In other words: A discussion of The Bush Administration
Dollar Crumbles as Snow Encourages Bears
LONDON (Reuters) - The dollar spiralled lower on Monday, hitting its weakest level against the euro in over four years as traders jumped on comments from U.S. Treasury Secretary John Snow that a cheap dollar would help U.S. exports.
...
Speaking on a U.S. television program on Sunday, Snow said: "When the dollar is at a lower level it helps exports, and I think exports are getting stronger as a result."
Acting as a true Enronesque CEO, Snow is only thinking of the short term, with potentially disasterous results long term. Yes, a weaker dollar would help us with exports, which would give us a little bump economically. But the long term is disasterous. We have a deficit in the trillions. 3 or 4 or something trillion dollars is what America owes. This is real debt. We owe people. When you hear of this year's outrageous 450 billion or more debt figure, note that that is just one year's new debt. We add it to the trillions of debt already out there. Oh, and we are paying interest on this too. And unlike a home mortgage, the government doesn't get some tax advantage from the interest on the debt. Nope, it is all real too. It goes to real people. Who? Well, like you and me, and my son with his little savings bond that comes due a decade from now (a nice gift from his aunt). But with trillions of dollars, that's a lot of savings bonds. Who else owns that debt, well believe it or not some government agencies own Tbills, and that is just goofy (but who knows, maybe there is a reason, as Bush said, "not everything is black and white when it comes to accounting") but that doesn't account for all this money. No, most of it is held by other nations, and people in other nations.
Now thier holding of this debt helps our governemnt. We get to go on our defense spending sprees, without raising taxes (heck... let's lower them!). The debt holders don't mind because, well, we're America, and the dollar is strong. What's that? You say Snow is happy about a weak dollar? Suddenly the treasury bills don't look as nice. Maybe they aren't the world's safest investment after all. So suddenly we have less buyers, so we have to up the interest rate that the Tbills offer to make them look like a better investment. But wouldn't that make the overall debt higher? Wouldn't a suddenly massively growing debt make the Tbill look even less like a good investment? Yes, it is a spiral, a sprial that if not controlled would eventually make American Tbills fancy looking junk bonds.
A strong dollar allows us to have debt, but it also hurts exports; that is the price we pay. If we don't like it we're just going to have to live within our means (but that is hard, I know). Snow knows this. But he is a Enron era CEO, a weak dollar will help the economy during his tenure. True it could mean utter collapse, or at least difficult times for people that come after him, but, hey, who cares, he'll be on the beach by then.
By the way, Snow was CEO of a rail company. He's entire method of expanding his company was getting favors and deals from government. He is a welfare case.
Oh, and one more thing, if this dividend tax cut gets passed, Snow's tax refund is going to jump $275,000 a year. Not that that would effect his opinion of the need for that tax cut at all. Oh, no. It wouldn't.
- rob 5:03 PM - [PermaLink] -
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