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Born at the Crest of the Empire

Sunday, July 06, 2008

Like a drunk being asked about abstinence....

Notice the curt snapback when asked if, you know, he was actually going to so something about it.
"In terms of the dollar, the United States believes in a strong dollar policy and believes the strength of our economy will be reflected in the dollar," Bush said when asked what world leaders could do to improve the economy and intervene to boost the dollar.

When pressed on potential intervention, Bush replied, "I just said, the relative strength of our economy will be reflected in currencies."
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8 Comments:

  • Unbelievable.
    Bush has destroyed the value of the dollar by selling about a trillion (that we know of) in Treasury securities to keep the GWOT "off the books". Supply and demand, kids. More dollars out there means a lower "price". On top of this dangerous gamble, we are now seeing that the world economy is not that interested in buying more of this debt, even at the "rock-bottom prices" the Decider's policies have created.

    Strip away the gloss, and this is simply a case of a gambler assuring his creditors that "he's good for it". Considering Bush's credibility with world leaders, one must wonder why he even bothers.

    Virtually the only countries that have any incentive to "intervene" to boost the dollar are the Gulf States and China, and this is because they are in so deep already. Pathetic.

    By Blogger Todd Dugdale , at 11:51 AM  

  • Exactly,

    Plus the curt, almost insulted response that he's not actually going to take any steps to change anything.

    His plan is to actually do nothing.

    By Blogger mikevotes, at 1:12 PM  

  • Actually there is nothing he or anyone else can do short of cutting back spending.

    You can't intervene when you don't have reserves.

    Strangely enough, people are still buying up the debt. Net Foreign Purchases was a whopping $115 Billion last month, twice what we need to cover the trade deficit.

    By Blogger Praguetwin, at 3:31 PM  

  • I'm definitely out of my depth, but doesn't buying new debt to keep the market up keep the value of their already owned debt higher?

    China for instance?

    A real economic collapse in the US would cost them not only the dollar denominated debt they already hold, but also destroy their top export market?

    By Blogger mikevotes, at 5:07 PM  

  • A real economic collapse in the US would cost them not only the dollar denominated debt they already hold, but also destroy their top export market?

    Absolutely right. And the Gulf States denominate oil sales in dollars (for the present), so they have an incentive to "intervene" on our behalf, too. And the Gulf currencies are tied to the dollar (for now).

    At a certain point, however, a creditor is over-exposed. This is why Bush is basically assuring the world that "we are good for it". He's relying on dollar hegemony.

    By Blogger Todd Dugdale , at 9:08 AM  

  • Yeah. The oil states are slowly moving to less dollar dependency, but they're still really tied in.

    By Blogger mikevotes, at 10:35 AM  

  • Gulf states have no intention of dropping the dollar peg although Kuwait already has last year.

    Saudis simply won't, and I believe the rest of the Gulf states will follow with the possible exception of Qatar and UAE (unlikely though).

    Sure, if China were to stop buying assets, it would destroy the value of their current assets. But remember that most assets are bought by businesses and individuals, not governments. So although collectively they should, individually, they don't have to....but they still keep buying.

    By Blogger Praguetwin, at 12:51 PM  

  • No, no sign the Saudis will. They'd lose their channel into US weapons, and frankly, with the monarchy a little wobbly, I don't think they'd really risk angering the US. But they have done more partnership with China and they have been moving a bit more into the Euro.

    Not a China expert, but there is some bleedover between business and state action. I get your point.

    My expression was more intended regarding the debt they keep buying.

    By Blogger mikevotes, at 3:23 PM  

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