[FoRK] oil producers shun dollar
Dave Long <
dave.long at bluewin.ch
> on >
Wed Dec 13 14:04:53 PST 2006
> If I were a currency speculator (and I'm not), I'd bet on a stronger
> dollar over the next 6 months. When the mainstream press picks up on a
> financial trend, that almost always signals that the trend is about to
> end, or at least moderate for a while.
When we were visiting Switzerland, pre-war, the dollar bought as many
euros as the euro does dollars now, so this has already been a
several year trend and certainly not recent news. However, while a
moderation would be personally convenient, I'm not holding my breath
expecting the dollar will restore its antebellum value by gaining 70%
over the next 6 months.
:: :: ::
 CHF moves against EUR, of course, but they're decent proxies for
each other, as the USD swings are about an order of magnitude greater.
So, lets see -- if dinner for two (no wine) at McDo's runs about $25
now, it would only have been $17 a few years ago. How's that work out
for the Big Mac index?
 actually, the current situation doesn't seem to be such a bad
hedge, and implies a certain amount of imputed value in the US stock
markets: for at least the last couple of years, when the dollar
strengthens, the market declines, and when the dollar declines, the
market picks up -- which is the behavior one would expect if shares
were alternately becoming cheaper or more expensive relative to the
value of the currency in which they are quoted.
1. is the net worth of the current white house denominated largely in
dollars, or in barrels?
2. there are two ways to end a housing bubble: house prices can
decline, or the currencies in which they are quoted can weaken. Not
having been a Texan during the savings & loan crisis, I haven't ever
seen a real estate market where the prices explicitly crash -- but I've
certainly seen inflation implicitly do the same to sideways prices.
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