IAUA End Time Ministry
Preparing for the End of Time
The Lord is Coming! Are you ready?
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IAUA End Time Ministry |
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Preparing for the End of Time | |
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The Lord is Coming! Are you ready? | |
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Mon Nov 15 08:18:18 EST 2004
A clipping from the news services that illustrates the precarious condition of the world today. This serves as a warning and a reminder that all is not well. The Dollar's Decline Is Reverberating Sun Nov 14, 7:55 AM ET Los Angeles Times By David Streitfeld Times Staff Writer During a routine sale of U.S. Treasury bonds in early September, one of the essential pillars holding up the economy suddenly disappeared. Foreigners have been regularly buying nearly half of all debt issued by the U.S. government. On Sept. 9, for the first time that anyone could remember, they stayed home. "Thoughts of panic flickered out there," said Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer. The foreigners returned in force at the next Treasury auction, and Sept. 9 was quickly dismissed as an aberration. But the episode demonstrated how much the U.S. economy is dependent on other countries to bankroll its free-spending ways. That fragility is becoming even more precarious because of recent declines in the U.S. dollar to multiyear lows, some economists say. Amid worries about bulging U.S. budget and trade deficits, the greenback dropped last week to a record low against the 5-year-old euro, a 12-year low against the Canadian dollar and a nine-year low against an index of major currencies. Many analysts don't see anything that will stop the decline. A cheaper dollar reduces the value of American securities, making them less attractive to foreign investors. That could eventually precipitate what Robbins called "the doomsday scenario" — Japan and China not only refusing to buy U.S. bonds, but selling some of their $1.3 trillion in reserves. The only way Uncle Sam could then find new customers for its IOUs would be by raising interest rates. And although higher rates are good for savers, they would be disastrous for a country weaned on cheap credit. "Sometime soon, the falling dollar is going to show up in rising inflation, rising interest rates and a falling standard of living," said Harry Chernoff, an economist with Pathfinder Capital Advisors. "The housing and mortgage markets, which benefited the most from declining interest rates over the past few years, are likely to feel the most pain." Not everyone agrees that suffering is imminent. The National Assn. of Manufacturers calls the dollar doomsayers "all but hysterical." Manufacturers and produce growers like a cheap dollar because it makes their products more affordable in foreign markets. Even some foreigners like the low dollar. China has pegged its currency to the dollar. A weak greenback means a weak yuan, making Chinese goods cheaper in foreign markets and fueling the nation's economic boom. To most American consumers, a falling dollar is more an annoyance than cause for alarm. It raises the price of a cup of coffee to outlandish levels during a Paris vacation, and may cause second thoughts about buying a more expensive Volkswagen. But a number of economists and academics say there are real reasons for concern. If the dollar falls too far too quickly, they say, those all-important foreign investors will abandon the U.S. in favor of stabler places. Indeed, there are signs that such an exodus might have already started. In August, the most recent period for which there's data, foreign private investors sold $2 billion more in U.S. stocks than they bought, the Treasury said. Meanwhile, they dumped $4 billion more in government bonds than they purchased. "A run for the exits could happen any day, that's for sure," said C. Fred Bergsten, author of "Dollar Overvaluation and the World Economy" and director of the Institute for International Economics, a Washington think tank. Next: 2004-11-17 Re: How to Respond to the Coming Persecution |
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Revised 2004-12-19 |