Replaying 1929: Business, Financial, and earth change news

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"Strong Dollars" and other Foreign Policies

As the end of the Bush Presidency rolls into view, the headlines continue to underscore that despite arguments to the contrary, we seem not to be doing so well in the foreign policy arena.

 

Not to picks on just one example like "Poland rejects U.S. missile shield offer", or The Wars, I'd point to the largest problem the administration has brought to both investors and regular everyday Main Street America.

 

That's the often claimed "strong dollar policy" of the White House, mouthed by various Treasury and Federal Reserve officials on cue.

 

Let's roll back the clock to see where the dollar was when The Decider was one day into his Presidency on January 20, 2001.  But first, here's a headline from that day to put you into the mood for this little exercise in forensic economics:  "We got some dancing to do," Bush says!'

 

On that day, ONE U.S. Dollar bought 1.07030 Euro according to the Oanda.com historical exchange data.

 

When the markets closed on Friday the Fourth yesterday, the exchange was ONE U.S. Dollar buying 0.63180 Euro.

 

In other words, relative to Europe, the Dollar has lost more than 40% of its overseas purchasing power under Bush.  Say, that's some "strong dollar policy" don'tcha think?

 

Not that the decline has been entirely relative to the Euro.  When Bush took office ONE U.S. Dollar would buy $1.51340 Canadian. and the conversion to gold (or more properly, the XSAU proxy) was based on $264.55.

 

One U.S. dollar now buy 1.0156 Canadian, a loss of 32.9% when we're bidding against Canadian money for world market goods.  Can you say "Spot the lunies/loonies?"  And the price of gold (via the XAU proxy) closed this week at $932.

 

And that's without getting into how oil prices have fared...

 

The fact is, we continue to spend more than we make...so we water down our currency. Balance of trade deficits do come home to roost one way or t'other.

 

Even Wikipedia, which seems to have an answer for just about everything, seems a bit unclear on what the Bushistas have mean when they talk about the 'strong dollar policy':

"Strong dollar policy is a U.S. policy based on the assumption that a strong exchange rate of the U.S. dollar is in the U.S. national interest and the interests of the whole world."

That works as long as you don't remember the definition of Narcissism is:

"Narcissism describes the trait of excessive self-love, based on self-image or ego."

Strong Dollar is strong ego coupled with an untreated case of denial with a dose of spendthrift thrown in.

 

A simple thought experiment makes the point:  With 195 countries in the world, how many can have the strongest currency relative to all others?  (Hint: One, last time I checked).  And we're not even in the running, yet jingoism about strong dollars makes us look like Global Buffoons.

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Here are a couple of inconvenient results of Bush foreign & economic policy (and that mythical 'strong dollar') after 7 1/2 years of Bush at the helm:

• The U.S. has slipped relative to India  One buck buys 43.28250 Rupees now, versus 46.43 at Inauguration in 2001. 

• The US has slipped versus Russia.  One US buck bought 28.3540 Rubles back when and it's down to 23.44150 Friday.

• And we've slipped relative to Brazil.  From 1.9580 Reals to 1.6095 at Friday's close.

 

I will give the Bush crowd credit for improving our position slightly vis-à-vis Mexico..  Incoming, the dollar bought 9.792 Pesos.  Today it buys 10.3883 Pesos.  This foreign & economic policy triumph has only cost us a drug war on the southern border, which seems to be dissolving before our eyes, while Mexican truckers undercut US drivers.  And oh yeah, there's the www.spp.gov movement, too. And rumors of the Amero persist, although a little research says nope, not yet.  That's yet..

 

It may seem a little harsh, but I measure foreign policy by what it puts on the tables of Mains Street Americans.  Less.

 

Eight years of corpgov's "strong dollar policy" has been delusional are best and deliberately deceptive at worst.  We keep coming back to that "The harder we work, the behinder we get" problem. Joseph Tainter notes that's when past civilizations have either walked away or revolted...when the marginal rate of return on harder work falls below zero, a country or siciety is in trouble.

 

Are we working hard/longer than we were 8 years ago?  I expect so.  Further ahead?  LOL, you're kidding, right?

 

The dollar is less sound than when Bush took office, as evidenced by the soaring values of currencies of other countries.  Can the administration do anything about it in the final six months?  I wouldn't bet on it. Rumors of another BANKruptcy continue, and a further meltdown in the markets seems probable this fall.

 

Oh, and did I mention tourism to the US is declining, too?

 

MSM Imploding Department

While it may be expecting a little much to get down to economic measurement of foreign policy, I can't help but notice that there's a p*ssing match of sorts going on between the Superpowers of News.  $4.50 gas, loosing ground to India, Russia, and Brazil, a fading border and we get this? 

 

You know why the 'net flourishes...LOL.

 

Betancourt "IT"?

If you've followed the release of one-time Colombian presidential hopeful Ingrid Betancourt,  you might well be thinking "that rings a bell somewhere..."

"Hello George: big fan here, i remember reading a while ago in the independence journal about a HPH prediction regarding a female who will impact the whole world, kind of lady Diana. is this the case of Ingrid Betancourt? liberated in Colombia, now received by France, and maybe the pope in coming days? just wondering."

Well, she's got the 'highlands of south or central America' background and she's being widely and warmly received...she may be just  part of the generalized 'women bringing healing and harmony' but I'll ask the time monks...

 

Another reader has a question, too:

"George,

Each time the time monks foretell a release period people are released from captivity. The 15 UK marines, one I forgot and now Ingrid Betancourt. None of these events were negative as it seems to me when reported.

Do I see this right and in the future look at this in a positive way? Or was it always meant as a positive event?"

It's usually a mix of good/bad...but you're right, there's often an actual 'release' along with the 'release of emotion' kind...

 

Big Bertha

Tropical storm Bertha is heading west - and forecasters are wondering whether this one will turn into a hurricane over time.

 

California Fires

Bad and getting worse, by the sound of reports like this one.

 

Regulating Tomatoes

Oh boy - or is that Oh, Better Boy, or Oh Big Boy... just what's a tomato, anyway?

 

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Coping: Car That Go 40

MPG's that is:

Hi George,

 

I just had to respond to this comment in your writing today:

 

"I would love to be able to buy not just a 40+ MPG car that was built in America, but I'd like to be able to buy one that has been designed by Americans so that the profits from that enterprise could accrue to America, and not Japan or Germany." 

 

The Saturn "S" series, built from 1991 to 2002 in a couple of flavors can EASILY deliver 40+ mpg consistently.  I have over a dozen of these - most run well and the others are for parts, and I have most family members driving them.  GM wanted to make a "different kind of car" and succeeded, though not the way they wished.  The plastic body allows old cars to look very good, with little to no rust, the body design of the original SL series is classic, so it does not obsolete easily, and the drive train generally runs 300,000 miles with very little maintenance.  The weak spots are the water pump, alternator and accessory belt tensioner, but they are no worse than anything else made today.  And the automatics should get a fluid/filter change at regular intervals.  The "S" series engine is a four cylinder engine with a TIMING CHAIN!  No rubber belt to destroy the engine when it slips or fails.   They are the best bang for the buck on the road today.  They put the screws to GM on planned obsolescence too!

 

I normally get 40+ mpg even when fully loaded.  I got that mileage last week on a 1000 mile round trip to Phoenix over the mountains.  And yes, I was driving at 75 at night, sometimes with the A/C on.   It's partly about driving well and partly about just having a very good basic car.  These cars have an irritating interior - few gauges and a stupid console, and the seats are horrible.   1996 onward they changed the body style and it does not handle as well, but is easier to get into.

 

I have no affiliation with GM or Saturn, and bought all my cars used.  The current generation of Saturn is just a glorified Chevy.   I recognized a classic and moved to get some before GM realized their mistake.  I do all my own work and once you figure out some of the tricks, it's not that hard.  BTW, congratulations on your Daewoo work.  I've never even seen one!

 

My other major driver is a Ford E350 Powerstroke diesel van.  20mpg with a load or a trailer, and it never goes anywhere empty if I can help it.  Bought it used from eBay for $831.00.  It's a bit of a nightmare to work on, but reliable.

 

Thanks for all your useful information.  I still have no clue on the release event - maybe I need to wait till the bot report tomorrow....

Another reader sends this reminder that while Ford was busy selling US cars and SUV's that got sucky fuel economy, overseas Ford was selling a dieselk version of the Focus that did over 60 MPG...check it out:

"George I read your comment about wanting better mileage in U.S. autos, here is the specs on the Ford Focus available in England that gets 50-60 mpg.I have repeatedly emailed Ford HQ suggesting they retool a shut down engine plant here and offer these engines to no avail, I guess they prefer going BK instead of helping America survive and employing folks. As a trader I call it, you can't fix stupid aka doomed by their own dna. Really enjoy your site, keep up the good work, folks need it.

So here's a "Better Idea" for Ford:  Bring in that 65.6 MPG 1.6 TDCi Duratorq turbo diesel Focus to the US market and it will sell like hotcakes.  I'll buy the first one...  Or, do you guys like losing money and market share?  OMG, you don't think someone's in bed with the Oilco's do you?

 

Self Hair Cutting

Someone pointed out, after I revealed my self-hair cutting project this week (which I'm very pleased with, BTW) that Wahl has an eBay web store where they offer a self hair-cutting kit.  At about $60 bucks it's more spendy than the "Hair-cutting for Dummies" kit that you can pick up for a pair of tens, but it also has some longer guides that don't come with the low-end kit; there are four over 1/2", for example.  I'm trying to find a 3/4 or 1" guide, but in hot weather, a short 1/2" guide crew cut works just fine, thanks. It's ever so much more even than the weed eater.

 

7 Fat Years...

...are often followed by 7 lean years...

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Send snip and save items toi george@ure.net

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Peoplenomics.com 

A Better Kind of Money?

Money is in the midst of a huge decoupling from its traditional role as means of storing wealth.  We've got several factors at play here which demand analysis.  Among these we can count the declining underlying value model, where over time (and enough printing) money stores more 'interest' than 'value'.  A second is that a transition from specie to paper and now digimoney is underway.  And the third, and perhaps most important aspect is that 'money' as most folks think about it, is in the midst of decoupling from physical reality as the printing of paper assets may continue ad infinitum, while the available resources (oil, oxygen, and fish as examples) is not unlimited and is likely peaking, as anyone who likes Copper River Salmon will tell you.  This week, a reexamination of the old problem "What is money, anyway?" and "Can we come up with something better?"   (More for subscribers - click here)

 

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"Live on $10,000" Updated

There's now a single-page website devoted to my little ebook "How to Live on $10,000 a year (or less) at www.liveontenthousand.com.  Yep - still possible.  I also took a bit of additional material that was pertinent from recent issues of Peoplenomics and included them.  The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the aforementioned dollar amount, but also how to migrate up the economic foodchain if you make a little more than that and do some active savings...  Click here for the page with more details on it.

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Last week's report is here.    For back issues of this site, click here.  (Goes back to 1997!)

 

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Friday July 4, 2008

Fourth of July