Is the greenback collapsing?

Here’s something that’s relatively easy to miss in these hard economic times where importing things from the US had become a luxury once again — there has been a sharp but sustained drop in the value of the US dollar recently. It’s fairly dramatic, too — in the past 3 months the value of the Canadian dollar has gone from $.77 to$ .92 US. That’s almost a 20% rise in the space of a quarter.

There isn’t really anything currently going on in Canada to warrant this sort of price movement, and indeed much the same story is revealed when looking up the relative values of the Euro and the Pound; even the Japanese yen is appreciating despite the plethora of political and economic bad news coming from Tokyo.

Nope — this is not about other currencies appreciating. This is about the USD tanking, and a low dollar means that Americans will spend more for the imports on which their economy depends. This heralds the onset of inflation in the American market. If Americans think they’ve had it tough since October, they’re in for a rude awakening.

The Paulson Trillion-Dollar Bonanza: What’s Not to Like, Part II

Yesterday I wrote at some length about how the US economy has gotten to the point where Paulson and Bernanke decided it would be worth spending 5 hours promising Congress gloom & doom unless they got a record-busting bailout measure passed. So, why not like this (theoretically) $700B plan to “save the markets”? There are a number of reasons, which I shall put forward here. For reference, here is the draft proposal for the bailout so you can follow along.

Continue reading “The Paulson Trillion-Dollar Bonanza: What’s Not to Like, Part II”