There comes a point where the $ gets low enough to seriously impact EM to the point that it kills their profit margins (especially given that commodity prices are not declining with the $), and reduces demand for their products. At some point this stalls the EM and given their nose bleed levels a stall is not priced in. They take a tumble and the ensuing liquidity crunch spreads. This is inevitable at some level of a lower $, question is how low does the $ go before it precipitates this reaction. Judging by the pain I hear coming from companies in Brazil and the intervention that Paulson is complaining to the IMF about (the US WANTS a lower $) probably not much lower.
There comes a point where you can SCOOP everything so cheap in the US that it doesn't matter you hate the currency and don't think is a good investment your buying because its fking cheap(and that include equities). We might get there soon so the dollar won't stop existing guys
Excellent Commentary .............................................................................. When you look at the worlds interest rate table... http://www.fxstreet.com/fundamental/interest-rates-table/ One may note that there are quite a few countries that are paying higher rates of interest on their currencies than the USA... Europeans for many years...as well as Latin Americans...have been habitually involved in diversifying their savings in different currencies...whereas this mode is somewhat new for Americans... More Americans will be using multi currency strategy as they become more sensitive to dollar losses.... The import export game ...has always been about two products...the currency...and the actual product.... .................................................................................. However the FX market because of the leverage and lack of interest payments ...is moreless a visad... What one has to do is to actually change over to another currency and earn the interest rates available... And actually one may have higher rates of return by always reinvesting the interest when one picks opportune moments in out of favor currencies... ...................................................................................... Just another marketplace......
Seriously, I have to laugh at everyone's take on a falling dollar. Ever hear the phrase "Our currency, your problem"? A falling dollar doesn't hurt John Q. as much as it's going to stomp the rest of the world bearing the brunt of the weight. Like Europe. LOL! Let's see the Euro go, and stay at around 1.45 for a while. I give it 6 months before countries like France and Italy are calling "uncle". Really now, bring it on. I delight in seeing all these morons is thinking this will result in the death of the US simply because the currency is dropping. And then you have the goldbugs. I was over at Kitco again (God that site amuses the SHIT out of me) where they're all foaming at the mouth, calling for $2000 gold in the next few months. Of course, they also predict 25% of the world's population dead in 4 years due to famine and disease, but that's another story. The goldbugs are under the impression that all fiat will die. Half of them don't even realize that the term "all fiat" isn't just the dollar, but the euro, sterling, etc. None of that is backed by gold anymore.
Ivanovich wrote..... Seriously, I have to laugh at everyone's take on a falling dollar. Ever hear the phrase "Our currency, your problem"? A falling dollar doesn't hurt John Q. as much as it's going to stomp the rest of the world bearing the brunt of the weight. Like Europe. LOL! Let's see the Euro go, and stay at around 1.45 for a while. I give it 6 months before countries like France and Italy are calling "uncle". Really now, bring it on. I delight in seeing all these morons is thinking this will result in the death of the US simply because the currency is dropping. ......................................................................... Excellent Commentary..... Exactly.....Its called CATCH 22...
A deflationary environment hurts everyone, though it is true it hurts the US least. If we get such an environment the gold bugs will be rewarded (though not sure about $2000!). Either way EM are going to get hit hard and Europe too though less so. Wealth is an insulator in an deflationary environment thus the wealthiest countries will suffer less on a relative basis but since it will probably bring about a deep recession no one will go unscathed. In other words not a laughing matter.