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#31
08-27-2007, 05:02 PM
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Re: How will the subprime crisis ultimately affect our country?
Overall do you guys think this will continue to lower the overall value of the US$? If so, what do you think the ramifications of that could be?
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#33
08-27-2007, 05:58 PM
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Re: How will the subprime crisis ultimately affect our country?
[ QUOTE ]
Overall do you guys think this will continue to lower the overall value of the US$? If so, what do you think the ramifications of that could be? [/ QUOTE ] tough to say. +US$: recession or slow growth means lower spending and reduced CA deficit, lower import demand. further, the lower the dollar falls, the more attractive its goods look to foreign purchasers. -US$: recession or slow growth means the fed will likely lower rates hurting IR diff trades (as zero EV as they may be overall, they are still done). +US$: slow growth in the US may increase demand for undervalued US assets and as the economy hits the trough, demand for equities & bonds will rise in international circles (especially sovereign wealth funds whose reserves are massive). this effect would not likely take affect till after the fact of recession hits obviously. regardless, the ramifications obviously depend on the sign and size of the price change of the trade weighted USD. i highly doubt the USD will appreciate throughout all of this. i could see positive feedback loops seriously hurting the economy once it gets falling (and incent the fed to lower rates to ensure a soft landing). demand for US assets could seriously fall as other knock on effects are seen to reduce economic performance (equities & bonds). things like this are obvoiusly complex. global risk aversion seems to push up demand for short dates US debt. but only to an extent. very likely not enough to prop up a fundamentally weak currency. Barron
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#34
08-27-2007, 06:14 PM
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Re: How will the subprime crisis ultimately affect our country?
[ QUOTE ]
ya know, i've read the bible (old testament since i'm a jew) and it was a while ago. i can't recall exactly HOW the jews became slaves in egypt just that at one point they were. could you refresh my memory and then clearly state your point about how this relates to the "larger" problem of which subprime defaults are a "symptom"? thanks, Barron [/ QUOTE ] in a word, debt. debt at all levels is at a record high. americans have been financing their standard of living by borrowing and by the dollar being the world reserve currency, both of which are going to come to an end. also the information I've seen is that the US has been in a recession (negative real growth) for the past year.
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#35
08-27-2007, 06:25 PM
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Re: How will the subprime crisis ultimately affect our country?
People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding.
BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant. As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies).
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#36
08-27-2007, 06:28 PM
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Re: How will the subprime crisis ultimately affect our country?
I also want to add that what effect will higher imports have on our economy? Many manufacturers in the US rely heavily on cheap goods from overseas, for many non complex machined parts and other raw materials. Secondly, most made in America goods are already overpriced compared to their foreign counterparts. If imported goods prices increase, we as consumers are stuck between a rock and a hard place. We have to buy more expensive imports and expensive domestic goods. At least thats how I see it.
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#37
08-27-2007, 06:59 PM
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Re: How will the subprime crisis ultimately affect our country?
[ QUOTE ]
People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding. BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant. As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies). [/ QUOTE ] The US is either the second or the third biggest exporter in the world, behind Germany and basically tied with China.
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#38
08-27-2007, 07:25 PM
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Re: How will the subprime crisis ultimately affect our country?
[ QUOTE ]
[ QUOTE ] People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding. BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant. As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies). [/ QUOTE ] The US is either the second or the third biggest exporter in the world, behind Germany and basically tied with China. [/ QUOTE ] In addition, if you're right that the choice is between "expensive Euro goods and expensive US goods" then prices will come own as demand for them wanes. Its when you have cheap Euro goods competing with expensive US goods that the balance of trade becomes an issue. The declining dollar helps that situation
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#39
08-27-2007, 07:46 PM
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Re: How will the subprime crisis ultimately affect our country?
[ QUOTE ]
Quote: ya know, i've read the bible (old testament since i'm a jew) and it was a while ago. i can't recall exactly HOW the jews became slaves in egypt just that at one point they were. could you refresh my memory and then clearly state your point about how this relates to the "larger" problem of which subprime defaults are a "symptom"? thanks, Barron [/ QUOTE ] first website that googled up. "people of egypt" refers to jews in egypt. http://dangoor.com/75001.html [ QUOTE ] At the end of the 14 years all the people of Egypt had sold first their cattle, then their land, then themselves, in order to get sustenance. [/ QUOTE ]
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#40
08-27-2007, 08:30 PM
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Re: How will the subprime crisis ultimately affect our country?
[ QUOTE ]
[ QUOTE ] People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding. BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant. As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies). [/ QUOTE ] The US is either the second or the third biggest exporter in the world, behind Germany and basically tied with China. [/ QUOTE ]As I mentioned, other than capital goods and agricultural items, what else are we really exporting? Secondly, why should we have to make the decision between expensive imports and expensive domestic goods? Can't you see the problem there?
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