Ok Guys, the $ how low can it go?

[GRG55]

Re: Ok Guys, the $ how low can it go?

GRG,

I don't look at what the Bundesbank says, I look at what the high Euro is doing to the German economy.

As Germany is the largest export economy in the world, the high euro is heavily impacting the entire economy.

The Bundesbank is merely afraid that the resulting negative wage impact won't arrive fast enough to offset rising prices.

Ultimately, though, the German companies and the workers manning them are not going to continue to subsidize their EU Mediterranean counterparts.

The Germans are the main reason the ECB has not yet cut rates. The ECB is probably going to find itself behind the curve when it finally wakes up to what you are pointing out, and acts.

But there is no damn way that the same German government that has been pushing the anti-inflation agenda with the ECB is going to lead Germany out of the currency union because of a high Euro. The German's obsession with inflation due to their historical experience is getting in the way of pragmatic policy, I will grant that.

[jk]

Re: Ok Guys, the $ how low can it go?

germany exports a lot, but a lot of those exports are to other euro-area countries. so the currency level doesn't matter as much as you might think.

[dbarberic]

Re: Ok Guys, the $ how low can it go?

Is there any article where one can further seek understanding of Sinclair's opinion?

I can not find Jim's specific analytics that he used to get to the .52, although he references it all the time in his writings.

If you go to his website and in the upper left hand corner do a search on .52, all his references to the dollar hitting .52 comes up. To many articles to click through to reference it here.

For example, his latest reference to USD at .52 is this:

After watching the questions and answers and the post-speech talking heads concerning Bernanke today, I want to yak.
The talking heads noted Bernanke’s repetition of the word risk more times in today’s presentation than any other since he became Chairman.
Outside of one exception I have never heard such rank stupidity in my life. The worst part is these photo opportunity gangs really think what they say is intelligent.
With this thinking leading the USA by running the economic show there is a good chance we will repeat a large percentage of the Weimar experience.
The fact that the Chairman can say what he says and heads indicate agreement is alone a good argument for the USD at .5200.

[c1ue]

Re: Ok Guys, the $ how low can it go?

germany exports a lot, but a lot of those exports are to other euro-area countries. so the currency level doesn't matter as much as you might think.

I'm not sure why that helps.

A very strong Euro means those other EU countries can buy outside goods even cheaper than from in the Euro zone.

Thus unless Germany is importing mostly unreproducible goods (hah) then the high euro is still going to hurt them.

I'll look into it when I get the opportunity, but I very much doubt going in that a high Euro helps offset already significant labor and government tax/subsidy advantages from offshore producers.

The only factor I see that might offset the negative Euro effects would be a very high import tax into the Euro zone.

The numbers the last few years showed trade deficits piling up as the Euro increased in strength - but it is possible that it is because of China redirecting export targets.

[Tulpen]

Re: Ok Guys, the $ how low can it go?

You are the people who claim to "Know"............so, How low can it go?
Mike

At least until a major bank fails.

Can anyone say Citibank?