Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Is Greenspan now trying to sink the dollar?

by Jerome a Paris Tue Feb 26th, 2008 at 06:05:17 PM EST


Greenspan tells Gulf to drop dollar   

Alan Greenspan, the former chairman of the US central bank, or Fed, has said that inflation rates in Gulf states, which are reaching near record levels, would fall "significantly" if oil producers dropped their US dollar pegs.
Speaking at an investment conference on Monday in Jedda, Saudi Arabia, he said the pegs restrict the region's ability to control inflation by forcing them to duplicate US monetary policy at a time when the Fed is cutting rates to ward off an economic downturn.

"Bubbles" Greenspan, the man who did more than anyone on the planet to ensure that there would be inflation on a global scale by bringing interest rates down to insanely low levels and flooding the markets with cheap credit is now trying to con Americans one last time by engineering a de facto default by the US on its foreign obligations, via devaluation.


Remember that Greenspan's lax monetary policy was accompanied by the largest ever tax cut for the rich. In effect, he created a lot of money, and Bush ensured that all of it went to the richest Americans in the form of inflated and untaxed asset prices (asset wealth is even more unequally shared than income). Of course, in the absence of actual wealth creation in the underlying economy, most of the money was not real, but it was as real as existing money, and both lost value relative to hard assets, like oil or commodities (or even gold). But both lost value in parallel, which means that the new repartition of money created by the Bush-Greenspan persists, resulting in a very real transfer, at the end of the line, form the middle classes and poor to the very rich.

We're now in that losing value, or "revelation" phase. All dollars are losing value, but assets, especially those invested abroad, can be more easily protected than wages. Silly middle class Americans - the only "assets" they bought from abroad were cheap, no-pollution-or-labour-standards-included junk and these do not appear to keep their value over time.

:: ::

Greenspan words do matter because one of the reasons the current bubble lasted so long is the mercantilist policies of the East Asian emerging economies and the oil exporting countries. Both share an unusual dependence on exports for their growth, and, more to the point, on dollar-priced exports. For them, pegging their currencies to the dollar made a lot of sense as a way to ensure that their products remained competitive in the global market, by avoiding all the uncertainty linked to variable exchange rates (and all the pain potentially associated with a appreciating currency). But it did mean that they had to live with America's monetary policy. and it meant that they were paid in dollar IOUs than in actual goods. But the dollar was as good as gold - or as good as the word of the US government, right?

But Bush happened. IOUs were created out of thin air on the largest scale ever. And inflation happened. And it spread to those dollar-accumulating countries, as they had too many dollar IOUs sloshing around, and had to buy their stuff from non-bubbly euro invoicing countries.

And now Greenspan tells them - "gotcha, suckers - all these IOUs you got from us, you'd better dump them because they're not good for much." Which could of course cause a self-fulfilling prophecy as dollar holders see the value of their reserves drom, are tempted to sell, and these sales cause further drops. So far the sang froid of all these countries has been quite remarkable, and the fall of the dollar very orderly, but  a fall it has been, and a quite big one - from 1.23 euros in 2000 to 0.67 today is a quite remarkable 45% drop...

The $1.5047 euro, the $101 barrel, and the $950 ounce of gold are just people trying to play catch up with Greenspan's legacy. They reflect that foreigners are left to hold the bag on an unprecedented scale for US profligacy, and are unlikely to be taken for fools once more.

The times of living above the country's means are over. Pity that once a very small chunk of the population did get to live about its means, and now everybody has to pay for their excesses. But the culprits do have a name: Bush and Greenspan.

Display:
http://www.dailykos.com/story/2008/2/26/171941/084/190/464597

And based on the comment by Migeru in this morning's Salon

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Feb 26th, 2008 at 06:13:12 PM EST
can be found here

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Feb 26th, 2008 at 06:16:18 PM EST
[ Parent ]
Greenspan's bubble effectively debased the dollar, so now he's just continuing his work through other means.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Feb 27th, 2008 at 11:27:06 AM EST
[ Parent ]
Maybe you have already written somewhere about it, but maybe not:
Some economists have argued pretty much for an strongly increasing dollar compared with the Euro at the end of last year, based on purchasing power parity, and said, the PPP value of the Euro would be between 1.1 and 1.2 Dollar.
Based on this estimations of real inflation in the US, I was not convinced. Do you give anything on PPP, or do you think the measurements are just faked. With the given inflation numbers 6 of the last 7 years in the US would have been recessions.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers
by Martin (weiser.mensch(at)googlemail.com) on Tue Feb 26th, 2008 at 06:24:48 PM EST
European Tribune - Comments - Is Greenspan now trying to sink the dollar?
Pity that once a very small chunk of the population did get to live about its means,

Doesn't this actually contradict your (spot on) diagnosis of the "Anglo Disease"?

There has been a concentration of financial "wealth" in fewer and fewer hands, but these people were the ones who were already loaded.

I don't think the Uber-Rich have been living beyond their means. What property they have will probably be free of mortgage, and the transient bubble price to such "rentiers" is irrelevant: they ain't selling, but rather renting out to "little people".

These few been profiting - via the Debt machine and the Bubble - at the expense of the many who have been borrowing against the inflated assets created by the Bubble, and consuming high off the hog.

ie it's not a "very small chunk" of the population, but a very large chunk who - because their real income has been declining (hoovered off by the few via financial Capital)- continued to live beyond their ever reducing means and put the US into global hock.

That, as I understand it, is the Anglo Disease.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Feb 26th, 2008 at 06:44:51 PM EST
You could argue, however, that robbing other people to pay your bills is a way to live beyond your means...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 26th, 2008 at 09:20:13 PM EST
[ Parent ]
I want to know why the fucker isn't in Guantanamo...

Any thoughts?

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Feb 26th, 2008 at 11:58:23 PM EST
Why?

Because it would mean that an awful lot of other fuckers would also be in Guantanamo with him. It's not that easy to transfer an entire city like day-time DC 2107 km south.

Mind you, bad old Stalin managed to do just that with an entire country. But Uncle Joe had his own ways, many of them quite uncivilized, deplorable and, on a more practical note, broadly inapplicable to the present circumstances.

by Francois in Paris on Wed Feb 27th, 2008 at 03:14:53 AM EST
[ Parent ]


The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Wed Feb 27th, 2008 at 08:53:15 AM EST
[ Parent ]
The $1.5047 euro

...already $1.5067...

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Wed Feb 27th, 2008 at 04:21:07 AM EST
$1.5088 reached... it shot above $1.50 enough to stay there, so no psychological limit for further continuous slide.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Feb 27th, 2008 at 05:13:28 AM EST
[ Parent ]
Bloomberg.com: Commodities

``This record is purely a play on the weakness of the dollar, as investors use both crude and gold as a hedge against inflation,'' said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland. ``If the dollar keeps getting weaker, and we don't have inventory builds today, it could drive prices towards $105.''

Crude oil for April delivery rose as much as $1.20, or 1.2 percent, to $102.08 a barrel in electronic trading on the New York Mercantile Exchange.



*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Feb 27th, 2008 at 05:21:06 AM EST
[ Parent ]
It is nt he salon now.. I put the reference..

there was a tiem when a dolalr was wordth 100 pesetas.. which would be roughly 1.65$ fo a euro.. and I think that is the palce where the dolalr is going to stay during tis long long US half-recession (which I have been advocatign for years to rebalance the world economy and oil consumption).

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Wed Feb 27th, 2008 at 06:35:54 AM EST
[ Parent ]
most of the money was not real, but it was as real as existing money

Money is an information token backed by the institutions that allow it to function as a means of payment, store of value, standard of deferred payment, and unit of account.

And the large majority of money in our economies ... I say "our" because every member of the EU is a monetary production economy in the same sense that the United States is ... is produced as a side-effect of bank lending.

Now, sure, we can talk as if "money" consists of gold duckets (in old wooden chests) or copper cash (threaded on string through their hole in the center and tied up in bundles) ...

... but in the US and France and the UK, "money" is either a bearer note from the appropriate Reserve Bank or an entry in the credit side of some commercial bank somewhere.

In consideration of what money really is, and of the fact that all sorts of mischief along the lines of "natural rates" of this and that is likely to be done by pandering to the confusion that money really is "valuable stuff", rather than "information tokens of value so long as our financial system keeps working" ...

... then perhaps we need to find ways to express things that do not pander to common misconceptions about money.

And most especially on pieces on the Daily Kos, where there are ever so many people who are self- or other-described experts on the basis of being able to convincingly repeat neoclassical fairy tales about money and finance.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 05:42:04 PM EST
BruceMcF:
perhaps we need to find ways to express things that do not pander to common misconceptions about money.
How do we do this?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Feb 27th, 2008 at 05:59:26 PM EST
[ Parent ]
In this case, simplify to the normal money ... bank accounts ... and say it in terms of that bank-credit money from the liability side of the financial institutions ...

So in this case, instead of

In effect, he created a lot of money,
... "He encouraged the system to create a lot of money"

... and instead of

most of the money was not real, but it was as real as existing money

"However, most of the money was not backed by real wealth, but by financial fantasy."


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 06:17:22 PM EST
[ Parent ]
Having dug very deep in that question (studying under, among others, Aglietta and Orléna of "La violence de la monnaie" fame), I agree with your point, but it's a topic that cannot be dealt with in one paragraph, or even a few.

So I try to skirt around it. Does it weaken the overall point?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Feb 27th, 2008 at 06:07:45 PM EST
[ Parent ]
... point, because those whose misunderstanding gets additional buttress here will in any event find hundreds of information sources, being created to sell to Wall Street, that buttress the same misunderstanding.

But I think the point can be made in language that directly reflects actual monetary institutions, even if it is not belaboring the point about what those institutions are.

That is, no, a diary cannot be written that is simultaneously about both this topic and the actual rules that govern modern monetary institutions ... because a diary can only coherently be about so much at one time ... but it can be written in the simple shorthands of the chartalist Banker's school rather than the simple shorthands of the quantity theory Treasury school.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 06:23:36 PM EST
[ Parent ]
Right, it's about being careful about word choices and turns of phrase. It may take a paragraph to explain why one expression is better than other but that is not necessary. It suffices to phrase the discussion in the right frame.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Feb 27th, 2008 at 06:30:42 PM EST
[ Parent ]
Yikes - I can't handle metaphysics after a glass of wine, but this sounds like metanomics which is more than I can handle any time...

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Feb 27th, 2008 at 07:22:45 PM EST
[ Parent ]
... its just Meta about talking about our economies versus talking in the conventional language of traditional marginalist economics.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Feb 28th, 2008 at 01:36:55 PM EST
[ Parent ]
BruceMcF:
Money is an information token backed by the institutions that allow it to function as a means of payment, store of value, standard of deferred payment, and unit of account.

I have to disagree. You share a common misconception that Money is an object when it is in reality a relationship.

This Monetary Rationale by E C Riegel is IMHO definitive.

In particular this abbreviated summary

Breviate

The purpose of money is to facilitate barter by splitting the transaction into two parts, the acceptor of money reserving the power to requisition value from any trader at any time. .

The method of money is to employ a concept of value in terms of a value unit dissociated from any object.

The monetary unit is any adopted value, which value is the basis relative to which other values may be expressed.

The monetary system is a cooperative agreement among traders to regulate the issuance of monetary instruments, to express and exchange values in terms of the monetary unit, and to keep account of such exchanges.

Monetary instruments may be any evidences of monetary transactions that serve the convenience of trade and the purpose of accountancy.

Wherever a barter system - such as the Swiss WIR or proprietary systems like Bartercard - incorporates "time to pay" or credit, then the result is a monetary system requiring a "Value Unit".

So, while Credit may be Money (as it is when Money is bank-created Debt), it is normally only a necessary part of  a monetary system.

Likewise, an abstract "Value Unit" is not Money any more than Credit is, but merely another necessary element of a monetary system.

Money is implicit in the system, and the agreement/documented relationship between the system participants.

In particular Money is not a "store of value":  "Money's Worth" such as gold, may be a store of value, and in that role constitutes "Wealth" or "Capital".

Riegel speculated elsewhere - and I agree with him - that Money exists only in the instant of exchange ie it is "Dynamic Value". Everything else is "Capital" or "Potential Money" consisting either of obligations (accounts payable and receivable) or rights of ownership and use(Property). ie Capital may be characterised as "Static Value".

I believe that the analogy between Energy and Value is exact, and I regard Economics as the "Physics of Value".

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Feb 27th, 2008 at 07:22:10 PM EST
[ Parent ]
... except that there is a system of relationships that gives it value?

And, indeed, this is surely not correct:

The purpose of money is to facilitate barter by splitting the transaction into two parts, the acceptor of money reserving the power to requisition value from any trader at any time

Money is first and foremost an institution, and as soon as we start talking about "the purpose" of an institution as a first principle, we are not talking about the empirical institution itself, but entering into the institution as participants and trading folkviews regarding the institution.

And when a work is so deeply entrenched in the monetarist fairy tale approach to the historiography of money as to say:

Civilization began with exchange, and exchange began with whole barter. Whole barter means the exchange of things for things, with each transaction complete in itself.
... its hard to know where to begin.

Civilization began with Cities, and Cities began with Big Men (priests, kings, whatever) redistributing taxes collected in kind. The first money were receipts that stood as proof of payment for those taxes.

And, yes, literally tokens, and yes, of course, obviously, with no value independent of the system of relationships where the information content of the token had meaning.

Barter is a fine thing to get luxuries and other status goods ... because, after all, if you fail to get the luxury or status good, it just means that the Joneses get ahead of you, when you would rather keep up with the Joneses.

However, for staples, reliance on barter would be insane. For staples, the problem of the dual coincidence of wants is not a minor annoyance that can be worked around for a century or decade while waiting for one of the items being bartered to emerge as the medium of exchange ... its a problem of, if nobody who has cereal grains wants what you have to offer, you starve then die.

Even worse is the following form of argument:

The total of 176 answers to the 22 questions showed such contradictions, inconsistencies and disagreements that we feel it a patriotic duty to state that there appears no understanding of the subject of money among the contributing authorities or among others whose writings we have studied.
... contradiction taken not as conclusively proving that they can't all be entirely right, but as proving that they are each and every one of them entirely wrong.

Now, if you take several chartalist theories, of whatever quality, and several quantity theories, of whatever quality, and throw them into a mass, it is certain that that will be a mass of confusion and contradiction, because there are fundamental premises upon which the two groups of theory will disagree, and both groups cannot be simultaneously right.

But that can not be used to disprove the validity of each and every theory in the mass.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 11:45:15 PM EST
[ Parent ]
Barter is a fact of life: Riegel's insight is that a monetary system is all about "split barter" transactions between multiple counterparties.

ie a time delay between two "legs" of a barter exchange.

1/ I accept your IOU against value now.

That is the first "leg" of a split barter transaction.

2/ I then exchange your IOU for something of value from Migeru.

That is the second leg of the "split barter" transaction.

This all takes place within a "monetary system" which requires a "Value Unit" and a legal framework, and of course also some means of guaranteeing performance in respect of IOU's...

We currently achieve money/split barter by accepting Bank issued IOU's as "Value" (when in fact they are claims over Value or "anti-Value"), and in fact banks' economic function is as "guarantee providers".

These implicit Bank guarantees are not backed 100% by Value = "money's worth" (as yours and mine are - ours are ultimately backed by our earning power, or by something we "own"). They are actually backed by maybe 8% of "Value"= Capital which is an "in-house", or proprietary "default fund", the extent and nature of which is set by banking regulators - the BIS in Basel.

I don't think Banks as credit intermediaries are either necessary (the internet allows us to bypass them) or sustainable (compound interest on money created as debt is mathematically unsustainable).

If we can back a mutual guarantee with a provision into a mutually owned (held by a "custodian") "default fund" the result is Banking without the Bank as credit intermediary.

But that will actually be great for the Bank because, in this model, a bank operates without putting its capital at risk. It is now a pure service provider managing the creation of credit by setting "guarantee limits", rather than "credit limits", and also handling the necessary accounting system and "default fund" held by the Custodian.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Feb 28th, 2008 at 08:56:54 AM EST
[ Parent ]
There are plenty of ways of exchange and repartition other than barter...

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Thu Feb 28th, 2008 at 12:22:33 PM EST
[ Parent ]
Civilization did indeed begin with cities (that is a tatutology), but the big men came later. These were parasites that lived off the new wealth created by the city, and most likely came from ouside, i.e. the horse cultures.
This is important because we are still living under their regime. A regime, however, that is neither comcommitant with, or necessary to, civilization.
by bil on Thu Feb 28th, 2008 at 10:39:34 AM EST
[ Parent ]
Not sure about that. Indeed, the differentiation between "villages" and "cities" is often considered as the presence of marks of a hiearchised society with people filling different functions, as this shows the presence of a surplus from agriculture allowing task specialisation. Writing, one of the hallmarks of a beginning civilisation, is often created and used by the elite.

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Thu Feb 28th, 2008 at 12:25:56 PM EST
[ Parent ]
European Tribune - Is Greenspan now trying to sink the dollar?
And now Greenspan tells them - "gotcha, suckers - all these IOUs you got from us, you'd better dump them because they're not good for much." Which could of course cause a self-fulfilling prophecy as dollar holders see the value of their reserves drom, are tempted to sell, and these sales cause further drops. So far the sang froid of all these countries has been quite remarkable, and the fall of the dollar very orderly,

Presumably they're not selling in large volumes because they don't want the dollar to fall even more.  But wouldn't they be mad to continue buying Dollars with their exports?  

Most of the exporting countries are still extremely cash rich and have to put their continuing surpluses somewhere - and I very much doubt its the Dollar if they can possibly avoid it.  Ergo the Euro will become the international reserve currency almost by default.

This will not be without its problems for the EU as EU exports will be priced out of many markets by the rising currency.  The only thing that will save the EU is that it has a very large internal market as well.

Presumably the EU financial industry will also be a long term beneficiary - with London and New York losing out.  But we still have a very long way to go before this plays out, and the US will discover that once you lose the trust of your trading partners, its very hard to win it back.

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Feb 27th, 2008 at 05:44:13 PM EST
... big current-account-surplus countries ... the neo-mercentalists and the resource-rich.

The resource-rich can back out of the dollar if the neo-mercantalists do not, because the active defense of dollar pegs or dollar-dominated pegs requires neo-mercantalists to issue domestic currency and use it to acquire dollar denominated assets and hold them.

However, the resource-rich can only do so if they do it slowly and cautiously, because something that looks like a run on the US$ may spur the neo-mercantalists to shift their peg ... which would lead to a meltdown in the US$, and a meltdown of the US$ will meltdown much of their accumulated financial holdings directly, and because major crises in any specific main money center is bad for business in all money centers, will also hurt their € and £ and ¥ holdings.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 07:07:53 PM EST
[ Parent ]
I damn sure hope so ... a strong dollar policy is primarily for the benefit of those with portfolios with large holdings of dollar-denominated assets and for those in the military-industrial complex who wish to hide the negative impact of massive government consumption of military equipment and services justified by the network of 700+ foreign bases.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 05:44:28 PM EST
A strong currency does reflect a strong economy (but it does not really work the other way round).

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Feb 27th, 2008 at 06:05:55 PM EST
[ Parent ]
... its a relationship of cumulative causation.

So, yes, a country that has experienced a collapse of its currency has few routes to a strong currency other than a strong economy ... but even then, the choice to have a stronger currency rather than stronger demands in labor markets is a policy choice made in the context of a strong economy.

However, a country that has had a strong economy, and in particular a country that has had the strongest economy in the world, can have additional routes to a strong currency ... just as one abstract example, a tacit collaboration with nations pursuing neo-mercentalist policies of a steeply discounted peg against "such a currency" (cough US$) would be able to maintain a higher indirect exchange rates for "such a currency" than otherwise.

That's not a permanently sustainable policy, but its sustainable over the medium term ... for example, over the long term the other parties to the game may not find themselves either able to sustain the neo-mercentalist policy against political demands to deliver standard of living gains, or willing to hold the accumulation of foreign exchange reserves denominated in an artificially inflated currency.

So, US$0.05 (€0.04 soon to be €0.02) version: a strong economy permits a country to sustain a "strong currency" policy, in service to its wealthy or in service to foreign adventurism (or both) ... but a "strong currency" policy without the backing of a strong economy is a foolish policy, and the policy that the US has been pursuing as if having a "strong currency" magically creates the strong economy that is required to make a "strong currency" policy sustainable.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 06:37:07 PM EST
[ Parent ]
Well said.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Feb 27th, 2008 at 06:41:02 PM EST
[ Parent ]
BruceMcF:
a "strong currency" policy without the backing of a strong economy is a foolish policy, and the policy that the US has been pursuing as if having a "strong currency" magically creates the strong economy that is required to make a "strong currency" policy sustainable.
You make the US sound like Argentina prior to the corralito.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Thu Feb 28th, 2008 at 07:11:44 AM EST
[ Parent ]
... a lot of countries have tried this trick of keeping a strong currency on the back of a weakening economy, and it does not usually end up well.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Feb 28th, 2008 at 12:29:58 PM EST
[ Parent ]
What do you make of the arguments that a strong Euro is going to kill the Italian economy?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Thu Feb 28th, 2008 at 05:35:33 PM EST
[ Parent ]
Nothing some appropriate transfers from the rest of the Eurozone can't fix.
by Colman (colman at eurotrib.com) on Thu Feb 28th, 2008 at 05:43:47 PM EST
[ Parent ]
A lot of ideological baggage needs to be dropped in the European Union before that can happen.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Thu Feb 28th, 2008 at 05:45:40 PM EST
[ Parent ]
Shock Socialism.
by Colman (colman at eurotrib.com) on Thu Feb 28th, 2008 at 05:49:20 PM EST
[ Parent ]
Maybe Italy should do some structural changes in its economy instead?

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 29th, 2008 at 10:15:48 AM EST
[ Parent ]
... I reckon the EU can manage it ... and if it can't, I'm not close enough to the facts on the ground to work out what the pitfalls are.

Of course, whether it will or not, that is always an open question, but I reckon it can be done.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Feb 28th, 2008 at 06:44:11 PM EST
[ Parent ]
"Mexico. Brazil. Argentina. Mexico, again. Thailand. Indonesia. Argentina, again.
And now, the United States."
Enjoy Paul Krugman, and in his blog there is quite some more comparison of the US with emerging markets.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers
by Martin (weiser.mensch(at)googlemail.com) on Thu Feb 28th, 2008 at 01:34:45 PM EST
[ Parent ]
stop talking about this a couple of months more?

Please>

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Feb 27th, 2008 at 06:23:46 PM EST
You know the old joke: the most depressing thing is not that people will sell their soul to the devil, but how cheaply they sell it.

So try us!

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Feb 27th, 2008 at 06:32:56 PM EST
[ Parent ]
francs.

(anciens.)

?

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Feb 27th, 2008 at 06:36:28 PM EST
[ Parent ]
I mean, you did mention that your money was in dollars. Do you really have that many dollars to commit to such a payment in hard currency?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Feb 27th, 2008 at 06:40:01 PM EST
[ Parent ]
If those dollars can be put into Euro call options with the right maturity, in a non-US money center ... why, sure, there'd be the ability to skim off plenty of hard currency if you have an option to buy it at a steep discount on its spot price.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Wed Feb 27th, 2008 at 07:10:55 PM EST
[ Parent ]
I think you want to put them in a US money center - on margin!

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Thu Feb 28th, 2008 at 07:09:06 AM EST
[ Parent ]
... goes belly up?

Yeah, I know, if the option comes into the money, they may have to top up their reserve against the option (I know it works that way with futures contracts) ... but that only helps me up to the point they go belly up. That's exactly when the call option is going to be giving the biggest windfall gain.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Feb 28th, 2008 at 12:21:26 PM EST
[ Parent ]
I found a bunch of old francnotes while packing, lots of 'em, an envelope stuffed with them we apparently forgot about, and the BOF site sez they're still good, so I actually think I'm covered. Not enough alas for real estate in Strasbourg though, holy crap what happened there in the past 7-8 years? I thought the flambee was limited to Paris and the coast...

Wasn't aware they were still calling the US currency "dollars" anymore in order to avoid confusion with actual hard currency like AUD or CDN or HKD btw.

In my finance circles it's refered to as the NAP, or New American Peso.

Probably take awhile before this filters down to the folks at FT.


The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Feb 27th, 2008 at 07:13:10 PM EST
[ Parent ]
What made the recent French housing bubble different to the previous 1990 one is indeed that prices raised across all the country.

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Thu Feb 28th, 2008 at 04:05:04 AM EST
[ Parent ]
... as was my habit in Oz. I'd not be surprised to see the A$ above its US$1.20 rate when it was originally created in the early 60's.

The A$ was, of course, created at 10 shillings to the dollar, so older folks call a A$0.10 coin a shilling. And a penny was original 1.2 pence ... but I never heard anyone call a penny anything, since they phased pennies out before I arrived.

And the US$ is still a harder currency than the Jam$, Bajan$ or EC$, so there, too.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Feb 28th, 2008 at 12:26:59 PM EST
[ Parent ]
I had this idea of borrowing $ to buy a portfolio of inflation-indexed € bonds...

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Thu Feb 28th, 2008 at 07:07:16 AM EST
[ Parent ]
A very good plan imho.

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Thu Feb 28th, 2008 at 12:47:01 PM EST
[ Parent ]


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