This is definately a subject matter dear to me because I travel annually outside of the US. This year, 2007, I felt more poor, specially coming from the richest country in the World (at least I’d like to think that still).
There are some great observations/notes by our daily pig contributors vis-a-vis the $ devaluation. In fact there was another trend a few days ago with respect to cashing out out of the foreign markets & preparing a position/cash for down payment to buy/invest in the US real estate based on the devaluation of the mighty buck. I have contemplated this option, as my family has some RE assets in EU, but I can’t imagine this is still the perfect timing. Moreover, I doubt that the RE bottom is near (I feel we’re a couple of years off..or so…I think 2010 or 2011).
I also remember that our current VP (Dick C.) has moved a significant lump sum of $ (around $20 mil or so) about 2 years ago into banks in Switzerland and away from the $. This was definately a great signal to all at the time that political pressure on our FREE economic system is a standard. The small club of Washington DC folk with lots of cash have someone always protecting them.
Having said that, I don’t think the $ will stop depreciating, in fact there are almost weekly announcements by various countries (China, Quatar etc) that will no longer hold $ as a state of valuation & they will go to the Euro or some other currency (swiss frank or BP). This will continously devalue our US $ since there will be less holders of it in worldwide.
Yes, a devalued US $ makes exports cheaper & allow us to deal w/ the trade deficit, but we are dealing with bigger issues and the US Economy is big time in debt. I wonder what the next move from the FED will be at the next meeting (holding the Fed rate the same or dropping it?). This will tell you the current shape of our political pressure (lower rates) and reality for dealing with attracting more $ to cover our national debt.
I guess the brownie Empire is slowly crambling, and the corporate lobby group is relentless because the big cash cow is now offshore outsourcing rather than US internal interests. With more US corporations having global positions,I will assume that they are fairly well protected (their stock), because most of their new markets are not based on the mighty $ and the earnings reported translated to against a weaker $ always beats some estimates. Hence, I say stock of global organizations have the most stability in this hard to read market…..and of course…there is always risk.
