Weak dollar costs U.S. economy its No. 1 spot

[Thirdshifter]

"Weak dollar costs U.S. economy its No. 1 spot"
http://www.reuters.com/article/newsOne/idUSL1491971920080314

The comparison of the United States to the Euro Zone is a bit distorted because it is comparing a group of countries to a single one. The article also applies the current (Mar. 14, 2008 ) conversion rate between the dollar and euro to the GDP for 2007. Playing with statistics can produce bogus conclusions. What will the comparison between GDP's be in 2008?


However, in another way it's combining a part of an economy to a whole economy. The "Eurozone" is only a part of a larger single market, which is far more comprehensive than NAFTA - the only difference is that the other countries in the EEA have their own currencies/interest rates, but to all intents and purposes they are one economy (there is more of a single market between eurozone countries than between some US states)

Not forgetting that technically EU had passed the US in size of economy some years ago, and the EEA (EU+Norway, Iceland and Liechtenstein) even earlier.
So, Is the loss of US long standing global dominance inevitable? I don't think Malaysia would be affected much by the dwindling power of USA, However will this now make EU the "worlds police" soon?

[vseehua]

I doubt Europe can carry that role properly. There are a lot of countries within the context of Europe and i don't think they can unite on all decisions, should they become the de-facto world police.

[strikingstar]

As US is heading into recession (Which is all Bush's fault. $3 trillion on a war they shouldn't be in is major crowding out, no matter how much damage subprime mortgages is doing.), volatility is estimated to be around 30% these days, compared to about 10% previously. Hence, a great investment strategy right now would be straddling options.

Just my 2 cents.

[capablanca]

By the rate this is going on, Malaysian students heading towards the States might benefit as the weakening dollar means more buying power to our Malaysian ringgit based on the currency exchange. Then again, the effect of the recession might spread worldwide and cause our own economy to head into another recession.

[vseehua]

By the rate this is going on, Malaysian students heading towards the States might benefit as the weakening dollar means more buying power to our Malaysian ringgit based on the currency exchange. Then again, the effect of the recession might spread worldwide and cause our own economy to head into another recession.

The Malaysians will be paid in US dollar rather than in Ringgit. It means, their buying power will stay more or less the same or get even lower later on...

[capablanca]

The Malaysians will be paid in US dollar rather than in Ringgit. It means, their buying power will stay more or less the same or get even lower later on...
Oh, I was thinking about those going to the states with their own money. Certainly, the currency exchange will be more in favor of them. But still, stuff in US are expensive!

[vseehua]

Oh, I was thinking about those going to the states with their own money. Certainly, the currency exchange will be more in favor of them. But still, stuff in US are expensive!

If you have the chance to come to europe you will know the real meaning of expensive.

[Thirdshifter]

Hence, a great investment strategy right now would be straddling options.

Just my 2 cents.


Some interesting #'s from Morningstar:
Over the last 10 years the S&P 500 has returned an average of just 1.3% annually. Over the last 9 years it has returned -.37% annually. And, over the last 8 years it returned -1.4% a year on average.

http://img401.imageshack.us/img401/3397/wsjvd2.jpg

[ianbyc]

Some interesting #'s from Morningstar:
Over the last 10 years the S&P 500 has returned an average of just 1.3% annually. Over the last 9 years it has returned -.37% annually. And, over the last 8 years it returned -1.4% a year on average.

http://img401.imageshack.us/img401/3397/wsjvd2.jpg

OMG. I never knew that..

Then again S&P 500 is HUGE. So volatility is higher.. Plus all depends on the USD. Weaker USD means imports are expensive for them. But it could help their labour market. :D

Either way, we gain by a weaker USD. Sure, it might hurt our exports but we could now afford buying more stuff from the US and slowly change our economy to a services-oriented one, unlike now its exports-oriented.

[Thirdshifter]

Sure, it might hurt our exports but we could now afford buying more stuff from the US .

From china you mean?

[ianbyc]

No, from US. Since their dollar is weak and our ringgit strengthen against the greenback.

[anderscheng]

American lifestyle=Credit Cards

That's the ultimate reason why America is so much in debt. Kesian Kesian~

[ianbyc]

Yo Anders. Nice to see you here.

Yah I agree with your saying. If you guys read Robert Kiyosaki's 'rich dad poor dad' you will know. Poor people keep working to stay off debts. That's how the majority of Americans live their lives.

[gal_flower]

American lifestyle=Credit Cards

That's the ultimate reason why America is so much in debt. Kesian Kesian~

This is a fact I learn in Econ class:

The marginal propensity to consume in the US is 1.1

i.e.,

Americans spend $1.1 for every $1 they earn.

[anderscheng]

This is a bit sidetrack~

There's a documentary i recommend you guys to watch . Its "Church of Stop Shopping". From the documentaries, you see how holiday season [in this case, Christmas] becomes so commercialized. They believe that buying gifts is loving your friends and family. Several quotes from the documentary

" I feel guilty if i do not buy the things my children want.[The son wanted many video games and an Xbox]

"Christmas becomes a burden to me. I have to work the debt off till next AUTUMN"

These "church of stop shopping" are a bunch of people volunteering to bring the message to people not to buy stuff for Christmas. Love can be spread through other ways like greetings etc. A very good documentary to see the "beautiful statistics" and why America's economy is down falling due to the excessive lifestyle.

[strikingstar]

Closer to home, the Vietnam dong is set to take a plummet by estimates of 20 to 30% in about 3 months.

The Vietnamese have been importing far more than they have been exporting for a decade and are running billions in current account deficits. There is much pressure on the dong to depreciate.

Also, inflation in Vietnam has reached about 25%, so unless interest rates are made spectacularly high (which is difficult because Vietnam has limited foreign reserves to sell), there is even more pressure to depreciate.

Forward markets for 1 year contracts on the dong are predicting an almost 40% devaluation of the dong so now's the time to short the dong like you've never shorted it before.