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The Mystery Chart

by @ 8:20 pm
Filed under: financial,money — Tags: , ,

Quick, when you look at this chart what's the first thought that pops into your head?

Courtesy Wikipedia

A crashing stock? Dwindling numbers of an endangered species? An almost eradicated disease? Whatever it appears as to you, it's pretty sobering and alarming.

Let's not keep you guessing any longer. It's the value of the US dollar versus the Japanese yen for the last 6 decades. To all those who think the news of the dollar's demise is greatly exaggerated, think again. Does this look like a healthy currency to you? Mind you, Japan isn't exactly firing on all cylinders either.

The US deficit and national debt must be addressed soon and hard choices must be made. Enough wait-and-see already.

Middle-Class Squeeze

by @ 10:44 am
Filed under: financial,politics — Tags: , ,

I haven't looked at the details of the latest tax agreement reached between Obama and the Republicans, but judging by its face value, it's yet another jab at the middle-class who's always the punching bag of everyone else.

So let's get this straight. The super-rich get to keep their unfair tax advantages squirreling away their monies in their foreign accounts and gold and enhancing their hedonistic lifestyles. In other words they'll just keep richer and filthier. The unemployed continue to receive their unemployment checks well beyond the reasonable term the unemployment insurance was meant for. In other words they'll just get lazier and keep coasting along on other people's dime.

The twisted logic is that by making the super-rich even wealthier, they'll be motivated to hire more people thereby spurring job growth. An the other end of the twisted logic the longer the unemployed receive checks, the more they're encouraged to spend thereby spurring economic growth. The flaw in both arguments is that neither case has been able to definitively prove its intended results.

What's proven is that these reckless policies have helped balloon the country's deficit to unsustainable levels. Soon enough the US will not even be able service its debt and guess who'll have to dig the country out of the mess, the shrinking middle-class.

What the US needs real bad right now is a good dose of austerity. That means some new taxes (yes, for the rich people too), and spending cuts (yes, for the unemployed too). But the gutless politicians are too craven or too connected to the special interest to even try it. Keeping the pressure on the middle-class is hardly a formula for economic success, it's fast-track to economic ruins.

Dollar Rally

by @ 11:49 pm
Filed under: financial,money — Tags: , , ,

The last time the euro was below $1.30 USD was over a year ago. It's below $1.30 once again. This despite the fact that the consensus had been for the US dollar to continue to be under pressure and see further declines. The fundamentals in the US haven't really changed much. There's still a monster-sized deficit and growing and there's even talk about the US spending all its income servicing debt in a few short years.

What's changed is the financial fiasco unraveling in Greece and gripping Europe by proxy. That has the investors scurrying and flying to the US dollar. It's a short term relief for the dollar where in normal conditions (in my opinion) should be trading at parity with the euro.

For now the market is nervous because it doesn't know how deep the rabbit hole in Europe goes and as usual the governments aren't saying much, lest they spook the markets even more. That has opened a short-term advantage for the dollar.

But my feeling is that the favorable period for the dollar will soon pass as Europe bites the bullet and faces the issue head-on, instead of wavering and hoping that the situation will correct itself. If the US hasn't addressed its deficit issue by then (and I see no evidence of that), the dollar will resume its slide and who knows how far the American rabbit hole will go.

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