Wondering if any economists could comment on the euro/dollar battle and what it could mean to the housing market.

I've been reading articles and don't like what I hear. Here's just one:

http://www.gold-eagle.com/editorials_03/wallenwein040903.html

They said the same in the late '70s & early '80s.
The old "Bunker Mentality". Gold and silver were driven artificially high, benefiting those who had the real thing, (I did, I owned a coin shop at that time) and others who held options.
Interesting story below.
http://www.321gold.com/editorials/laborde/laborde012904.html

http://www.nndb.com/people/569/000055404/

We didn't have the euro then... and the oil reservers have been depleted...

Broker-
With all due respect, you got that article from a website that is used solely as an advertisment source for gold brokers. Of course they are going to tout gold. They work on commission, too!

No one can say for sure how the Euro is going to affect anything since it is still in its infancy.

The "Euro/dollar battle" is, in my mind, kind of a misnomer. It's premise is that the base valuation of both currencies are the same, and the Euro has outpaced the dollar. That is not true.

The increase in valuation of the Euro over the last several years is due to its increased usage. It would be interesting to see how much the Euro "increased" over the dollar when a new country adopts it. This reaction by the market acknowledges that the increase in circulation of the Euro makes it a more viable currency for trade.

For overall valuation, the Dollar will still win out. Without writing a dissertation, the reason in a nutshell is that the world market acknowledges the US as the epitome of capitalism.

The biggest actual threat the dollar sees is if China becomes a representative government with a focus on private-sector capitalism. The sheer amount of enterprise there would catapult China in front of the US as the world's foremost economic power.

I am not scared by gold brokers. In my opinion, most of them are wacky, doom and gloom types. Remember all the Y2K crap? The gold brokers were out in force.

Look at gold prices during global conflicts. Historically, gold is bullish during conflict. Right now, we are in conflict. This conflict creates uncertainty, thereby increasing the value of gold. Couple that with the fact that our current conflict is against an enemy that is sometimes invisible, and we can see why there is an additional increase of uncertainty, and thus, an increase in gold prices.

Gold will continue to go up for the next year or so, albeit not at it's previous pace. I then see a bear market for gold. That is, if we are not attacked again. If that happens, the whole $1700/oz. scenario becomes more of a possibility.

Buy gold in uncertain times. Sell gold in certain times.

"The biggest actual threat the dollar sees is if China becomes a representative government with a focus on private-sector capitalism. The sheer amount of enterprise there would catapult China in front of the US as the world's foremost economic power." by Greg in Atlanta

Right on the money, Greg. This process has already started. They're buying up all our bonds. They are already the second largest holder of US Treasuries in Asia, right behind Japan. By buying up our treasuries this delays the rise in yields and fall in value of the American dollar. Now, they have diversified in to yen, euro and the american dollar as Fan announces he has "lost faith" in the all mighty american dollar. The way I see it is this is all a smoke screen as we still have leverage with the US dollar over China using it as a catalyst in their revaluation of the yuan.

Here's another one ... different take...

http://www.thirdworldtraveler.com/Iraq/Iraq_dollar_vs_euro.html

There are a million different takes on what would affect our economy. Another one right up there with China (in my opinion) is Japan, who has the most vested interest in this countries Central Banking system (as a whole) in Asia. If their bubble ever burst, as some economists fear, the value of the U.S dollar would plummet.

Can you explain why that is? Is it because of how much in T-bills they own?

So much of the US economy and consumer sentiment is built around 'perceived weatlth" which for most people is equity in thier home... so I think this is a valid subject.

I've been doing some research on hedge-funds and the power they have over the markets and every part of our economy is intertwined. With the amount of debt we have racked up sooner or later we're going to have to pay the piper. Makes me think that they changed the US bankruptcy laws in advance of a meltdown so the banks and financial institutions could help limit their losses.

Where are you getting these articles? If half of the allegations in this article were true, the media would be all over them.

I just did a search on google for "dollar vs. euro" and these came up.

I started searching for info on hedge funds and an article came up concerning the bailout of LTCM and then it directed me to an article on how hedge funds are working to combat the euro....

Partially right.

A rise in bond yields generally means a rise in valuation of a currency, since investors looking to that currency want more bang for their buck.

I think your premise might be a little off.

First off, China cannot critique anyone about currency. The Chinese government does not allow any foreign parties in to examine their monetary system. So, when they tout the increases in their currency's value, it is unverifiable. Simply put, it is communist propaganda.

Secondly, diversification is the smartest thing they can do. IF they tried to "dump" US bonds in an economic emergency, they would be in trouble. Bonds are callable, but only by the issuing entity. So, if they wanted to sell 100% of their bonds, they couldn't just say, "we want our money". They would have to go to the open market.

HOWEVER- The government of the United States has guidelines in place that govern the sale of US debt by a foreign entity. If a foreign country owns a particular amount of debt, they have to ask permission to sell anything over a fixed amount at any one time.

So- The fact that China is diversifying leads us to think that not all is wonderful in commie-land. The constant misinformation about their own monetary system may have put them in a place where they have to survive off of other country's debt. Diversifying into Euro, Yen, Swiss Franc, etc. would allow the Chinese more latitude in order to keep their monetary system afloat. Just a theory.

The main threats of non-US interests investment in US debt is sluggish economic growth and a wacky interest rate market.

The last one was kind of conspiracy-based.

Go to the Econ depts at U of Chicago and Stanford. They should have some interesting articles on this. They are about as fun to read as the operating instructions on a Panasonic clock radio, but they are informative. If you have insomnia, read them at bedtime.

I think that google searches turn up information by credential-less sources or "advertorials" disguised as actual articles more often than we would like. This has been my experience when searching for articles on currency trading.

I hope you're right.

Seeing how everything we buy or use is tied to oil in some way, I think there may be more to this then rampant speculation.

The US can't keep printing money for free... and this is the best explanation for invading IRAQ that I've heard yet. I hope it's not true.

It also can explain alot of US policy torwards other countires that we Americans don't understand.

You guys are ALL on to something. The bottom line is this: The US cannot just mindlessly and endlessly print more dollar bills, issue more tbills and tbonds, etc. without a corresponding effect in the economy and the creation of inflation. That's right...our government is creating and perpetuating inflation of all price levels with this type of monetary policy.

For some of the aware folks out here, how many of you caught the "Raising of the debt ceiling" last few weeks by Congress at the urging of the Sec. of Treasury? Guess how many times this has happened in the past few years? Guess what funds they are raiding/journaling over like Enron in order to create more funds? This is one big fraud at perpetuating this empire, not counting all the "off-books" things that are occuring.

"Where are you getting these articles? If half of the allegations in this article were true, the media would be all over them. By Greg in Atlanta"


The media has had it all wrong for a while now. In particular, the lefts doom and gloom take on the economy, when in all reality we are IN the strongest economy we have had in decades.

During the Clinton administration we heard all about what a wonderful job that administration was doing and this doesn't even compare to what THIS administration has accomplished up until now. Where is this "news"?

You know, I'm sitting here watching economists last night at a round table discussion from both end's of the spectrum (politically speaking) and I was shocked as they ALL agreed on what I had pointed out above. It's not often you see that happen. I almost choked on my curly fry!