EURO vs USD

[J. Abizeid]

Big Risk Surging Debt Makes U.S. More Dependent on China Russia Gulf States: Tech Ticker, Yahoo! Finance

Surging Debt Makes U.S. More Dependent on China, Russia, Gulf States

But there's an even bigger financial institution with greater debt and an increasing level of bad loans on its books: The U.S. government.
Given the actions already taken, from the Housing Bill to the nationalization of Fannie Mae and Freddie Mac, the U.S. deficit could double to $800 billion in two years, says Nouriel Roubini, of NYU's Stern School and RGE Monitor. (Even worse, the official government deficit figures exclude the costs of the wars in Iraq and Afghanistan, as well as the unfunded liabilities of Social Security and Medicare.)
The big risk is that foreign holders of Treasuries will no longer accept low interest rates to help fund U.S. debt spending, says Roubini, noting countries like China, Russia and oil-producing nations in the Middle East have becoming increasingly important holders of Treasuries. Should they demand higher rates to hold U.S. debt or, worse, dump their holdings, it could have profound ramifications on the U.S. economy and the value of the dollar.

[J. Abizeid]

U.S. to lose financial superpower status: German finance minister - MarketWatch
LONDON (MarketWatch) -- Germany's finance minister on Thursday laid the blame for the global banking crisis on the Anglo-American free-market model's quest for ever-higher near-term profits, predicting the United States would soon lose its role as the world's dominant financial power.

Quick Fed rate cut on table - MarketWatch
WASHINGTON (MarketWatch) - A quick rate cut in coming days is definitely on the table, several Fed watchers said Thursday.

Oil rises $2 on bailout hopes: Financial News - Yahoo! Finance
Oil rises $2 on bailout hopes


(Anyone would like to guess which way the dollar will be going the next few months/years?)
It is regrettable that the Lebanese government is not able to peg the LL to the euro.
Why should the Lebanese consumer pay more for gas in order to bail out the US economy and its failing/fraudulent banking system?
Lebanon is more connected to Europe economically and geographically.
Europe has its financial problems like every other continent but the difference is, unlike the US, it is more honest and more transparent about its economic situation. It doesn’t use deceptive Hollywood tricks and that’s a great advantage.
I hope we all realize that for the sake of our economic stability.

[J. Abizeid]

Originally Posted by Abou-Eddie

The problem with your argument is that it assumes that things are going very bad in the US while things are rosy in Europe. This is definitely not the case.

Please don’t take it personal but in view of today’s realities, would you reconsider?

Below is my quote from just a week ago when I sounded so unrealistic.
Based on the facts on the ground I doubt the euro will ever go down to $1.38 again but it’s a matter of a few months before it beats its own record again.

And yes, timing of the US elections has everything to do with it.
Just a few days ago, oil surged up to $130 which proves there is no upper limit for oil prices. They drive it up when they need the money. They keep it down when they need your vote.

Oil went below $100 on Friday but the euro went up to close at $1.4212 which means lower oil prices below the $100 mark started hurting the dollar instead of helping it partly because of decrease on dollar demand to buy oil.
It’s an interesting observation. When oil moves down from a record high the dollar moves up to a certain point beyond which it starts reversing course in a parabolic shape.
With all the manipulations the euro hit its bottom in the $1.38 area which means it will be building up on that base from now on.

[Raficoo]

i simply have a few words to say "pessimistic", "Subjectivity", "$700Billion", and "bailout"

find out what those mean

[J. Abizeid]

Originally Posted by Raficoo

i simply have a few words to say "pessimistic", "Subjectivity", "$700Billion", and "bailout"

find out what those mean

Life gets better if we get over our emotions and stop living in denial.
It’s still not too late to diversify your portfolio between dollars, euros and gold since you are so hung up on Uncle Sam.
I guarantee you; you’ll feel much better if you build your Noah’s ark even if the flood never happens.
If you take the time to analyze what I have been saying above, you’ll realize I’m a realist and a friend.
One more thing, historically, and after each great depression you’ll find equations turned upside down; many maters end up borrowing from their slaves so they can eat. That’s when a new generation of rich people emerges. It’s a universal law. Those who know it take advantage of it best.
Good luck to all!

[Abou-Eddie]

Originally Posted by J. Abizeid

Please don’t take it personal but in view of today’s realities, would you reconsider?

Below is my quote from just a week ago when I sounded so unrealistic.
Based on the facts on the ground I doubt the euro will ever go down to $1.38 again but it’s a matter of a few months before it beats its own record again.

And yes, timing of the US elections has everything to do with it.
Just a few days ago, oil surged up to $130 which proves there is no upper limit for oil prices. They drive it up when they need the money. They keep it down when they need your vote.

I don't find any reason to reconsider. All I said is that things are bad on both sides of the Atlantic. While, I honestly feel that the US is in huge trouble due to the dumb Bush policies, Europe is also in shambles. I just returned from Europe today and I can assure you that the word I heard the most during my trip is "catastrophy".
I still feel the euro/dollar exchange rate favors the dollar more than the euro and still believe we will see the levels of 10 days ago with a few jitters along the way. For oil, it is a totally different story and this is where I am reconsidering. I believe the levels of USD90-95 of 10 days ago will be very hard to reach again. I see it more in the 105-120 range in the short term and in the long term (2-3 years), I see it at 140-150

[J. Abizeid]

Originally Posted by Abou-Eddie

I just returned from Europe today and I can assure you that the word I heard the most during my trip is "catastrophy".

Was that old Europe or the new one you are talking about?

On a more serious note, I understand the European’s feelings you experienced. I was in Old Europe early this month but let me share my vision and observation just for the sake of argument.
The Europeans feel the pain because they are more honest and responsible. Their cost of living is high because they pay their dues and taxes. That is the basis to succeed in life as a nation or as a simple family.
Today, the world feels the pain because they trusted the US market they invested in and it failed them. It’s a lesson for the world but once they get over it, the US market will become a dinosaur.

http://www.marketwatch.com/news/story/wamu-fails-sold-jp-morgan/story.aspx?guid=%7B42316B59%2D4AB5%2D406B%2D808E%2 D931513D5763C%7D
SAN FRANCISCO (MarketWatch) -- In the largest bank failure in U.S. history, Washington Mutual Inc., with about $310 billion in assets, succumbed Thursday to the fallout from the subprime mortgage crisis, was seized by federal regulators and rapidly acquired by J.P. Morgan Chase for $1.9 billion.

WaMu is the last collapsing pillar putting more pressure on the rest of the pillars. As I mentioned before, there are over 100 US financial institutions in trouble that need to be bought out, bailed out or completely shut down.

Here is my observation on the $700B bail out:
It’s a rip off to the American people but still the least of two evils.
It will pass and make China and Europe breath again so they can live and learn.
As far as the market reaction, notice this:
Few days ago, when the approval looked imminent, the world stock market went up BUT, oil shot up to $130 and the dollar sank down against the world currencies.
When the deal started faltering, everything reversed course.
Oil prices fall as US bailout plan in doubt: Financial News - Yahoo! Finance
Oil prices decline more than $2 as US financial bailout talks falter
http://www.marketwatch.com/news/story/bush-says-financial-rescue-plan/story.aspx?guid=%7BCD93BC1C%2D7E6A%2D4E1B%2DB6E3%2 D1E347B654D3B%7D
Bush says financial rescue plan will be passed

And it will pass because that was part of the deal for China to rescue the dollar just before the Olympics.
And once it passes, many will make a killing from the one or two day spike in the stock market (that’s a given opportunity). But the dollar starts paying the price (and that has nothing to do with the euro itself)
I wouldn’t be surprised if they kept oil relatively low if they can afford it until after the elections. After all, the whole deal is mainly aimed at protecting the McCain candidacy.
http://www.marketwatch.com/news/story/dodd-says-white-house-meeting/story.aspx?guid=%7BF849F192%2DD0CD%2D4456%2DBC50%2 D751A5259D7F4%7D
Dodd says White House meeting was a disaster
I wouldn’t anticipate an abrupt reaction from the market immediately after the elections but that’s when the long term trend starts showing it real course.
By the way, I did suggest back in august the euro will remain between $1.45 and $1.49 until the elections. I sounded unrealistic back then but $1.4627 today is not too bad after all. I think I deserve some kind of credit for that one…
EURO vs USD

I don’t see oil go up until after the elections since it’s a Bush not a Clinton administration unless they come up with a twist that helps McCain with votes.
Meanwhile the euro remains between $1.45 and $1.49
After the elections, we’ll have a different picture. I expect oil and the euro start going up gradually but quickly.
They’ll blame it on high heating oil demand…

See you all in 2009

[Abou-Eddie]

With all the bad news coming out of Wall Street and the Congress failing to pass the 700 Billion package, the Euro is at 1.406, simply amazing!

[J. Abizeid]

We are going through some extraordinary times.
Today’s euro fluctuation ranged between 1.4011 and 1.4427 so far.
The dollar boost was not caused by foreign currency sell off but the stock sell off. Investors are parking their stock proceeds in dollars and T bills with lower return until the dust settles. I believe it’s a good opportunity to dump your dollars now.
Last time oil went below $100, the euro fell to $1.36; holding its own above 1.40 today is considered the new euro bottom out from which it will be building upon from now on.

I was pleasantly surprised the bailout didn’t pass the first time. I like to see Paulson and Co. sweat it out before they get it because it might not be the last one. They were hinting this amount might not be enough early on when they thought they are getting it. It is no secret; America’s total real estate bailout could reach 2 trillion dollars.

I consider this bailout blackmail to the American people by their own government.
This administration promised the Chinese and the Europeans they will get their money back even with smaller dollars. The dollar bail out in early august by those nations was part of the deal. They needed to boost the dollar so it can handle the extra $700 billion debt. Paulson said he knew about the problem nine months ago.
This bill must pass because if it doesn’t it will anger the foreign investors and their revenge can be deadly to the US economy. They’ll have nothing left to lose. Germany expressed that loudly few weeks ago. The Chinese don’t talk much…..
There are advantages and disadvantages from passing this bill.
If it doesn’t, it will help the dollar hold its present value in the short term but the real estate will completely collapse.
If it does, it will help real estate hold some of what’s left of its value and the stock market goes up short term but the price will be weaker dollar, higher interest rates and oil prices. That’s what I think will happen in the next few months.

[Mar1K]

please delete