1. Love Mises To Pieces said...

Strange that the pound is at a 26-year high against the US dollar but, within the last few days, at an all-time low against gold.

3. planning4acrash said...

I don't believe that this is the end of the US as a superpower. The global economy is booming and US corporations are global. The US has been wanting a lower dollar for ages. Remember that China will suffer dearly from a lower dollar, killing its biggest market. Just as China is going down, the US will go up. The US wants nothing more than to bring back jobs exported to China and to dwindle its foriegn debt (i.e. steal money from China that was lent to it.)

The US rightly sees the fall in the dollar as a cyclical thing and is keen to reach bottom ASAP. Anybody who writes off the USA should remember that its competition is so far behind that its rediculous. The US's big achilles heel is oil and its dependence on it, but that issue will not play out for real until 2015-2020.

5. Cristiano Barbaro said...

I tend to agree that the US is facing similar problems as the ex USSR, both in terms of economy and competitiveness. We can all see how Vladimir Putin has outmanoeuvered the Bush administration on just about every crucial deal, from the US sponsored failed gas pipeline which was supposed to circumvent Russia, to the India nuclear deal, to the weapons sales to Venezuela etc... Furthermore the US' s problems are compunded because its elite is run by an exaggerated free market mentality which is quite happy to justify low living standards, and millions of unemployed with the "it's the free market" mantra, while at the same time when it comes to bail out speculating hedge funds and fraudulent institutions (most of Wall St banking), they intervene with public funds like there's no tomorrow.
The result is that this behaviour has temporarily saved the cronies in the Wall St. Mafia, while it has placed even more burden on the average American who finds himself stuck in a rut he can't get out of.
Thirdly, over the last thirty years, deregulation and outsourcing, and de-location of key industries have taken place, with the gradual erosion of key local machine tool design experience, fitters and turners, basically this process has transformed whole segments of production capable society into "tertiary sector" pen pushers, or call centre people, who depend totally on non productive areas of the economy, such as investment banking, mortgage banking, travel agencies, and other non hard physical economy sectors which are typically low wage environments (except for the thieves at the top). These new jobs (which are no substitute for the old) are under increasing threat of the axe as the just begun credit crunch tightens, and we read all the time of how the vultures in the financial sector are cutting jobs as we speak. Those US multinationals which would try to move back to the US if the dollar had to weaken further would find it incresingly difficult to do so, partly because a lot of the key people which would make qualified workers are evaporating. The automotive sector of the US, which is the only source of such skilled machine tool makers left, is being stripped as we speak, and it is not unfeasible that one or more of the big US carmakers may go bust.
US government and congress behaviour in this respect has not been encouraging. They have preferred to bury their heads in the sand than to tackle the issues head on. China will not be happy with a falling US dollar but trust me the ones who will suffer the most will be the people of the US themselves. Also, the Chinese are not stupid, they have been workinghard to develop their own internal demand, and also economic ties with other countries, most notably Russia. Furthermore the Chinese have forced those Western companies who wished to operate there to effect technology tranfers, so that effectively the Chinese are now building their own Boeings for example. Unlike the US and the West in general, most of the co-operation between China, Russia, Japan and India, is centered exactly in those key hard physical economy areas which generate real jobs, real scientific growth and real opportunites for the future. They have long term investments in areas such as: 1) the development of a new Trans Siberian communication and transport line with mag-lev concepts; 2) the development of new IV generation nuclear power reactors, and PBMR ultra safe (impossible to achieve a meltdown) reactors, these reactors will make a hydrogen ecomomy a reality; 3) they limit speculating activity recognizing that only the government can make long term low interest loans geared towards infrastructural developments.
The above points are exactly the kinds of policies which when enacted in the US by president Roosevelt in the 40's and 50's made the US the biggest and most advanced player in the world.
By contrast since 1968, and the onset of the hippies in power and the "green" revolution, the US has been losing ground constantly, because of a refusal to make key long term investments in the areas of physical economy that mattered. In fact the truth is in front of us all. Just look at the decrepit power distribution infrastructure of the US, the bridges and roads which are in need of drastic investment, and the waterways, and then you have a picture.
However the post-industrial hippies which have cultural sway in the States, prefer the fake economy of the "tertiary sector", backed by nothing underneath. They are the true human hating post industrialists, justifying every action and decision they take with "we will all have to learn to make do with less", as if that is enough to excuse their wish for humanity to return to living standards of the 1800's. Of course the various Al Gore's will have enough money for themselves to purchase as many solar panels as they like and SUV's which burn corn (an evil, immoral concept in itself putting food in your gas tank).
Anyhow, their post industrialist policies are unravelling before our very eyes. Watch the propaganda they will use to get the population to accept a lowering of their quality of life and naturally of life expectancy itself, as they practice their eugenicist dreams of selection and population control.
Return to FDR concepts now!

7. Bobrisk said...

Never underestimate the US - it's a vast economy - I predict 1.7 against the pound in about a year.

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