Reuters tells us that …
Asian central banks bought U.S. dollars early in the global session on Thursday to weaken their own currencies, traders said, as the slumping greenback threatens smaller export-driven economies.
Asian central banks said to be intervening in currency markets overnight by buying dollars included South Korea, Hong Kong, Taiwan, Thailand, the Philippines and possibly, Indonesia, according to analysts.
Read the rest by clicking here.
Nonetheless, the U.S. dollar index closed down on Thursday. It might seem like the Asian Central Banks are trying to bail out the Titanic, but give them some time, they might refloat this boat for a while yet.
Why are they doing this? Because international trade has collapsed. The Asian Central banks think, based on past experience, this is happening because the U.S. dollar is too low, making their goods too expensive. Well, here’s the bad news that they haven’t digested yet: The collapse has its roots in the fact that American consumers are no longer spending.
Source: EconomicData.blogspot.com
So, their actions may ultimately be futile, unless American consumers can be goaded into spending again. Good luck with that …
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Jobs are disappearing at rates not seen since the Great Depression. The fact that new jobless claims fell to a 9-month low is like saying murder rates are down – no consolation if you’re one of the ones murdered, and no consolation if you think you might be one of the ones to get hit next.
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The number of US job openings is down 50% from the peak in 2007, and there are now 6 applicants for every job. Losing a job in this environment is a family tragedy.
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Six in 10 workers now live paycheck to paycheck. Even among well-off workers – those with salaries of $100,000 or more – 30% are living paycheck to paycheck.
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A health care bill may pass, but it won’t be one worth having. It will likely be really, really bad. In fact, it will probably just be a funnel to take more money from ordinary folks and put it in the pockets of insurance companies. Our current health care system is one reason why workers are so insecure and why employers hold back on creating new jobs.
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Obama says he won’t sign a bad healthcare bill. Sure. Just like he’d get American troops out of Iraq in 12 to 18 months and end “Don’t Ask, Don’t Tell” in the military. He’s keeping those promises, right? Right?
Meanwhile, efforts to jump-start the economy fizzle when government gimmicks go away. Check out what happened when Cash for Clunkers ended …
Source: Clusterstock.com
The same thing is going on with home sales, which have been boosted by a homebuyers’ tax credit. When that tax credit ends – next month – the ramp-up in home sales will too. That is, unless the tax credit is extended.
So, if anything, this means more pressure on the U.S. dollar. The government will have to keep spending because the mainstay of our economy (consumers) are scared to death and have pulled in their horns.
Well, at least we have the consolation that a lower dollar will revitalize America’s industrial base, right? Except that it takes about three years to get a factory up and running. You have to acquire land, get permits, do design and feasibility studies, contract to have the plant designed, negotiate with vendors, and more. And there has been no inclination on the part of American business to do any of that, despite the 11.9% drop we’ve already seen in the U.S. dollar this year. Sure, some closed factories could be reopened sooner. Good luck with that.
So, a “rescue” by Asian central banks is probably short-term, and should be used as an opportunity to buy investments with more potential. Do I mean gold and silver? You can bet your sweet bippie on that one.
And for more on that, see my latest column in UncommonWisdomDaily.com, “The 4 Best Reasons to Buy Silver and Gold Now“
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