Martin D. Weiss, Ph. D. discusses the declining dollar and its impact on other currencies and economies. In this issue of Money and Markets, Dr. Weiss explains how the slumping U.S. economy is driving the dollar lower and pushing foreign currencies even higher.
Jupiter, Fla. (PRWEB) October 3, 2007 -- Martin D. Weiss, Ph. D. discusses the declining dollar and its impact on other currencies and economies. Dr. Weiss explains how the slumping U.S. economy is driving the dollar lower and pushing foreign currencies even higher.
The dollar's crash is now so fast and so severe; it's setting off nearly every other market on the planet.
- The euro has just catapulted to 1.427, its seventh consecutive all-time record high.
- The Brazilian real has made its highest close since September 2000.
- The Indian rupee is close to a nine-year peak.
- Even currencies like the Philippine peso and the Botswana pula are now stronger than the U.S. dollar.
- And gold has just hit its highest level in 27 years. The price of gold (based on December futures) has jumped to $750, the highest since January 22, 1980. That was just one day after it had spiked to its all-time record high of $873.
Meanwhile, commodities have just had their biggest monthly gain in 32 years.
- The CRB Index, representing 19 commodities, has surged 8.1% this month, the most since July 1975.
- Crude oil has hit $83.90 a barrel, the highest ever.
- And wheat, helped along by droughts in Australia, has absolutely gone ballistic, reaching a record $9.51 per bushel. That's more than triple its level of just two years ago.
In addition, due to the dollar decline, expect impacts on U.S. bond markets, the U.S. mortgage market and the U.S. stock market. Everywhere, the greenback's fall will leave its mark.
And now, with the dollar crash gaining momentum, some on Wall Street are finally beginning to see the light. And the press has even started to recognize some of the other voices now warning about this disaster.
Phenomenon #1: Americans have virtually abandoned the age-old practice of saving money.
For example, in 2005, the personal savings rate of Americans dipped below zero. Consumers depleted net savings to finance purchases of big-ticket items. And even since 2005, the most the average American household has saved is a fraction of a penny per dollar of disposable income.
Phenomenon #2: In order to continue growing, the United States borrowed massively from the hard-earned savings of foreign households.
The U.S. borrowed from Japan, Germany and elsewhere. That's why America must now attract some $3 billion of foreign capital each and every business day in order to keep its economy growing. And that's why the U.S. now owes foreign investors and governments over $7 trillion, according to the U.S. Treasury.
Phenomenon #3: The dollar decline is accelerating in large part because of the bursting of the subprime mortgage bubble.
Phenomenon #4: The days of open-ended American consumption are likely to come to an end, making it hard to avoid a recession.
Phenomenon #5: The political winds are also blowing against the dollar.
China will have to let the yuan surge. And Japan, which competes and trades heavily with China, will have to let the yen do the same.
Phenomenon #6: The more Fed Chairman Ben Bernanke follows the Alan Greenspan easy-money script in response to the housing collapse, the greater the risk to the dollar. Yet that's precisely what Bernanke is doing, and will continue to do.
The housing collapse is gaining momentum, and the dollar's woes have barely begun.
Between July and August, the sales of existing homes plunged 4.3% to an annual rate of 5.5 million, the lowest reading in five years.
Meanwhile, existing homes, condos and co-ops up for sale jumped more than 19% from a year ago to 4.58 million units, the highest level in recorded U.S. history. There are now about two million more single-family houses on the market than was typical in the 1990s and early 2000s.
Result: Home prices are plunging nationwide, and in key areas of the country, they're in a virtual free fall. The average home price is down 9.7% in Detroit, 8.8% in Tampa, 7.8% in San Diego and 7.3% in Phoenix.
Foreclosure filings skyrocketed 115.3% to almost 244,000 in August. Nevada was the hardest hit state, with one in every 165 households in foreclosure. California, Florida and Georgia are not far behind.
"On Thursday September 27, the U.S. Dollar Index measured against a basket of the world's main currencies, broke its all-time low made in 1992. That was the watershed. So on Friday, the dollar crashed 62 basis points, falling clearly below that all-time low. And next, the biggest decline ever can be expected," according to Dr. Weiss.
For more information and to read the full article, visit this link:
http://www.moneyandmarkets.com/press.asp?rls_id=967&cat_id=6&
About MARTIN WEISS & MONEY AND MARKETS
Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.
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