[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[0] 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[1], I'm not holding my breath 
expecting the dollar will restore its antebellum value by gaining 70% 
over the next 6 months.

-Dave

:: :: ::

[0] 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?

[1] 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.

other thoughts:

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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