In other words: A discussion of The Bush Administration
Ignoromics, Part 2: Acme Bush Co. Evaporated Dollars (just add oil)
Great for Roadrunners! (void where prohibited)
A falling dollar is unlikely to curtail imports as much as hoped. It is more likely instead to act as a consumption tax. About one-quarter of the United States import bill arises from oil purchases, which are priced in dollars. A rapidly depreciating dollar thus means lower earnings for OPEC producers. In response, the cartel might well raise prices. . . .
Nor will a cheaper dollar encourage domestic production that can replace imports, as some argue. Auto parts, for instance, are increasingly produced in Mexico and other developing nations. These plants, part of a highly specialized global supply line, are not likely to be replaced by suppliers in the United States just because of temporary currency movements.
Because currencies' values are relative to one another, the lower the dollar gets, the higher the euro and yen rise. As the currencies of Europe and Japan strengthen, the exports of these nations will become more expensive. That could easily translate into slower growth in those already slow-growing regions - and less money to buy our exports.
While big American companies still export billions of dollars' worth of goods across the Atlantic, they sell three to five times as much from their European-based operations - to countries in Europe. A lower dollar won't have much effect on those sales.
Our need to borrow so much from abroad is caused by our enormous consumption and our anemic savings. Today, Americans save just 0.2 percent of their disposable income, practically the lowest level in 45 years. . . . Our government, too, needs foreign creditors to invest in Treasury securities, to finance its escalating budget deficits.
This is a one-way bet for speculators. Already, rumors are rampant that several central banks with significant dollar holdings may diversify into other currencies. . . . If momentum to sell dollars gathers steam, it could lead to a dollar plunge, a global financial crisis and deep worldwide recession.
The author, who held economic and foreign policy posts in the Nixon, Ford, Carter and Clinton administrations, then goes on to prescribe sensible remedies -- none of which the commander in thief intends to pursue. A letter writer in today's Times, on an unrelated matter, feels the same way -- although nothing about this criminal regime can be considered for one minute unrelated: it's all related -- to stealing everything we have, and all we'll ever have.
To the Editor:
I admire Thomas L. Friedman's boundless optimism, but he's wasting his time whenever he appeals to President Bush's sense of history.
Mr. Friedman is right that the best thing Mr. Bush could do - to make us more secure, create a new sense of purpose and a whole new economic sector - is to start a crash program to find a clean alternative to oil. But the president and his allies have proved over and over that they are more interested in the political and economic profits to be made now than they are in the future. People who've held their breath waiting for him to change have run out of air.
Kurt Strahm
Brooklyn, Dec. 5, 2004
Does anybody really think that this president is interested in solving a problem? Big, overreaching government is bad, remember? He said so himself, to a room of schoolchildren at 9 a.m. one day in September a few years ago, while our cities were on fire and our mayor was talking about canceling elections; yeah, he had the right idea, it just wasn't the right time. Right idea, wrong time. I think I'll use that, but first I have to dress up in a military costume with braids.
Then I can crash the country into the ground, like an echo of those planes on that glorious day, and scram with the loot, which luckily I converted when it was still worth the paper it was printed on -- relatively speaking, heh (wink).
Don't forget, it's still your money, and you're stuck with it.
See you in Disneyland.
- Michael 6:57 PM - [PermaLink] -
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