Chuck
01-08-2008, 03:34 PM
And sadly we Americans are borrowing well into our children's futures. :(
The focus of CleanMPG is on saving energy, but a byproduct is saving money.
Not only is the US consuming energy at unsustainable rates, but spending money it' does not have.
To be blunt, millions of Americans are pretending be part of a lifestyle that can afford MacMansions and land barges.
We have gone from a lending nation less than twenty years ago to a borrowing nation.
Reference Why America's Currency Is the World's Problem (http://www.spiegel.de/international/business/0,1518,520700,00.html) (the beefy part is Part 6 (http://www.spiegel.de/international/business/0,1518,520700-6,00.html))
Now it's back (a devalued dollar). Nothing has really changed since then. The Americans -- the citizens and government alike -- continue to live beyond their means. And economists agree that as long as this continues, the tendency will be for the dollar to lose value.
But opinions are divided over what happens next. There are three possible scenarios. Which of them becomes reality will depend on whether the participants behave more or less rationally -- or whether panic breaks out.
In the best-case scenario, the dollar's decline will slow down. Americans will tighten their belts, saving more and spending less. Imports will decline while exports grow, because American goods will be cheaper and more competitive. The foreign trade deficit will shrink and the dollar's fall will end :flag:
This could change if -- in the second scenario -- the subprime crisis continues to grow, possibly expanding into consumer loans. In this case -- when the "infection spreads," as a leading German banker puts it -- banks would be forced to make far more drastic value adjustments. Not only would this poison the spending climate, but it would also undermine foreign investors' confidence in the US economy.
But what happens if the dollar just keeps on falling? What if fear of a permanent decline in values spreads in all of those countries that have accumulated vast quantities of the US currency in the past few years, countries like China, Japan and the Asia Tiger states, as well as the oil-exporting countries and Russia? What if panic breaks out and the new mantra is to "get out while you can?" :eek:
The focus of CleanMPG is on saving energy, but a byproduct is saving money.
Not only is the US consuming energy at unsustainable rates, but spending money it' does not have.
To be blunt, millions of Americans are pretending be part of a lifestyle that can afford MacMansions and land barges.
We have gone from a lending nation less than twenty years ago to a borrowing nation.
Reference Why America's Currency Is the World's Problem (http://www.spiegel.de/international/business/0,1518,520700,00.html) (the beefy part is Part 6 (http://www.spiegel.de/international/business/0,1518,520700-6,00.html))
Now it's back (a devalued dollar). Nothing has really changed since then. The Americans -- the citizens and government alike -- continue to live beyond their means. And economists agree that as long as this continues, the tendency will be for the dollar to lose value.
But opinions are divided over what happens next. There are three possible scenarios. Which of them becomes reality will depend on whether the participants behave more or less rationally -- or whether panic breaks out.
In the best-case scenario, the dollar's decline will slow down. Americans will tighten their belts, saving more and spending less. Imports will decline while exports grow, because American goods will be cheaper and more competitive. The foreign trade deficit will shrink and the dollar's fall will end :flag:
This could change if -- in the second scenario -- the subprime crisis continues to grow, possibly expanding into consumer loans. In this case -- when the "infection spreads," as a leading German banker puts it -- banks would be forced to make far more drastic value adjustments. Not only would this poison the spending climate, but it would also undermine foreign investors' confidence in the US economy.
But what happens if the dollar just keeps on falling? What if fear of a permanent decline in values spreads in all of those countries that have accumulated vast quantities of the US currency in the past few years, countries like China, Japan and the Asia Tiger states, as well as the oil-exporting countries and Russia? What if panic breaks out and the new mantra is to "get out while you can?" :eek: