Tuesday, November 08, 2005
On April Fool's Day, you had to spend $1.30 to buy a Euro. Today you can buy that same Euro for $1.17. That's an improvement of over 9% in the value of the dollar, which is a pretty significant move, in the direction opposite to that predicted by the New York Times because Bush's economic policies were what they were. So that must mean that Bush's economic policies are smart, right?
Here's the first thing I thought when I saw this latest drop in the Euro against the USD: I bet Tigerhawk is going to gloat some more about how wrong the NYT was. Thanks for living up to expectations.
(I LOST AT THE TRACK MONDAY AND I AM NOT A FINACIAL PROFESSIONAL.) /disclaimer
WARREN BUFFETT: (Zillionaire/"If you don't know jewelry, know the jeweler." - Warren E. Buffett)
SHORTING: By contract agreeing to deliver a commodity, in the future, at a price which is lower than the current market value.
HEDGING: You buy all of your boyfriends unique new watches while telling each of them they are special cuz they are.
NEW YORK TIMES: Darwinian style agitprop publication which emotionally depresses readers, to varying degrees, based on their rank in society.
APPEASEMENT-PROFITEERING: Aquiring wealth and power through elite social stature and int'l investment while dictating that your news/media syndicates present world affairs as uncontrollable and terrifying mulitcultural upheaval.
AGITPROP: Untruths and the presentation of such as truthful.
Today a guest on CNBC mentioned Warren Buffett's bearish position on the Dollar. The guest noted that Buffett had been shorting the Dollar.
The guest on CNBC said Buffett has now liquidated 25% of his EURO position but said guest comments that Buffett should be liquidating more because of the Dollar's strength. Buffett's bearish position on the Dollar is actually a hedge:
"The $20 billion bet has to be put in context. Berkshire has a huge portfolio of investments that includes $40 billion of Treasury securities. Budget and trade deficits are likely to make dollars worth less and bonds worth less. So the currency play is a partial hedge of a large position that can be read as bullish on the U.S."
FRANCE was also mentioned on financial TV today. Initially there has been no impact on France in markets after the start of the Islamic violence. The question is; Will there be a negavtive impact on France and the EURO as the psychological mechanisms of Islamic-Agression, Appeasement-Profiteering, Agitprop and Investor-Sentiment drag painfully onward into the near future?
Will the perfectly organized and patient global minority Islamic front flare up with more lower level violence in Europe and then drop the value of the Euro? Will periodic higher level Islamic guerilla attacks (terrorism), if occuring, in Europe also weaken the Euro? Will all of this theorectically send Buffett and his theoretically wasted hedging to the two dollar window?
Will Buffett's Berkshire-Hathaway-Holdings-(A) shares plummet from $89,910.10 per share to $79,910.10 per share?
"Nov. 7 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. reduced a bet against the U.S. dollar after losing more than $900 million from foreign-currency investments this year."
Will wealthy "multiculturalists" who appear on CNBC and blame EvErYtHiNg on Israel aid France in a time of need?:
Saudi Prince donates $20 million to Louvre
“This project ought to remind the French people and the world of Islamic civilizations’ essential contribution to our culture,” Donnedieu de Vabres said.
"French President Jacques Chirac proposed remodeling the wing three years ago, after the Sept. 11, 2001, terror attacks, to bridge the divide between East and West."
Just over the wire:
Dollar & Volcker-Greenspan, Gates-Buffett
By John Connor
A DOW JONES NEWSWIRES COLUMN
WASHINGTON -- American Enterprise Institute Economist John Makin, in a new economic outlook essay, tackles the question of why the U.S. dollar is rising again.
"Currency values are broadly determined by three factors: the performance of the issuing country's economy, the credibility of its central bank, and the size and liquidity of markets for financial assets denominated in the currency in question," said Makin.
"In view of these criteria, we shall argue that it is surprising that the dollar has not risen further," he said. "It may yet well do so."
Regarding the relative economies, Makin said aggregate growth rates in the U.S. have persistently outstripped those in Japan and the euro area by a fairly wide margin and that U.S. inflation expectations for the coming decade remain well contained despite a rise in inflation due largely to higher oil prices.
As for monetary policy, Paul Volcker and Alan Greenspan are the heroes of the plot in Makin's view, squeezing out and then containing inflation at the same time the U.S. enjoyed a nice trend growth rate that substantially exceeds the rates of Europe and Japan...
..Makin said the Fed enjoys an important advantage over the central banks of the euro area and Japan -- "absolute independence from government interference." Well, the word absolute might be a little strong.
"Ever since the presidency of Ronald Reagan, American presidents have learned that supporting the independence of the Federal Reserve as a protector of price stability has paid dividends in the form of stronger economic performance and sounder currency," Makin said, adding that the governments of Europe and Japan have not yet fully learned this lesson...
...after further dollar analysis, Makin said: "One final irony emerges from the dollar's defiant strength this year. America's two richest men, Bill Gates and Warren Buffett, are losing hundreds of millions of dollars having bet against the dollar on the premise that rising U.S. current account and budget deficits would weaken it.
"Maybe these two remarkable men should have pondered a little more the question of whether they could have become multi-billionaires in Europe or Japan, where the environment for growth and innovation is far less friendly and the underlying vigor of the economy is less conductive to a strong currency," he added.
Makin, by the way, started his essay off with a riddle. "Why is the dollar like a Republican president? Answer: Because the dollar faces incessant predictions of imminent collapse, but in the end it wins out over weaker alternatives."
-By John Connor, Dow Jones Newswires;