The Almighty Dollar

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RVInit
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Re: The Almighty Dollar

#26

Post by RVInit »

TollandRCR wrote:
Mon Sep 17, 2018 2:11 pm
The US insistence that other countries also cease economic interactions with Iran was not morally or legally justified. It is time for the American imperium to die. It will be ironic that the president who most strongly expects it to prevail will have taken the actions that kill it.
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Re: The Almighty Dollar

#27

Post by Addie »

Bloomberg
Europe Finally Has an Excuse to Challenge the Dollar

The plan for a “special purpose vehicle” to bypass U.S. sanctions on Iran could test American dominance of the global financial system.


With more and more European companies fleeing Iran following the re-imposition of U.S. sanctions, it may be tempting for Americans to write off Europe’s efforts to save the Iran nuclear deal. It would be wiser to resist the temptation. A new plan by Germany, France, Britain, China and Russia to create special financial infrastructure to work with Iran could be a credible challenge to the U.S. dollar’s long global dominance.

Federica Mogherini, the European Union’s top foreign-policy official, said in New York on Monday that the plan to create a “special purpose vehicle” for trade with Iran “will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran, and this will allow European companies to continue trade with Iran.” The technical details are still to be worked out, but her wording provides some useful hints on how the scheme will work.

The U.S. sanctions, reimposed after President Donald Trump pulled his country out of the 2016 agreement that severely restricted the Iranian nuclear program, make it virtually impossible for an entity with any U.S. exposure — including correspondent accounts with U.S. banks — to do business with Iran. The cost of defying American sanctions can be steep: in 2015, BNP Paribas SA, the French bank, paid a penalty of almost $9 billion for violating U.S. sanctions against Iran, Cuba and Sudan. The French government’s angry protests over the “disproportional” punishment were ignored.

Now sanctions are back, it is clear to the Europeans (as well as the Chinese and Russians) that any future transactions with Iran must go through entities insulated from the American financial system. In a July 2018 report, Axel Hellman of the European Leadership Network think tank and Esfandyar Batmanghelidj of the Iranian company Bourse & Bazaar proposed “a new banking architecture” in response to the U.S. sanctions, relying on the existing system of “gateway banks,” such as the Hamburg-based Europaeisch-Iranische Handelsbank, and the European branches of private Iranian bank. “A further third category of gateway banks can be envisioned,” they wrote, “which would comprise of special purpose vehicles established by European governments, or as part of public-private partnerships in order to facilitate Iran trade and investment.”

The new plan appears to focus on this third option. Mogherini indicated that Germany, France and the U.K. would set up a multinational state-backed financial intermediary that would deal with companies interested in Iran transactions and with Iranian counter-parties. Such transactions, presumably in euros and pounds sterling, would not be transparent to American authorities. European companies dealing with the state-owned intermediary technically might not even be in violation of the U.S. sanctions as currently written. The system would be likely be open to Russia and China as well.

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Re: The Almighty Dollar

#28

Post by Addie »

CNBC
Something behind market sell-off no one is talking about: Strong dollar

Stocks investors are spooked about a lot of things, and the strong dollar biting into earnings growth is now one of them.

The dollar index , which measures the greenback versus a basket of other currencies, jumped 0.6 percent to 97.43 Monday, a 17-month high. As the dollar rose, the Dow Jones Industrial Average lost more than 400 points, and the S&P 500 was down 1.3 percent at midday.

The dollar's strength Monday was largely attributed to weakness in the British pound and euro because of negative Brexit news and concerns about Italy's budget. But the dollar has also been rising on trade war concerns, rising U.S. interest rates and weaker growth rates outside the U.S.

"It could be a challenge for the stock market in the fact that about 40 percent of the S&P 500 earnings are generated from outside the United States," said Michael Arone, chief investment strategist at State Street Global Advisors. "As the dollar strengthens, that has certainly created risk to those earnings. Another thing that could be a risk is, as the global economy has been slowing this year, the rising dollar poses a problem for many countries outside the U.S. and that has contributed to the slowdown in growth. The question is whether the U.S. economy can withstand a slowdown in global growth, and I don't think it can in the long run."

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Re: The Almighty Dollar

#29

Post by Addie »

Reuters
Dollar weak as U.S. Treasury yield curve inversion sparks recession fears

NEW YORK (Reuters) - The dollar edged lower on Tuesday as U.S. Treasury yields fell, feeding fears that the Federal Reserve could pause in its rate-hike cycle, while an inversion in part of the yield curve was taken as a red flag for a potential recession.

Lingering uncertainty regarding China and the United States’ ability to resolve their trade war provided some support to the greenback. Still, investors were nervous about an inversion of the curve between three-year and five-year U.S. Treasury notes and between two-year and five-year notes. ...

The dollar stumbled last week after Federal Reserve Chairman Jerome Powell on Wednesday said U.S. rates were nearing neutral levels, which markets interpreted as signaling a slowdown in rate hikes.

The yield curve inversion and comments from Fed speakers are causing investors to rethink the potential of a recession or if rate hikes are nearing the top, said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.

“If that’s the case, obviously the dollar has had a nice run, I think we may be seeing the top on the dollar,” he said.

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Re: The Almighty Dollar

#30

Post by Addie »

Reuters: Dollar hits 4-month low against the yen as chaos engulfs Washington

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Re: The Almighty Dollar

#31

Post by Addie »

Reuters
'Flash crash’ rips through Asia's currency markets sending the yen into orbit and the Aussie dollar crashing to Earth

SINGAPORE (Reuters) - The yen soared versus its peers on Thursday, breaking through key technical support levels as heightened global growth risks pushed investors into safe haven-assets in moves exacerbated by thin holiday volumes. ...

Market participants fled to the safety of the highly liquid Japanese yen, which rose 1.4 percent versus the dollar on Thursday, fetching 107.38.

In early Asian trade, the dollar tumbled to an intra-day low of 104.96 yen, its lowest since March 2018 before recovering some of its losses as trading progressed.

The spike in risk aversion triggered massive stop-loss flows from investors who had held short positions on the yen for months. A lack of liquidity, with Japan still on holiday after the New Year, added to the sharp surge. ...

Longer-term, however, analysts see other reasons for the yen to rise.

"The yen is undervalued and can strengthen both if the dollar weakens across the board, but also if our broadly positive view that the global economy will stabilize at potential growth this year proves to be wrong, the Fed pauses and/or we get a risk-off market correction-as we saw at the end of 2018," said Athanasios Vamvakidis, FX strategist at Bank of America Merrill Lynch.

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Re: The Almighty Dollar

#32

Post by Addie »

CNBC
Dollar rises again despite Trump trying to ‘jawbone’ the US currency lower

The U.S. dollar rose against a basket of various currencies on Monday as investors looked past comments made by President Donald Trump over the weekend regarding the greenback.

The U.S. Dollar Currency Index, which tracks the U.S. currency’s performance against others like the euro, was up 0.2 percent at 96.74. Against the euro, the dollar gained half a percent and traded at $1.132.

The moves came after Trump said on Saturday he was not pleased with how strong the dollar had become relative to other world currencies. “I want a dollar that’s great for our country but not a dollar that’s prohibitive for us to be doing business with other countries,” he said. ...

The Federal Reserve signaled earlier this year it will be “patient ” in raising rates this year after hiking four times in 2018.Trump criticized the Fed’s decisions throughout 2018. In October, he said the central bank had “gone crazy ” by continuing to raise rates.

Over the past 12 months, the dollar has risen more than 7 percent and is up about 1 percent over the past month. Last year, the greenback gained more than 4 percent.

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Re: The Almighty Dollar

#33

Post by Addie »

Reuters
Dollar off two-year highs ahead of U.S. GDP, shares subdued

LONDON (Reuters) - The dollar slipped from 23-month highs on Friday ahead of keenly awaited U.S. gross domestic product data for the first quarter, while global shares were on track for a fifth successive weekly gain despite subdued trade.

The dollar index, which measures the greenback against a basket of peers, was down 0.06 percent on the day, off a nearly two-year high hit on the previous day.

The U.S. currency has gained strongly over the past few days as investors expect the U.S. economy to outperform the rest of the developed world. The dollar index is set to end the week 0.7 percent higher. ...

“Today’s GDP print in the U.S. has become even more important given the recent move higher in the dollar,” said Mohammed Kazmi, portfolio manager at UBP.

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Re: The Almighty Dollar

#34

Post by RTH10260 »

No tornado tweet storm from Washington DC yet?

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Re: The Almighty Dollar

#35

Post by neonzx »

So how bad is this for me when I go to BoA later today to convert 5,600 paper pesos back into USD?
To which Trump replied, Fuck the law. I don't give a fuck about the law. I want my fucking money.

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Re: The Almighty Dollar

#36

Post by Addie »

You'll get close to $300USD, so not bad.
neonzx wrote:
Fri Apr 26, 2019 11:51 am
So how bad is this for me when I go to BoA later today to convert 5,600 paper pesos back into USD?

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Re: The Almighty Dollar

#37

Post by phaseolus »

...The real risk for the United States is both more subtle and profound. The [Europe-Iran Special Purpose Vehicle] is a put option on American hegemony. It will allow Europe to begin experimenting with alternative arrangements to U.S.-based infrastructures that could be the seed of a greater transformation. In a recent report, “Towards a Stronger International Role of the Euro,” the European Commission described U.S. unilateralism as a “wake-up call regarding Europe’s economic and monetary sovereignty.” ...

As former State Department official Jarrett Blanc warns, “The Iran SPV, though, will teach its managers lessons that can be applied to other cases in the future,” such as Russia, if the U.S.-Russia relationship continues to worsen. Blanc describes a “nightmare scenario of the U.S. pushing its financial power so far that our allies and partners feel compelled to build financial alternatives to New York and the dollar,” with profound consequences for “the tremendous influence the U.S. enjoys as the global backbone for even simple banking operations.” Former Treasury Secretary Lew expressed doubt in February at the Atlantic Council that the SPV could work as hoped for Iran, but warned that
the plumbing is being built and tested to work around the United States. Over time as those tools are perfected, if the United States stays on a path where it is seen as going it alone…there will increasingly be alternatives that will chip away at the centrality of the United States.
...

The fights over the SPV and Chinese technology firms are only the beginning of a much broader set of infrastructure disputes as America’s accidental empire devolves into bitter wrangling between multiple rival imperiums, likely leading to further splintering and contention between regional infrastructural systems. Plumbing problems did not lead to the decline and fall of the Roman empire. They might, however, help precipitate the decline and fall of America’s.

- https://nationalinterest.org/feature/am ... ture-52707

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Re: The Almighty Dollar

#38

Post by RTH10260 »

To note that once the SPV is in good working condition it's possible that other markets and geographical regions will want to use this payment option cause they don't like the US directly involved and intervening with the payment processes.

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Re: The Almighty Dollar

#39

Post by Addie »

Foreign Policy
Report: Europe’s Dream: Escaping the Dictatorship of the Dollar

Trump’s hostile behavior is reinvigorating efforts to turn the euro into an alternative to the world’s dominant currency. If only the Europeans could find some way to do it.


Europe’s quest to find an alternative to U.S. financial dominance and the global rule of the dollar has only intensified since French and German leaders first howled about the need to recover their economic sovereignty last summer. But European governments are finding that coming up with a workable plan is a lot easier said than done—leaving them fuming but still vulnerable to Washington’s strong-arm tactics.

That doesn’t mean, however, the Europeans are going to give up trying—and that poses a long-term danger to U.S. power.

Countries such as France and Germany first bristled at the Trump administration’s decision to unilaterally pull out of the 2015 Iran nuclear deal and reimpose crippling sanctions on Iran, putting European firms squarely in the crosshairs of U.S. sanctions. America’s Iran policy still rankles, and Europe’s efforts to create a so-called special purpose vehicle to enable some trade with Iran continue, with meetings taking place this week even with oil tankers ablaze just outside the Persian Gulf.

But since the return of the Iran sanctions last year, the Trump administration has dramatically stepped up its use of sanctions and other economic weapons to force friends and foes alike to cow to its foreign-policy wishes.

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Re: The Almighty Dollar

#40

Post by Addie »

WaPo
Trump suggests he could take steps to weaken U.S. dollar, fueling confusion

President Trump gave mixed signals this week as to whether he would intervene and try to weaken the U.S. dollar, telling aides Tuesday he had ruled out the idea but telling reporters on Friday he was still open to it.

On Tuesday, Trump rejected a recommendation from senior adviser Peter Navarro that the United States should take steps to weaken the U.S. dollar to boost U.S. exports, people briefed on the exchange said. Trump said intervening could damage the U.S. economy and cause problems that would difficult to control, the people said.

But on Friday, Trump told reporters he had not ruled anything out. He said the strong U.S. dollar was making it harder for U.S. companies to boost exports, something he blamed in part on the Federal Reserve’s decision to raise interest rates last year.

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Re: The Almighty Dollar

#41

Post by HST's Ghost »

Oh, maybe he waivers because that rattling peabrain of his can't prevent the doltus from grokking the fact that his idiotic tariffs policy is hurting the US ecomony, directly and indirectly, so that little roullette ball of gray matter lands in the currency manipulation hole, but there is some dim memory of criticizing China of currency manipulation, so it's back to "we'll see what happens..." and Twitler waits for marching orders from Fox News and the voices in his head...
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Re: The Almighty Dollar

#42

Post by RoadScholar »

There you go, sugar-coating it again... :-D
The bitterest truth is healthier than the sweetest lie.
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Re: The Almighty Dollar

#43

Post by Addie »

Business Insider
The dollar just hit its highest level of 2019, even as Trump continues his full-court press for a weaker currency

Trump's frustrations with the US dollar continue.

The president again took to Twitter on Monday to lament the strength of the US currency, which he says runs counter to his trade-war objectives. Meanwhile, the Bloomberg Dollar Index — which surveys the greenback versus a basket of global currencies — climbed to its highest level of 2019 that same day.

"Our dollar is so strong that it is sadly hurting other parts of the world," Trump tweeted.

As part of his weak-dollar crusade, Trump has even gone so far as to suggest the US should intervene and artificially weaken the dollar, moving the trade conflict into currency war territory.

But, so far, instead of directly debasing the currency, Trump has repeatedly blamed the dollar's strength on the Federal Reserve and implored it to slash rates. After all, monetary easing expands the overall money supply, reducing the value of each existing dollar in circulation.

The Fed should cut by "at least 100 basis points, with perhaps some quantitative easing as well," Trump said. If that happened, it would boost the US economy and the world economy would be "greatly and quickly enhanced — good for everyone!" he added.

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Re: The Almighty Dollar

#44

Post by Gregg »

The Fed should cut by "at least 100 basis points, with perhaps some quantitative easing as well," Trump said. If that happened, it would boost the US economy and the world economy would be "greatly and quickly enhanced — good for everyone!" he added
I hereby nominate him to be the Chancellor of the Exchequer of the Golgafrincham B Ark Colony.
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Re: The Almighty Dollar

#45

Post by tek »

It is clear how he managed to bankrupt so many business ventures.

Every day is just another lap around the goldfish bowl for him. Neither yesterday nor tomorrow have any existence.
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Re: The Almighty Dollar

#46

Post by Addie »

Business Insider
Trump's tweet citing the 'highest dollar in US history' is flat-out wrong. Here's where the dollar actually stands.

On Wednesday, Trump tweeted another message of discontent aimed at Federal Reserve Chair Jerome Powell. That included another mention of how strong the dollar is, with Trump saying "yesterday, 'highest Dollar in US History.'"

It was the latest entry in Trump's crusade for a weaker dollar, which he says will give the US a leg up in the ongoing global trade war. He's continuously lashed out at the Fed and Powell as the reasons for the greenback's strength.

But the president's claims about the greenback's place in history are simply not true. Although one dollar measure maintained by Bloomberg hit its highest level of the year on Tuesday, it's far from the highest reading of all time. In fact, other gauges are dollar strength aren't even close to year-to-date highs.

Here are four data points that show where the US dollar stands against other currencies right now, relative to history. Each one handily dispels the notion that the greenback is at record strength:

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Re: The Almighty Dollar

#47

Post by RTH10260 »

I remember the US$ to be at relatively stable rate of CHF4.50 or higher well into the 1980s. I had a stash of Traveller Cheques in US denominaion at the time (remember: credit cards with their paper handling and fees were not welcome in many places). Then the currency started to give way. I exchanged those traveller cheques at a stop loss rate of CHF3.50 just a couple weeks before the $ made a nosedive to CHF2.50 where it lingered for quite some years. Recently haging around and below the CHF1.00 value.

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Re: The Almighty Dollar

#48

Post by Addie »

Reuters
World needs to end risky reliance on U.S. dollar - BoE's Carney

JACKSON HOLE, Wyo. (Reuters) - Bank of England Governor Mark Carney took aim at the U.S. dollar’s “destabilising” role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.

The dollar’s dominance of the global financial system increased the risks of a liquidity trap of ultra-low interest rates and weak growth, Carney told central bankers from around the world gathered in Jackson Hole in the United States.

“While the world economy is being reordered, the U.S. dollar remains as important as when Bretton Woods collapsed,” Carney said, referring to the end of the dollar’s peg to gold in the early 1970s.

Emerging economies had increased their share of global activity to 60% from around 45% before the financial crisis a decade ago, Carney said.

But the dollar was still used for at least half of international trade invoices - five times more than the United States’ share of world goods imports - exposing many countries to damaging spillovers from swings in the U.S. economy.

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Re: The Almighty Dollar

#49

Post by Addie »

CNBC
A 'growing club' of 'very powerful countries' is steering away from using the dollar

The U.S. dollar has been the world's major reserve currency for decades, but that status could come under threat as "very powerful countries" seek to undermine its importance, warned Anne Korin, from the Institute for the Analysis of Global Security.

"Major movers" such as China, Russia and the European Union have a strong "motivation to de-dollarize," said Korin, co-director at the energy and security think tank, on Wednesday.

"We don't know what's going to come next, but what we do know is that the current situation is unsustainable," Korin said. "You have a growing club of countries — very powerful countries."

To be sure, the dollar is seen as one of the safest investments in the world, and it rises during times of economic or political tumult.

But one factor curbing countries' enthusiasm for the greenback is the prospect of being subject to U.S. jurisdiction when they transact in dollars. When the U.S. dollar is used or transactions are cleared through an American bank, entities are subject to U.S. jurisdiction — even if they have "nothing to do with the U.S.," Korin told CNBC's "Squawk Box." ...

But if the dollar declines in influence, other currencies could fill the role traditionally played by the greenback — especially China's yuan.

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Re: The Almighty Dollar

#50

Post by fierceredpanda »

Obviously it's worrisome that friendly countries are considering moving away from the dollar as a reserve currency. However, I am deeply skeptical that many countries would turn to the yuan as a viable alternative. Trump and Navarro's rhetoric with regard to China may be overheated, but Beijing's history of currency manipulation is very real, and who wants to run the risk that the unaccountable Chinese government one day decides they can afford to devalue the yuan just to screw with everyone who had bought it up?

I'm no expert, but I would think the Euro and Japanese yen would make much more logical reserve currency alternatives to the dollar. The pound sterling might also qualify if Brexit hadn't made a complete hash of that. (This is me lamenting for the 1000th time that I didn't invest some money shorting the pound back in 2016. I could have made a killing.)
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