…And the Bears Whisper Back: "Just
Watch the Dollar"!
By Duru
November 14, 2004
In my last missive, I taunted and teased the bears as the market seems
to have triumphed over their dire predictions of gloom and doom. I also
allowed for some caution, primarily around the ever-sinking dollar. Sure
enough, as the dollar has cratered to all-time lows against the Euro, a flurry
of articles have percolated to foment new worries about the soundness of the
American, and global, economy. I have listed a few references below. I start
with what I think is the most important quote of all that I have read on this
topic. Looks like it is only a matter of time before the Bushies learn that
even we cannot thumb our nose at the rest of the world and do whatever we feel
like doing…at least not without consequence…
(Note that these links will not remain
active indefinitely. If you are checking in late, I strongly encourage you to
do an internet search and track down some primary sources on this topic. Your
bank account is counting on you!).
"With more than two out of every three dollars
of the world's savings now subsidizing U.S. consumption, the growing difficulty
in increasing the dollar buying necessary to maintain these exchange rates has,
in the calculations of some traders, raised the odds of a sharp correction.
Former Federal Reserve Chief Paul Volcker sees a 75% probability of a severe
dollar correction in the next five years, according to a book published earlier
this year by Peter G. Peterson, chairman of the Council on Foreign Relations.
"If delayed much longer, the dollar's inevitable fall is likely to be much
larger and much faster," C. Fred Bergsten of the Institute for
International Economics warned in a September article."
From "The Buck Stops Where?" by
Spencer Jakab (Barron's, Nov 15, 2004)
Two other articles:
"Dollar's
Decline Is Reverberating" (La Times, Nov 14, 2004)
"Administration Calm Despite Dollar's Woes" (AP, Nov 14, 2004)