(Untitled)

[renideo]

The commercial paper crisis continues, with major contraction in its seventh consecutive week. The dollar continues to slip and the euro continues to rise, while oil peaks. Still, long term interest rates seem on a persistant uptrend. The US, which has relied on foreign savings to support it for a long time, running a persistant trade deficit and

Comments

[itinerantsphinx]

Hey, sorry been such a long time. So shameful. Sorry...

But you know, I was talking to an American journalist friend about the dollar, and he was saying that the falling dollar was good for the US. Something about it being good for the export market I think... And if Americans don't travel it doesn't make much difference internally. (I don't get economics, as you know). Does that make any sense?

[renideo]

Yep, he's right, it is better for the export market. The reason is that it lowers the effective price of dollar denominated goods, and makes them more attractive to other countries.

However, that is not the only factor at play. It means increased inflation as goods that were known famously as 'cheap goods from china', among others, will also rise. It also means a weaker flow of money to US bonds etc, and diminished ability to keep the spectrum of interest rates low. It also means that the likelyhood that oil will continue to be denominated in dollars has been steadily shrinking.

Meanwhile, oil prices have been rising as the dollar falls. And oil is one of the US's major imports.

[itinerantsphinx]

Oh noooo, too much economics :p

I realise that import prices would therefore rise - do they care? Can they build economy by trying to do more business internally? I suppose that that has it's downsides also though, and international trade is there for an economic purpose.

Meanwhile, oil prices have been rising as the dollar falls. And oil is one of the US's major imports.

Isn't that related though? Oil isn't increasing in proce so fast against the Euro, for example. And I mean, if the dollar is devalued, then it's the same percentage of the country's wealth which is being spent on importing the oil?

Forgive me my deep ignorances...

[renideo]

lol, no deep ignorances.

They do care, because the US is inextricably entangled with other countries in its operations. But, the way in which this is true is complex. I wouldn't want to begin to try to tackle it here.

But also, things which sometimes seem small compared with the whole economy can become big, if they affect vulnerable areas. That's one of the major problems right now, in essence. Though, that understates it.

[itinerantsphinx]

no deep ignorances.

Is that a comment or an order?

You are sweet and patient with me. Thank you.

[renideo]

Also, what must be factored into the credit crunch scenario is the general multi-stage reversal of a powerful long term trend

[itinerantsphinx]

I've pretty much exhausted my abilty to talk about economics...

I suppose like any economic or policy decisions there are certain groups which are affected differently, positively or negatively.

'Course, it would help if they didn't spend so much on War. But that's one of the main reasons for Americans being anti, isn't it? Rather than, say, chaos caused, blood spilt, etc etc. I mean, they are only Arabs living in tents aren't they, what do they matter (insert rant :).

How much intentional effective change can a government bring about to the economy which is tied into international trends and decisions? I mean, if circulation speed is declining, or investment, or import vs export balances, etc.