Archive for the ‘dollar’ Category

The year 2025: Oil, dollar out; Russia, Islam in

November 21, 2008

Global warming could be a boon to Russia, a European country could be overrun by organized crime and the U.S. and its dollar could further decline in importance during the next two decades, says a U.S. intelligence report with predictions for the world in 2025.

The report, Global Trends 2025, is published every four years by the National Intelligence Council to give U.S. leaders insight into looming problems and opportunities.

The report says the warming earth will extend Russia and Canada‘s growing season and ease their access to northern oil fields, strengthening their economies. But Russia’s potential emergence as a world power may be clouded by lagging investment in its energy sector, persistent crime and government corruption, the report says.

By PAMELA HESS, Associated Press Writer

Analysts also warn that the same kind of organized crime plaguing Russia could eventually take over the government of an Eastern or Central European country. The report is silent on which one.

It also says countries in Africa and South Asia may find themselves unstable and ungoverned, as state regimes collapse or wither away under security problems and water and food shortages brought about by climate change and a population increase of 1.4 billion.

The potential for conflict will be greater in 2025 than it is now, as the world’s population competes for declining and shifting food, water and energy resources.

Despite a more precarious world situation, the report also says al-Qaida’s terrorist franchise could decay “sooner than people think.” It cites its growing unpopularity in the Muslim world, where it kills most of its victims.

“The prospect that al-Qaida will be among the small number of…

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Oil rises to new record as dollar drops

March 17, 2008

By GILLIAN WONG, Associated Press

SINGAPORE – Oil prices jumped to an all-time trading high near $112 a barrel Monday in Asia as the tumbling U.S. dollar and plunging stock markets prompted investors to seek shelter in commodities.

An oil rig in a file photo. Oil jumped to a record above $111 ...
Oil jumped to a record above $111 a barrel on Monday, as a surprise weekend cut in the Federal Reserve discount rate and the fire sale of stricken investment bank Bear Stearns sent the dollar to all-time lows.(File/Reuters)

Investors fled the dollar after a surprise move by the U.S. Federal Reserve on Sunday to provide cash to financially squeezed Wall Street investment houses pushed the battered greenback deeper into multiyear lows against the yen.

“The Fed’s move overall will help the liquidity of the U.S. dollar, and that will really further soften the dollar,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “Meanwhile, investors seem to be just following the mantra of buying oil and commodities to hedge against the falling dollar and inflation.”

Light, sweet crude for April delivery spiked to a record $111.80 a barrel — up $1.59 from Friday’s close — in electronic trading on the New York Mercantile Exchange, midafternoon in Singapore. It later slipped back to $111.61 a barrel.

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Economy Hammered by Toxic Blend of Ailments

March 14, 2008
Almost everything seems to be going wrong for the American economy at once. People are buying less, but most things are costing more. Mortgage rates are rising, the dollar is falling and prices of key commodities like oil are leaping from one record high to the next.
.On Thursday, the dollar plumbed new lows against the Japanese yen and several other major currencies; the price of an ounce of gold jumped above $1,000 for the first time; and lenders raised home loan rates once again. Government figures showed retail sales fell in February as consumers cut back on cars, furniture and electronics.

Stocks fell sharply after the retail sales report was released early in the day, and a large investment fund said it was nearing collapse. The volatility that has defined the market lately continued unabated.

The Standard & Poor’s 500-stock index fell 2 percent in the morning, then rebounded partly in reaction to a report that said banks were nearing the end of subprime mortgage losses. It was up nearly 1 percent in the afternoon before paring that gain to close up 0.5 percent, to 1,315.48 points. The Dow Jones industrial average closed up 35.5 points, to 12,145.74 points.

A toxic blend of economic and financial developments is testing policy makers and lawmakers who are struggling to contain the slump brought on by the collapse of the mortgage market, a downturn that now looks sure to push the economy into a recession. Though current conditions are a far cry from the 1970s, resurgent inflation is raising the threat of stagflation — a condition in which unemployment and the price of goods and services both rise.

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Dollar’s clout sinks worldwide

March 13, 2008
By ALAN CLENDENNING, AP Business Writer 

SAO PAULO, Brazil – Antique store owners in lower Manhattan, ticket vendors at India‘s Taj Mahal and Brazilian business executives heading to China all have one thing in common these days: They don’t want U.S. dollars.

These handout images provided by the Bureau of Engraving and ... 
The new Five Dollar note.  But is it only worth $4.30 today?
Image from the Bureau of Engraving and Printing for illustration

Hit by a free fall with no end in sight, the once mighty U.S. dollar is no longer just crashing on currency markets and making life more expensive for American tourists and business people abroad; its clout is evaporating worldwide as foreign businesses and individuals turn to other currencies.

A man looks out from a currency exchange office in Brasilia, ...
A man looks out from a currency exchange office in Brasilia, Feb. 28, 2008. From antique stores in lower Manhattan to the gates of India’s Taj Mahal, euros and British pounds are now more welcome than the U.S. dollar, as the greenback continues weakening with no apparent end in sight.
(AP Photo/Eraldo Peres)

Experts say the bleak U.S. economic forecast means it will take years for the greenback to recover its value and prestige.

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U.S. Economy In Recession (Or Very Close)

March 12, 2008

By John E. Carey
Peace and Freedom
The United States is in a recession and economic storm clouds loom in Asia. 

U.S. homeowners have more debt than ownership (equity) causing many to “bail out” on their mortgages.  Banks now own more and more houses.  To make it easier to buy, the Federal Reserve has lowered interest rates over and over again.  The Fed may lower rates again next week.

The dollar is way down compared to the euro — and just about all other reputable currency — and oil prices are up because of this, high world-wide demand and limited refining capacity.

A US banknote is reflected on a euro coin. The dollar found ...

A US banknote is reflected on a euro coin. The dollar found some support Monday, gaining ground on the euro on warnings against excessive exchange rate volatility from European Central Bank head Jean-Claude Trichet.(AFP/File/Joel Saget)
In China, where banks hold over a trillion dollars in foreign exchange reserves, a sell-off of dollars could also depress the dollar further.  Fear of such an action alone is enough to make economists wary of pressuring China.

Farmers in the Midwest of America are delighted by high corn prices – much attributable to demand for corn-made ethanol.  But the high price of corn is a burden to those trying to feed livestock.

The good news is that it is so expensive to feed cattle right now that the farmers are slaughtering beef at a better than average rate.  Beef is cheep just now (but watch out next year).

The price of wheat per bushel has doubled in the last few months.  This means bread, pizza and bagels are going up in price.  Beer too!

Because of the low dollar, screwy farm prices and high gasoline prices, pretty much everything in the grocery store is costing more.

Retail sales are way down and applications for unemployment are way up.

But recession has a real definition and this, plus politics, has prevented the White House from using “The ‘R’ Word” much.

In macroeconomics, a recession is a decline in a country’s gross domestic product gross domestic (GDP), or negative real economic growth, for two or more successive quarters of a year.

For the U.S., the judgment of the business-cycle dating committee of the National Bureau of Economic Research regarding the exact dating of recessions is generally accepted. The NBER has a more general framework for judging recessions:
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.
So, we at Peace and Freedom believe we Americans are in a recession and we see dark economic clouds world-wide, especially in Asia.

China’s high January and February readings for inflation have increased the pressure on the government to take action to counter price rises.  In China, annual consumer inflation jumped to 8.7 percent in February after hitting 7.1 percent in January, the worst in more than 11 years.

But much of the current economic turbulence in China, the communist government says, is attributable to the largest winter snowfall in 100 years.  China says their economy will quickly rebound.

A staff counts Chinese Renminbi currency at a bank in Baokang, ... 

Confidence among Australian consumers weakened sharply in March to its lowest level since 1993, according to data released Wednesday, sparking economists’ predictions that the central bank is unlikely to continue a run of interest rate hikes.

The International Monetary Fund has warned Vietnam that its fast-growing economy is overheating. It has advised Hanoi to adopt a more flexible exchange rate regime and to tackle imprudent lending practices by commercial banks, in order to help control inflation.
Vietnam’s Communist authorities are battling to curb inflation, which, driven by higher food and energy prices, hit 15.7 per cent in February and has fuelled labor unrest, especially among factory workers who say they cannot make ends meet.

Japan’s economy has so far shown resiliency, but experts on the world’s second largest economy worry that Japan’s export-led recovery could stall if US economic troubles deepen.

At the U.S. Department of the Treasury, the leadership has confidence that the U.S. economy will rebound in the next quarter.

The U.S. economy is going through a rough patch but, thanks to a government fiscal package worth some $150 billion, should start recovering as soon as the second quarter, a senior Treasury official said on Tuesday.

“The booster shot that’s been given to the U.S. economy is going to boost consumer spending, is going to boost business investment — that will lead to both higher growth and higher job creation,” Robert Kimmitt, Deputy Treasury Secretary told Sky News in the UK.

“Many economists predict, and we agree, that we will see that upturn in the second quarter,” he said.

We’ll have to wait and see.

Our advice is to pay off your credit card debt, reduce spending and hunker down.

The U.S. Treasury building designed by Ammi Burnham Young
The U.S. Treasury building

A Few Ways I Can Tell We Are In A Recession
(These may or may not apply to your neighborhood….)

1.  The AA clubhouse starts charging for matches and coffee — and is considering a ‘no smoking’ policy just so the gang can save money.
2.  The church no longer supplies a pen near the pile of the collection envelops.
3.  People actually born in America are eating at the Peruvian Pollo Chicken restaurant.
4.  The neighborhood restaurant no longer has music.  Now you do karaoke.
5.  You no longer know the pizza man’s name.
6.  You’re going to have to use our IRS refund for gas instead of a vacation.
7. A resident of the shelter is wearing a tie and a lapel pin from a bank.
8. A bunch of realtors joined the prayer group.
9. The number of Spanish speaking illegals standing on your street looking for work has doubled.
10.  You’re looking for a lock for your gas cap….

U.S. sees Russia, China, OPEC financial threat

February 5, 2008
By Randall Mikkelsen

WASHINGTON (Reuters) – The United States should be worried that Russia, China and OPEC oil-producing countries could use their growing financial clout to advance political goals, the top U.S. spy chief told Congress on Tuesday.

Director of National Intelligence Michael McConnell testifies ... 
Director of National Intelligence Michael McConnell testifies before the Senate (Select) Intelligence Committee on Capitol Hill in Washington February 1, 2007. Concerns about a weaker U.S. dollar could tempt more oil-producing countries to delink their currency pegs from the dollar or ask to be paid in other currencies, McConnell said on Tuesday.
(Jim Young/Reuters)

U.S. National Director of Intelligence Michael McConnell voiced the concern to Congress in an annual assessment of potential threats, in which economic matters joined terrorism, nuclear proliferation and computer-network vulnerabilities as top security issues.McConnell told the Senate Intelligence Committee in prepared testimony that the global threat of terrorism remained, but that al Qaeda had suffered setbacks and its international reputation was diminishing.

Among other top worries, Iran….Read the rest:

Weak Dollar Fuels China’s Buying Spree Of U.S. Firms

January 28, 2008

By Ariana Eunjung Cha
Washington Post Foreign Service
Monday, January 28, 2008; Page A01

SHANGHAI — From his posh office in a coastal city in eastern China, millionaire Zhou Jiaru oversees more than 100 workers at an auto parts refurbishing factory he purchased in a struggling manufacturing town on the other side of the world.

Zhou’s new company is in Spartanburg, S.C.The Chinese entrepreneur bought it from Richard Lovely, a 56-year-old industrial engineer and mechanic who says his….

US recession may not take big toll on China: experts

January 9, 2008
By P. Parameswaran 

WASHINGTON (AFP) – A US recession will dampen China‘s surging exports but the impact on the world’s most populous nation, which is taking steps to cool down a red-hot economy, may be limited, experts say.

But they also cautioned that Beijing must be prepared to face protectionist trade policies from Washington as a result of a recession, with the sub-prime mortgage crisis and the credit rout showing little sign of easing.

Many experts believe there is a greater than a 50 percent likelihood of the United States, a huge absorber of Chinese exports, plunging into at least a short, shallow recession over the next 18 months or so.

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Making Cents of Our Economy

January 5, 2008

By Rich Tucker
January 5, 2008

It’s impossible to open a newspaper without being told how awful the American economy is. Yet it’s just as hard to open your eyes without seeing how outstanding the American economy is.

Consider an AP report from Dec. 4. “Hiring practically stalled in December, driving the nation’s unemployment rate up to a two-year high of 5 percent and fanning fears of a recession,” it begins.

At this point it’s probably impossible to count how many warnings of recession we’ve endured. Today the threat is rising unemployment. Last month it was the collapse of subprime mortgages. And in the years before that it was soaring gas prices, Hurricane Katrina and the Sept. 11 attacks. Through it all, month after month and year after year, the economy just keeps growing.

So let’s ignore the news for a moment and consider whether we’re better off than we were just, say, a generation ago.

A recent trip to Florida reminded my wife that, 20 years ago, her parents surprised their three children with a Christmastime trip to Disney World. Back in 1987, that was the ultimate extravagance for a middle-class family, a once-in-a-lifetime voyage. These days, if my stack of Christmas cards is to be believed, plenty of middle-class Americans make a pilgrimage to Orlando every year.

Statistics bear that out. Attendance at theme parks increases every year. Even last month, amid the much-heralded jump in unemployment, “Theme park parking lots swelled past capacity, and pedestrian concourses at Walt Disney World, SeaWorld Orlando and Universal Orlando resembled Manhattan sidewalks during rush hour,” the Orlando Sentinel reported on Jan. 2. The story’s headline says it all: “No sign of tough economic times at Orlando-area theme parks.”

And it’s not simply humans who’re living better than ever. So are our pets. Last year the Progressive auto insurance company announced that, “In most states, a Progressive policy with Collision coverage will now cover its customers’ canine and feline four-legged family members.” Insurance for Fido is only part of a trend, though.

In July 2007, BusinessWeek magazine reported, “Americans now spend $41 billion a year on their pets — more than the gross domestic product of all but 64 countries in the world.” Keep that in mind the next time you say, “It’s a dog’s life.” Animals in this country have more disposable income than humans in most other countries.

Furthermore, spending on pets has doubled in the last 10 years. Of course, as Walter Cronkite noted in his memoirs a few years back, in a troubled economy the family pet is the first thing to go. “My mother denied it to her last breath,” Cronkite wrote about the early days of the depression, “but I am positive that I remember her making hamburgers out of the dog’s last can of food.” If Americans were being forced to eat dog food to survive they wouldn’t want to share it with an animal. Instead we’re pampering our pets more than ever.

Of course, there are problems. Consider health insurance. Apparently, it’s just too good.

“My insurance company requires no co-payments for generic drugs, so I can theoretically mask [high blood pressure] for free,” Washington Post reporter Michael Rosenwald explained in a story last November. “And it just became cheaper for millions of Americans to get low-cost generics through Wal-Mart, which is charging $4 for a 30-day supply of drugs that treat common ailments such as high blood pressure.” Access to inexpensive drugs is undoubtedly a problem most countries would love to have.

Rosenwald admits he’s overweight, as are millions of Americans. But that, again, is a sign of a good economy, not a bad one. On the whole, we work less strenuous jobs, yet have more money than previous generations. Good work, if you can get it.

Yes, there are problems in the American economy. Too many people lack health insurance, for example. But the answer is to expand the free market by getting them enrolled in private health-insurance plans. How to do that is another column for another day. However, suffice to say the problem will abate when more people control their own health care and can act in their own best interests.

At some point our economy may, indeed, slide into recession. But if past is prologue, we’ll just go on enjoying the most amazing boom in human history. You won’t be reading much about that boom in the papers. But look around, and you’ll see evidence of it everywhere.

Rich Tucker is an editor in Washington D.C. and a columnist for

U.S. Economy: Dark News

January 5, 2008

By John E. Carey
Peace and Freedom
January 5, 2008

Dark news of trouble for the U.S. economy continued to pile up at the start of 2008.

The dollar fell Friday as a disappointing US payrolls survey ...
The dollar fell Friday as a disappointing US payrolls survey highlighted soft economic conditions that boosts the risk of recession and further rate cuts by the Federal Reserve.(AFP/File/Bertrand Langlois)

On Friday, January 4, 2008, a Labor Department report said the U.S. economy edged a step closer to recession in December by producing only 18,000 new jobs, its worst performance in four years, and sending the unemployment rate to a two-year high of 5 percent.

Outside government, private sector jobs actually shrank by 13,000 in December.

According to the Labor Department, lay-offs were across the spectrum of American jobs.

Manufacturers, builders, banks and even retailers laid off more than 100,000 workers at the height of the Christmas shopping season.

The construction trades shed 49,000 jobs and manufacturing lost 31,000 workers.

The housing crisis has put hundreds of thousands of people involved in the construction trades out of work. The trickle down impact is hitting furniture manufacturers and all kinds of other businesses from appliance manufacturers to curtain and carpet makers.

Gas and home heating oil price increases seem likely following reports that petroleum has now hit $100.00 per barrel. Gasoline prices impact all drivers and have already contributed to price hikes on everything from milk and eggs to FedEx deliveries.

Tightening credit, a slumping housing market, oil prices and a staggering stock market are starting to take a toll on the American housewife and wage earner.

Peter Gosselin and Walter Hamilton wrote in the Los Angeles Times, “The [job] losses were widespread, suggesting that the economy’s troubles run deep. They were compensated for by gains in only a few areas, especially health care, food service and government.”

“Economists viewed the report as the most powerful indication to date that the United States could well be falling into a recessionary downturn,” wrote Peter Goodman and Mike Grynbaum in the New York Times.

“This report raises threats” because of the way it undercuts consumers, said Stephen Gallagher, economist at Societe Generale. “Up to this report, employment gains have been seen as sufficient to support the consumer” and keep the economy afloat.

President Bush has been upbeat on the economy but he met yesterday with a host of economic advisors to hear options on how the U.S. government can jump start the economy.

“This economy of ours is on a solid foundation, but we can’t take economic growth for granted,” he said after meeting with a White House working group on financial markets.


The Economy is Slowing, Losing Altitude

U.S. Economy: Storm Warning

Making Cents of Our Economy