" about anything Skippy boy. GOLD in the real world was used by the government to back to value of the currency, this means that the Government had REAL MONEY in reserve to back the paper. This might confuse you because it's elementary high-school type economics. So the reason GOLD was mentioned in this conversation is that it simply puts a value to the dollar based on how many dollars are in circulation and how much gold is on deposit. Which again, means nothing because our currency isn't backed by anything tangible and therefore is essentially worthless. Read any note and it reads "Federal Reserve Note" which means it's the government's promise to pay the face amount, this is nothing but an abbreviated, mass produced loan document. And indeed, that's exactly what it is because when the Government can't pay, and it never can because there is no money whatsoever in reserve, then the Federal Reserve BANK loans the money to the government to pay the debt.

Now unless you were alive in 1913 and obviously you weren't, no one in their right mind would take your word for the quality of life today being better than it was then. The fact of the matter is, you're speaking in terms of technology and you're right, there weren't any game boys in 1913. But, there wasn't any income tax either, income tax created to do nothing more than pay the interest on the debt the Federal Reserve created in and for their personal profit. The United States virtually had no debt, government was much smaller, and the individual citizen had very little-if any-debt.

Now let's take this a step further and something everyone will argue until you're smart enough to put pen to paper. If you think you buy a house, finance it 20-30 years (or more) and sell it in 35 years and make a profit, you're sadly mistaken. A house bought 30 years ago for say 25K and sold today for 350K hasn't made any profit at all, none ever do. A prudent investor takes that 350K and values it at the value of the dollar at the time he made the investment, in this case 1977. Google an inflation calculator and see what that's really worth. Then subtract in the down payment and the interest paid, not to count maintenance and taxes and even you, skippy, might be surprised.

Any monetary system that exists within the realm of a central bank is an illusion. I'm a historian on this very subject and until you STUDY the history of central banks going back to the mid 1700's and understand the fundamentals, don't pretend to come on here and talk like a paper tiger because you don't have the intellectual ammunition to debate it, you're speaking from a Sesame Street pie in the sky perspective.

You are 100% right. The reason why Real Estate is a very reliable investment in the United States or anywhere else in the world is because it is the only investment you can make that moves up on par with Inflation. But, you must remember if you purchase Real Estate with a 30 year mortgage today you are locked in for a price today not 10 years from now. YOU NEVER PAID FOR IT ONLY YOUR DEPOSIT. If you purchase Real Estate today and wait 5-10 Years to sell it you make the profit difference between the two prices, The property was never paid off. In 10 years you only paid 12.5% of actual amount in 2007. In 2017 this property will be worth at least 20% more. Obviously you just pocketed an extra 20% net profit of the 30 year paid off price value. But technically the only money invested that came out of your pocket was the original deposit of 10-15% plus your very small monthly payments. So if let's say you purchased a condo in New York for $500'000 and put down 15% which is $75'000 in 10 years of paying the banks rent for where you live, You sell your apartment for at least $600'000 and you then automatically have liquid $175'000. Again 20% inflation in 10 Years is nothing in the past 7 years through out the whole world almost every single country has been seeing inflation rise by at least 6$-7% yearly. So if you calculate inflation at even 5% a year in the United States your condo in 10 Years will be worth $750'000 Dollars. When an economy inflates usually so do salaries and cost of living which is your Real Estate.
 
NAV20
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 2:35 am

2175301, Atmx2000, yes, you could both be right - that a continually-appreciating Euro is in fact the 'Grand Design' of the EU (very largely, the French and German governments), and that to that extent the over-valued Euro is 'according to plan.'

But in my submission that process, even if it is indeed a fully-considered plan of action, means that reducing debt and holding inflation down are virtually the ONLY policy objectives of the controlling powers of the EU. It is becoming abundantly clear that that policy, if that is what it is, will militate against all exporting firms in the Eurozone. If that is so, Airbus is probably just the first of large numbers of export-oriented EU firms beginning to scream with pain as their products become uncompetitive.

I can't believe that that issue has been 'thought through' in the Eurozone. The key leaders continue to 'face both ways.' As one example, Sarkozy just arrived in China, on a mission to sell more Airbuses to China. Those aeroplanes, as things stand, will be assembled in China, with Airbus paying its share of the costs in over-priced Euros and the Chinese paying theirs in their own (deliberately vastly-undervalued) currency. Any such deal cannot fail to result in yet further losses for Airbus as the prices of the aeroplanes in question are - inevitably - going to be denominated in $US.

"French President Nicolas Sarkozy has arrived in China for a visit that is expected to focus on economic links and international issues including Iran.

"Mr Sarkozy, who is accompanied by business leaders, is hoping to sell nuclear reactors and Airbus planes."


http://news.bbc.co.uk/2/hi/asia-pacific/7111994.stm

As I see the situation, the Eurozone can EITHER seek to remain a 'player' in international aerospace manufacture - OR pursue policies which insulate its people from the 'swings and roundabouts' of international trade by keeping the Euro artificially high.

But it can't go on trying to do both at the same time.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
MD-90
Posts: 7836
Joined: Mon Jan 17, 2000 12:45 pm

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 3:00 am



Quoting GeorgiaAME (Reply 57):
minimal if any inflation

Ah, there's the sticking point. Inflation is not minimal, unfortunately, because the Federal Reserve has been inflating the money supply like mad for too many years.

Quoting Dougloid (Reply 72):
Oh really? Tell me more-better, let me guess. It's either the Illuminati, the freemasons or the Yids.

Communist International Jewish Banking Conspiracy, anyone?

I'll take some Thorazine with my copy of the Protocols of the Elders of Zion, please.

It is not a "Communister International Jewish Banking Conspiracy" that controls the dollar, it is a government-sanctioned private cartel called the Federal Reserve.
 
Indy
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 3:09 am

The day of the dollar is numbered. I believe the number to be small. This isn't the past when it was the strength of the dollar versus the strength of the yen. Today it is about the collapse of the dollar. There is nothing on the horizon that looks to fix what ails the U.S. currency. You can't keep printing money and running up debt and not expect your currency to take a beating. I remember back when the dollar was strong and you could (if only briefly) get a 1 - 1 exchange for the British Pound. I remember when the Euro first got released. It was nearly a 1 to 1 with the dollar as well. I know because I was in Europe when this happened and came home only a few days after the new currency was introduced. Now I have to pay $1.40 or so to get 1 euro.
Indy = Indianapolis and not Independence Air
 
socalfive
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 3:12 am



Quoting PolymerPlane (Reply 85):
BTW I took the liberty of calculating the monetary values of the money made in payment of your scenario. For $25,000 mortgage and 5% mortgage interest rate, after inflation adjustment, the future value of all the payments in 2007 is $82,366.10. Even at 10% mortgage rate, the future value is $134,314.23. If I can get 350K for that investment, I'd say it's a good investment.

But again, you haven't adjusted the 350K for inflation, which has to be done to adequately gauge the performance of the investment-NOT how you probably learned it in economics because it's not how they want us to learn the realities-but true nonetheless. So you have 134k in total investment and 350K adjusted for inflation (AS I STATED IN THE EXAMPLE) is now $102,301.05. So where's your profit now? I'm no economist but it looks to me like a 32k loss.

Quoting PolymerPlane (Reply 85):
You do not even consider the economic benefits of USING the house. If you just let the house sit there and rot, of course it's going to be a waste. The fact is you can RENT the house to somebody else or USE your own house and thus not paying rent worth something more than what you have just illustrated.

You're right on this, there are a lot of ways of making money on a house when you use it as income property, but that wasn't the example I was making.

Quoting Atmx2000 (Reply 86):
The reason why gold was used was because in a world where transportation was slow and communications links non existance no one around the world would have any idea what a currency unit would be worth without a common reference. They would know how much gold was worth though. In the modern era, information regarding what a unit of currency will buy you is easily found anywhere on the planet. Money is pretty much simply a measure and medium of temporary storage of value. An economy could function without any currency by operating on a purely barter basis, but transactions would be more complicated when someone wants something but doesn't have something to offer immediately that the vendor wants. Money (whether a currency controlled by a government or some precious metal or rare item) just facilitates such transactions. The problem with gold is the supply is fairly fixed, whereas the productivity continues to increase leading to more goods for sale. A gold based economy will pretty much favor "old money." I don't think we would have seen 1/10th of the advances we have seen in the last 40 years if we were operating on a gold standard because deflation would be the rule, and economies that are deflating move at a slower rate.

Exactly and Gov't issued treasury notes were a good way for growth to pace productivity, however, that isn't what we have, what we have are debt-based notes to the bankers of the world through the US Federal Reserve.
 
atmx2000
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 5:19 am



Quoting Socalfive (Reply 91):
But again, you haven't adjusted the 350K for inflation, which has to be done to adequately gauge the performance of the investment-NOT how you probably learned it in economics because it's not how they want us to learn the realities-but true nonetheless. So you have 134k in total investment and 350K adjusted for inflation (AS I STATED IN THE EXAMPLE) is now $102,301.05. So where's your profit now? I'm no economist but it looks to me like a 32k loss.

You don't adjust the sales price for inflation because the payments are adjusted for inflation. But to double check I recalculated the example.

I assumed a $25000 property bought with $5000 down in 1977 and a 30 year mortgage of $20000 with a 10% interest rate. The monthly payment is $175.51 and the yearly payments are $2,106.12. Total payments including down are $70,289.72. If you calculate how many 2007 dollars those payments are worth based on the year they were paid in, the total is $128,224.99. That is subtantially less $350,000.

If you want to ask the question how much in 1977 dollars everything is worth, remember that your payments in future years are worth less in 1977 dollars as well. So while you are supposed to pay $70,289.72 over the course of the mortgage, the value in 1977 dollars for those payments is $37,190.48. The value of the 2007 sales price is $101,514.34 in 1977 dollars according to the calculator I used. Anyway you put it, you made a lot of money. And you did it while getting a place to live for all those years.

Quoting Socalfive (Reply 91):
You're right on this, there are a lot of ways of making money on a house when you use it as income property, but that wasn't the example I was making.

The example you made ignored that you would have to pay rent to live some place if you didn't buy a place.

Quoting Indy (Reply 90):
I remember back when the dollar was strong and you could (if only briefly) get a 1 - 1 exchange for the British Pound. I remember when the Euro first got released. It was nearly a 1 to 1 with the dollar as well.

The reason why the pound was almost $1 dollar was because the Fed Reserve w/ Reagan's backing jacked up interest rates and dried up the money supply to kill the inflation of the previous 10 years. But the valuation of the dollar at that time basically killed competitiveness of American companies and resulted in huge trade deficits for several years in the mid 80s.

And you remember incorrectly about the Euro's intro rate (unless you are talking about the paper currency). When the Euro was introduced in 1999, the exchange rate was around $1.18. It went down from there to a low of about $0.83 in 2000. And just like in the 80s, the competiveness of American companies was seriously damaged.
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iwok
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 5:39 am

At the end of the day, does it really matter what the currency is that aircraft are purchased with? If the planes were sold in Euros, then Boeing would still be at an advantage because of the weak dollar, which means they could have nice high margins to play with compared to Airbus because of the exchange rate???

In general a weak currency is good for exporters no matter what the main currency is. No?

Not to mention the global sourcing may make the actual purchase currency essentially meaningless.

iwok
 
atmx2000
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 5:49 am



Quoting Iwok (Reply 93):
At the end of the day, does it really matter what the currency is that aircraft are purchased with? If the planes were sold in Euros, then Boeing would still be at an advantage because of the weak dollar, which means they could have nice high margins to play with compared to Airbus because of the exchange rate???

It doesn't matter. People just don't seem to get it when it comes to aircraft pricing or oil pricing. The only thing that changes is who bears the currency risk.
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NAV20
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 6:07 am



Quoting Iwok (Reply 93):
At the end of the day, does it really matter what the currency is that aircraft are purchased with?

Iwok, yes, I for one think that it DOES matter because of the long lead-times, particularly for new designs. This Carol Matlack Business Week article dates from 2001, but it is still relevant because it refers to the deals done (in US dollars) on the first 60 A380 sales, way back then:-

"A dazzling start, no doubt. But is it a good deal for Airbus? BusinessWeek has learned that the company is giving extraordinarily generous terms to early buyers. It's selling the cargo model of the A380 for as low as $133 million and the passenger model for just over $140 million--about 40% off list prices and less than the going rate of $140 million to $150 million for Boeing's 747. Airbus is accepting down payments as low as $500,000 per plane while giving customers the option of canceling orders 12 months before delivery without customary penalties. Airbus has offered lenient terms to buyers of established models before. But experts say it's unusual to offer them on a new plane."

http://www.businessweek.com/2001/01_10/b3722107.htm

$US140M. will exchange out at less than Euro100M. nowadays - for A380s that Airbus has yet to build, at 2008/2009 costs?

Given that the prices for most of the A350s that Airbus is gathering orders for are updated from 'old new A350' orders placed two or more years ago, and the Euro has appreciated quite a lot since, it's entirely possible that a similar disastrous loss-making scenario is opening up for that aeroplane too.
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davescj
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 6:40 am



Quoting Socalfive (Reply 82):
the Federal Reserve BANK loans the money to the government to pay the debt.

Remember, Treasury notes/bill/bonds are sold at auction by the Treas Dept. The "bank" isn't a commercial bank per se. The only "loans" it gives are ulta (think 24 hr) loans to major banks to turn around and lend money out.

As to a debt economy, I agree. We need a balanced budget. But no one wants to live through the pain of paying off what we owe.

Dave
Can I have a mojito on this flight?
 
iwok
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 6:49 am



Quoting NAV20 (Reply 95):
Given that the prices for most of the A350s that Airbus is gathering orders for are updated from 'old new A350' orders placed two or more years ago, and the Euro has appreciated quite a lot since, it's entirely possible that a similar disastrous loss-making scenario is opening up for that aeroplane too.

Right, I see your point. However, your point is more about the fluctuation in currency exchange as opposed the actual exchange rate. Fluctuation poses a risk no matter what the purchase currency is, and hence the current situation is a "temporary" issue, but not long term I'd say.

And I'm sure that Airbus didn't take all the risk on the exchange rate; they did hedge some. Still, I think they miscalculated on just how far the dollar would drop.

As I said before, this has happened many times before. I remember coming to the USA from Southern Africa in the 80's and feeling like a very rich kid, because our South African Rands were like 2x stronger than the dollar (check out that rate now  Wow! )

iwok
 
Indy
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 8:10 am



Quoting Atmx2000 (Reply 92):
And you remember incorrectly about the Euro's intro rate (unless you are talking about the paper currency). When the Euro was introduced in 1999, the exchange rate was around $1.18. It went down from there to a low of about $0.83 in 2000. And just like in the 80s, the competiveness of American companies was seriously damaged.

I'm referring to the paper currency. To me until the paper currency came out the Euro was just some sort of hypothetical currency. BTW that was an interesting time to be on vacation. Personally I thought it was a bad move. I still think its a bad move. Your currency is part of your identity as a nation. Then there was this crap where some retailers were basically taking off the DM sign and putting up the Euro sign behind the price. I go back now and I see the same price in Euros as I used to see on some things in DM. Anyone else have a similar experience to share?

The current U.S. Dollar problems are so deeply rooted and so severe I don't know how they get fixed. The money isn't backed by a precious metal and our government is so far in debt that there is no way out that the dollar is pretty much worthless. What value it has is being slowly burned away. This is my opinion on the subject.
Indy = Indianapolis and not Independence Air
 
jfk787nyc
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RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 11:47 am

Everyone is 100% right. But, here is what is going to happen. the United States Federal Reserve is trying to turn the cards around on the European's and the Asians. Little by little all countries are starting to pressure China to float there YUAN currency on the open exchange FINALLY after the United States has been asking all countries of the world to get on board with this for the past 15 Years. The YUAN is highly HIGHLY undervalued and this is the only reason why China is so powerful today. If the YUAN goes head to head against the 10 most important currencies in the world mark my words it will be worth at least 2-1 against the Dollar.

The Dollar will keep on falling against all the currencies, Maybe in five years the Euro will even cost 3-1 against the Dollar. The world general currency would switch from the falling Dollar to the more powerful EURO. Finally all these huge production compaines will little by little start building factories in the United States the worlds most developed land. Our infrastructure is all there very minimum investment based on the company, All of this will eventually take the United States from a service economy back to the production economy it was in the 1800s - 1900s.

The United States debt is 10 Trillion Dollars, 10 Trillion Dollars seems like a lot today but if the dollar collapses tomorrow that 10 Trillion will seem more and more like nothing. If Big United States compaines start taking Euro's instead of Dollars they will start making tremendous amount's of profit based on the Euro-Dollar ratio. Everyone in the United States will start making more DOLLARS to afford the living costs that have obviously already went up. Meanwhile this will hurt many countries through out the world but will drastically reduce the number of problems in the United States debt wise. Everyone must remember the monies that are owed by the United States are today's Dollars the are locked in and the amount of money owed does not go up if the worth of the Dollar drastically reduces. Let's take Boeing for example if from 2009 all pricing gets switched to EURO's and the price of the 787 goes up to let's say 130 Million EURO instead of 155 Million, Each plane that will be purchased by airline carriers will automatically make an extra 25 Million Dollars for Boeing. So let's calculate 200 787s that will be purchased in 2009 this leaves Boeing an extra 5 Billion Dollars NET PROFIT on top of the regular Net Profit it makes today.

This will work exactly the same for ALL United States compaines and ALL United States Industries this is a different world than it was 50 Years Ago, This world does not depend on ONE Country anymore to purchase goods so in a competitive world as it is today you must figure out away to make your product's competitive and this is exactly the Federal Reserves plan.

The problem with the United States is the United States is the ONLY ONE country in the world that does not have any connection's to any atmosphere's of business. AIRBUS is a EURO NATIONAL company. When Sarkozy travels to China to sell planes he is putting money into the French Budget. When Boeing sells a plane they can do whatever they want with the money they are making. At the end of the year the United States gets a small amount of Business Income Tax paid to them. In 2007 Business Tax only amounted to 345 Billion Dollars, That is NOTHING compared to what other competitive countries are making. Look at Russia for example 65% of all the money in the country is coming from Government owned industries. That is the reason why there is only a 11% Income tax in the country. Look at China, Does everyone remember that they are still a communist nation? Every single company in China must pay royalties directly to the Chinese Government. It is understandable why these nation's have Budget Surpluses these countries regulate business 100%. There are a lot of big business in Europe that are directly owned by government entities.

The United States Economy RUNS directly on there people trust in making money. You work hard you make money! That is the philospohy of the United States. I personally am starting to wish the United States wakes up and develops some sort of investment fund like Russia for example, And starts to purchase shares of the United States based Oil & Gas Compaines, Large Miniority stakes in all of them from Exxon Mobil to Chevron and wait 5 years, If let's say the United States owned 40% in ExxonMobil that would of gave the government an extra 15.8 Billion Dollars clean, not including the taxes it collects from ExxonMobil and there employees.

If the United States wants to move the clock back to 1935 they must start doing this as this is the only way it will work.

Basically what I am saying is the Federal Reserves new philosophy is let all of the worlds economy's go to hell and lets worry about our own only. The United States has been caring about to many countries for no reason for a very long time. 75% of the US Dollars that are borrowed in the United States are owned to foreign banks, So the Federal Reserve will devalue the Dollar and the United States will pay back there loans with a green piece of paper that is worth 40% of what is was worth from 1970-2007. After it is paid off the Dollar will start to pick up again as our economy will be boasted by the flood of business from competitive nations. The new China will start to develop in the next 5-10 years and in a country that has a totally developed infrasturcture with no need for extra investment like we seen in China in the 80s and 90s. It will be funny if by 2017 China will start importing cheaper goods from the United States with better Quality than what they can produce themselves.
 
incitatus
Posts: 3336
Joined: Wed Feb 09, 2005 1:49 am

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 2:50 pm

Yawn folks. Sometimes we come across a really poor thread with a baseless premise. Yes, the US currency has had problems lately. But as a repository of value, the Euro, which is the currency of a bunch of sclerotic European economies, is not a real alternative. The United States continues to be the biggest driver of innovation in the World. Your Ipod video may be made in China but of its retail price of 310 Euros, about 1% paid for its assembly in China. The bulk of the money goes to your local retailer and Apple Headquarters in Silicon Valley. The same happens when you buy drugs, go through some hi-tech health procedure or uses websites to get any transaction done.

The slide of the dollar is temporary and it is due to the US government public deficit. That is the result of a particularly incompetent federal administration.
I do not consume Murdoch products including the Wall Street Journal
 
davescj
Posts: 1277
Joined: Wed Jun 13, 2007 1:46 am

RE: When Will The Industry Drop The Dollar?

Mon Nov 26, 2007 2:57 pm



Quoting Indy (Reply 98):
Your currency is part of your identity as a nation.

And with the Euro NOT being controlled by the Central Bank of X nation, Europe's countries also lose some power.

Quoting Indy (Reply 98):
Anyone else have a similar experience to share?

Italy did the same thing.....it was about 2,000 Lire to 1 Euro.........stuff went from 2000 Lire to 2 Euros. Brutal for many people. To show honest pricing, some stores still make receits in lire and euros both.

Dave
Can I have a mojito on this flight?

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