In other words: A discussion of The Bush Administration
Bush and Snow play games with the future of America'a economic leadership and strength for short term political benefit
U.S. now says weak dollar OK in a calculated policy switch
Washington -- Treasury Secretary John Snow has tacitly but unmistakably abandoned Washington's longstanding support for a strong dollar in favor of a weak dollar that is getting weaker, though he continues to insist there has been no change in policy.
Stripped of the code words and elliptical references to "excessive volatility" in exchange rates, the message that Snow delivered over the weekend to finance ministers from Europe and Japan was that the dollar's plunge against the euro is just fine and that the dollar should now decline more rapidly against Asian currencies as well.
In so doing, the Bush administration has made a calculated economic and political choice. By condoning and even encouraging a cheap dollar, the administration is providing a big push to American exporters by making their products less expensive in foreign markets.
That should encourage more hiring and lower unemployment leading up to the election. The only immediate losers are exporters in Europe and Asia who have to choose between cutting prices and losing market share in the United States.
But the long-term risks are substantial. At some point, a weaker dollar will inevitably lead to higher prices for imported goods -- almost all consumer electronics bought by Americans, most of their clothing, many of their cars and much of the oil that provides the fuel to drive them.
Let's not forget that a weak US dollar could adversly effect the interest America's pays on its debt as well... but gee with the surplus that shouldn't be a problem.... Oh yeah, that's gone now. Really really really gone.
- rob 2:52 PM - [PermaLink] -
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