The $US Lays an Egg

[TampaYankee]

Just how far can the US $ fall? It is nearing 1.5 $ US = 1 EU.

I know this is good for Boeing as Airbus is busting a gut competing in the commercial aircraft market. On the other hand OPEC seems to be growing grumpy about having to warehouse so much worthless paper in their banks. Banks are supposed to hold valuables. It seems some OPEC ministers prefer to measure the cost of oil against a basket of currencies with some value including the EU, YEN and the Peso.

Seriously, how far can this go before it has serious repercussion on Mainstreet? INquiring minds want to know.

[Guest BewareofNick]

Well, as you should know already, this is all Bill Clinton's fault. People are nervous at the prospect of a Hillary presidency and therefore, the economy is reacting to that. If Nancy Pelosi and Harry Reid were more interested in helping America rather than cutting and running in Iraq (which we're winning btw), they would understand that being supportive of America rather than trying to destroy it would help to revalue the dollar. But of course, those of you with Bush Derangement Syndrome will try your best to drop this at the President's doorstop. Well, just remember that we were attacked on 9/11 and we're in Iraq fighting against those who attacked us. You surrender monkeys make me sick.

http://www.foxnews.com

[TampaYankee]

But of course, those of you with Bush Derangement Syndrome will try your best to drop this at the President's doorstop.

I think he has cut out his fair share of responsibility of his own volition. After all, he has been President for nearly seven years in charge of the Ship of State with hand-picked Treasury sectretarys and trade representatives; six of those years with a complicit Republican Congress. So any of this partisan smokescreen is just that. But I'm not interested in Bush Bashing here -- much too easy. We all have eyes and most of us lived throught it -- though not all, sadly.

But I'm more interested in the economic fallout as the $US continues to descend. How far will it go? What might be hard consequences for Main St.? Is there a resistant floor beyond which it is likely to fall? If so why?

[Guest PWIT]

But I'm more interested in the economic fallout as the $US continues to descend. How far will it go? What might be hard consequences for Main St.? Is there a resistant floor beyond which it is likely to fall? If so why?

As you know, that is such a complex question. There are many 'guesses' as to what it might mean. The impact has a lot to do with where 'Main St' is. As with any market change, there are winners and losers.

The lower the dollar, the less likely jobs are outsourced to where the supply is cheaper, so it may mean some of the manufacturing main street employees will continue to have jobs. Some companies have even ramped up business to accommodate increase in order sales - especially those making heavy construction equipment. So some on Main St will see overtime which may mean more take home money, but less time at home.

Some Main Street US locations will see new jobs as some jobs shift to US as the US now has a cheaper supply of an educated workforce. You saw this when all the Japanese auto companies started building plants in the US several years ago. Euro companies such as BMW and Mercedes also now have plants here.

Some people that make big bucks in the currency market are also gainers - think George Soros - but I am sure that is not the typical Main St person by any means.

Main St people who were planning for that trip out of the states may not fare so well. Of course recreational travel may be redirected to areas that are more economical, so expect to see fewer vacancies in US tourist areas. But that will be a plus to Main St Tourist USA. Also, the tourists from outside US will help with the tourism too as US locations become better bargains than Euro destinations.

Main St Cold Climate USA will feel a pinch in their heating costs.

Main St drivers will feel the impact every time they pull up to the pump.

Main St Northern Border Town will see some increases in business as driving across the northern border to buy staples is less appealing. They will even benefit as neighbors from the North start driving south to do some shopping.

Main St clothing shoppers will not be too impacted - as so much of the clothing now comes from locations where the currency still is relatively high in the exchange rate or the exchange rate is artificially controlled (i.e. China).

So it all depends on which town you are driving down Main St.

[Guest Conway]

It is important to note that NAFTA, which has partially contributed to the present trade imbalance was endorsed by politicians from both parties when Bill Clinton signed it into law. As a nation, we have elected to spend our dollars with retailers who buy products built in a foreign market at a fraction of the cost of making them here.

You could blame labor. You could blame Walmart. You could blame Bill Clinton or George Bush. But, at the end of the day, we have to blame ourselves, particularly, if we have chosen to buy foreign made goods over American made goods.

Just this weekend, I was out looking for a new HD television. I did laborious internet research looking for one that was either manufactured or assembled in the USA. Guess what? There are none. The best that I could do was a Sharp manufactured by a NAFTA partner in Mexico.