Financial experts issue dire warnings as Fed and Treasury continue to say they are "committed to a strong dollar"
March 14, 2008
Another prominent economist has warned that the bottom may soon drop out of the dollar completely as the currency hits fresh lows and continues to sink worldwide.
Peter Schiff, a dollar-bear at Security Pacific Capital, told the London Telegraph that the greenback faced the danger of outright collapse as countries in Asia and the Middle East mull plans to break their dollar pegs, which are fueling inflation across the region.
"The decline could accelerate rapidly. The world is still holding a lot of dollars it doesn't need," he said.
Schiff is well respected amongst the major financial publications, primarily due to the fact that over two years ago he accurately forecast that the U.S. housing market was a bubble that would soon come to bust, and also that the crisis would extend to the credit card lending industry.
Schiff is also the economic advisor for Ron Paul's Presidential campaign.
The greenback reached a record low of $1.5651 against the euro yesterday, meaning it has lost 15 percent against the euro since September alone. It also dipped below 100 yen, its lowest level in 12 years, and fell below parity with the Swiss franc for the first time in history today.
Other analysts share Schiff's fear of a total dollar collapse. Mitul Kotecha, head of currency strategy at Credit Agricole, said: "The real risk remains that we get a dollar rout. The news from from the US is consistently negative and investors are actually not overly long euros."
The Negative dollar sentiment is now becoming global, with nations who have traditionally accepted the dollar as equal to or better than local currency now rejecting it outright. Reports suggest that the once mighty dollar is no longer good enough even for Manhattan flea market traders:
In Manhattan's Bowery district, Billy LeRoy, the owner of Billy's Antiques & Props, prefers payment in euros so he can stockpile the currency for his annual antique buying trip to Paris.
"Whip out dollars at the French flea market now, and they'll shoo you away," he said at his store near apartment buildings where Europeans are snapping up units because they've become dirt cheap. "Before it was like the second coming of Christ, but now they don't want it or if they do take dollars, they're going to take their pound of flesh."
Other nations mulling a turn away from the dollar peg are likely to be influenced by the fact that the Chinese yuan has risen to the highest level since the end of its dollar link in 2005.
As the Financial Times reports, analysts are in no doubt that the weakness of the dollar is being caused by Fed rate cuts and injections of liquidity, which it says constitute efforts to steady markets.
Executives, investors and politicians say they're becoming increasingly worried. Dollars are ``printed on toilet paper,'' Marc Faber, managing director of Marc Faber Ltd., said in an interview with Bloomberg Television.
Yesterday U.S. Treasury Secretary Henry Paulson again repeated the now engrained mantra that he backs a "strong dollar'' and refused to elaborate when questioned at a press conference in Washington.
"The "strong dollar" message is so familiar, and is uttered with such unfailing regularity, that market observers often roll their eyes when they hear it, and short-term traders pay it little heed," reports Market Watch.
In the wake of the news that the G7 nations may intervene to shore up the dollar, analysts have stated that such action may now be futile considering that the Fed is seemingly unfazed by the currency's total degradation and has the ability to effectively "pull rank" over policy makers who may be genuinely worried about the decline.
Supporting the dollar may also prove futile, as its decline partly reflects the Fed's cuts and the ECB's decision not to follow, said Chris Turner at ING Financial Markets.
The Fed has cut its main rate by 2.25 percentage points since September to 3 percent, while the ECB's rate is still at a six-year high of 4 percent.
"Failed intervention is worse than no intervention,'' said Turner, ING's head of currency research in London. "Policy makers have their hands tied and will defer to the global priority of the Fed slashing interest rates.''
Meanwhile the corporate media in the US continues to echo the Bush administration's snowjob policy on the dollar crisis by ludicrously citing "experts" who claim that the unprecedented plunge of the greenback is "not necessarily a bad thing for the U.S. economy."
by Larry Simons
To comment on that last sentence, here is Dana Perino just over a week ago saying how the plunge of the dollar is "not necessarily bad". Oh, wait, that's right. She didn't say ANYTHING about it, remember? She wasn't allowed to talk about it. Hmmmmmm. I wonder why she would be stifled from talking about something that is viewed as "not necessarily bad" by her superiors.
Watch the clip:
Yeah, I always avoid things that aren't "necessarily bad" too. I don't blame the American people for the dollars' collapse, I blame Bush, and Bush alone. He caused this with the astronomical cost of this war. It is bankrupting our country. Ron Paul has been warning us about this for years, and now it has come to pass...our new great depression. All because we have deranged lunatics in the White House that have no limit to their obsessive need for greed.
I remember not too long ago when supporters of Bush were ecstatic because of the economy. It was the only thing they could think of in which Bush hadn't totally fucked up (Of course, the fact is, that when Bush supporters were bragging that the economy was good even then, it wasn't). Now, it has surpassed recession stages and has entered into, according to some experts, the new great depression.
The sad part of all this is there are STILL complete morons in this country that do not see this as Bush's fault and will still support the maniac-in-chief. Of course I'm angry that gas is near $4 a gallon and food prices are rising, who isn't? But, a small part of me is very happy. I'm happy that all this bad shit is happening, because something is needed to wake up these fucking MORONS who STILL stand by George Bush, who is by FAR and officially the worst president this country has ever had....period.
The cover-up of 9-11 wasn't enough to wake people up. The hundreds of lies that led us to war wasn't enough. The ending of our rights and shitting on our Constitution wasn't enough. Torturing prisoners wasn't enough. Being business partners with the Bin Laden's wasn't enough. Being a total fucking idiot wasn't enough. Being a member of Skull & Bones and the Bohemian Grove wasn't enough. Using fake fear on the American people wasn't enough. Nothing seems to be enough.
Sadly, maybe it will take Americans to be hit hard, in their wallets or literally by means of another false flag terrorist attack by the Bush administration. Do I want this to happen? Of course not. This is why I didn't vote for this prick EITHER time, but sadly, it may the only thing to start a revolution in this country. I realize that the Neo-con assholes in this country will take what I just said as advocating terror. If it makes you feel better, go ahead.
Notice I didn't say "Another 9-11 attack is NEEDED" like Philadelphia Daily News writer Stu Bykofsky said last August, in which FOX News AGREED. I said, "sadly, it might take that to wake people up". Two different things.
The Neo-cons will get their wish with the retirement of General William Fallon on March 11, 2008. Now the Neo-con assholes in Washington, in the media and the ones at home who support this psychopath we have as our President can rejoice when we attack Iran and our gas doubles or triples in price overnight and Iran bombs our targets overseas and domestically. Sadly, and even sickeningly, even after that there will be mentally ill people in this country that still stand by Bush.
Where do these people come from?