Dollar Tumbles Against Pound, Euro

Source: Wall Street Journal

The trend lower in the U.S. dollar remained firmly in place Friday morning as the euro pierced the $1.4000 level for the first time since early January.

The euro reached a high at $1.4008, its highest level since Jan. 2, before retreating modestly to the $1.3992 level, according to EBS.

Without any major new drivers in currency markets, the greenback continued a broad retreat that was triggered Thursday by concerns in the market that the U.S. could follow the U.K.'s ratings outlook downgrade from Standard & Poor's Corp.

The pound recovered from the turbulence it suffered in the wake of the S&P announcement Thursday and set a new high for 2009 at $1.5937.


Read more: http://online.wsj.com/article/SB124299624143947231.html

I don't get it. With the US government (and many others) spending money they don't have, with the major economies in the toilet, why is the NY Stock Market still holding on? What don't I understand?

Considering that the DOW was as high as 14000 at one point, calling it "holding on" at 8000 is a stretch. There is something called "book value". I understand that even that is a moving target these days, but none the less, your question implies you think there is something "overvalued" about 8000. What number are you searching for?

I realize that houses and stocks aren't the same thing. But why are all these houses on the market? Because the prices are too high. It's sad, but real estate is something I actually do understand, and there is no such thing as a book value. There is fair market value, and there is commercial value. Right now people are trying to hold on to the commercial value, ie the value of a house in the rental market. But the sheer number of houses on the market means that something has to give- and it will be the price. And when those prices give, and houses start selling for fractions of their 2006 prices then the rents will come down as well, because the new landlords out there will be able to undercut the existing ones. When they undercut the existing landlords, those landlords will lose their investment properties, and banks will eat the losses. So why is JPMorgan trading at 75% of its regular value?

You're overlooking something called booked orders. Many companies in one sense or another have contracts for work into the future. Furthermore, they have a RECENT track record of sales. That is the basis for what their current value is. But you seem to believe that it is currently over valued. So I'll ask again. How much lower than 8000 do you think it should be?

I don't know what the market "should be at" but it seems it's not falling relative to the economic conditions. I sat there a couple of years ago and listened to folks saying it was undervalued at 14,000 or whatever it was at the time. I believe the biggest mouth on that score was someone named Michael Glass or Glassman, I haven't seen him since.

I don't want the stock market to be in the toilet, I just don't understand why it isn't deeper in the dumper than it is when we're printing huge amounts of money and real property and major goods are rotting on the market (not to mention a huge war cost).

It's already "in the dumper". We're at 8000+. Markets anticipate the future and they went down to HERE because of all the things you reference. It all came true (to some extent). The worst fears (that took it to 6500) were that worse things could happen. All of them did not. Now it looks like this is about as "bad" as it's going to get so we are "hovering" at 8500. (By the way, it will probably go below 8000 a little her in a week or so). The price you see the market at now basically reflects where markets think the economy will be at Christmas. They think we'll have an economy that is about on par with February of 1998. And in reality, since there has been inflation since then, it's probably more like 1997. If you don't think a 12 year loss of value is "in the dumper" I'm not sure what you're hoping for. Numbers like 2000 are a decade prior to that. And that's without an inflation adjustment. The population growth alone in the last 22 years should justify a higher market value.

Prices did NOT stop to drop till 1938, as the stock market lost 89% of its value (and this is ignoring the affect of FDR's devaluation of the Dollar in Terms of Gold when FDR set the price of Dollars at $35 a ounce instead of the $20 an ounce it had been since the 1870s).

During this time period (1930-1938) various "Sucker" rallies took place, where money poured back into the Stock Market and thus increased the value of the Stock Market, and then started the slow decline again.

This pattern appears to be action again. This follows the old rule that a Bubble takes twice as long to deflate as to inflate, for people will hold onto stocks after they have lost value hoping the stock will go back up (This rules applies to housing and other items also, thus low inflation is considered "good" for it slowly devalues money and in real terms values go down as the stated money value appears to go up, i.e. $10,000 home is sold at a real value of $8000 but in inflated dollars value of $10,000. The owner sells at that point for he is NOT seeing a lost, he is taking one but inflation covers it up).

My point is the big fear is we are following a Classic post-bubble burst, it takes twice as long to deflate and it took to inflate and the only way to speed up the deflation is monetary inflation (i.e, double digit inflation do people can keep their %500,000 homes and sell them at that price, even through in constant dollar terms the house is only worth $50,000).

thanks to Sr. Arbusto.

Now, counter cyclical stimulus spending is putting us even more in the tank.

During the Reagan and Bush I and II administrations, we got used to tax cut after tax cut, and perhaps business and economics types the world over are coming to the conclusion that we are unlikely to ever get the debt under control.

The only good thing would be if our exports suddenly grew significantly.

However, since China does not look like it is willing to float or otherwise fairly value the yen, we will be undercut by them on many items.

given that banjo and parts parts will be more realistic to buy again for shipping to the UK. Yes - I'm a selfish bastard.

I'm so happy The Recession Is Over and all it took was engineering an Artificial Stock Bubble Based on Propaganda and Rhetoric, and Helo Ben's Debt Monetization to do it.

Now all we have to do is keep feeding banks more printed toilet paper and we can get this thing into high gear!

Then we get the Auto's to complete Bankruptcy and we can REALLY get to partying.

Geithner Is CHRIST!

PRAISE MARTY MOOSE!

:crazy: