Head in the Sand (or somewhere else) On Dollar Decline
Dollar Falls to Record Low Against Euro on Rate Differential
By Lukanyo Mnyanda and Kosuke Goto
Sept. 12 (Bloomberg) -- The dollar fell to a record low again against the euro as investors bet the Federal Reserve will reduce its target interest rate, narrowing the gap between the U.S. and Europe.
The currency declined for a sixth day, the longest losing streak since April, after the National Association of Realtors yesterday cut its home sales forecast, stoking concern the housing slump is spreading. Investors meanwhile added to wagers the European Central Bank will raise borrowing costs by year-end.
``The fundamentals for the dollar remain poor because the Fed's the only major central bank that's likely to cut interest rates,'' said Adam Cole, head of global currency strategy at RBC Capital Markets in London.
Anyone who believes the problems with the fall of the dollar are related to the sub-prime bubble bust, housing price declines or short term interest rates just hasn't got their headphones on.
The buck has fallen by half since the impeached Bill Clinton was replaced by the un-impeached George Bush and the reasons are evident to those who will look;
The reinvention of huge deficit spending
$2 trillion pissed away to the super-rich
An unfunded war
Total destruction of any and all cost-controls related to that unfunded war
The spiraling that occurs when foreign investment is repaid with dollars worth half what they were when the investment was made
Hank Paulson and Ben Bernanke may choose to ignore those issues and their credentials are far superior to mine, but their heads are just not in the game. The five factors I have enumerated above are not subject to dispute, nor are they any more irrelevant in this market than they have ever been in the past. The toilet, Ben and Henry, has been flushed.