Value of the dollar?

[Brandywine]

We have been planning on a newish catamaran next year but the falling dollar to Euro etc.. Is killing us. Boats that were 220K 18 months ago are now more the 300K. so we will have to ether look for a U.S .boat or boat that has been in the U.S. long enough that it was purchased under a stronger dollar...

Is anyone on her aware of a good resource for watching long-term trends in the dollar say 6- 12 months? Its amazing what a point or two means in real dollars when you are looking at items in this price range.

[Microship]

Merk Hard Currency Fund is a great way to retain the value from the sale of one boat before shelling it out on the next.

Also, for current data: XE is an excellent tool. And Bloomberg has a useful market-oriented currency section.

Steve

[Pblais]

Is anyone on her aware of a good resource for watching long-term trends in the dollar say 6- 12 months?

Anyone that good at it sure is not a member here. I would be sure to avoid anyone that would claim they could. That magic answer could make anyone a very large fortune to the point you wouldn't need to care about the price of boats.

[Microship]

Originally Posted by Pblais

Anyone that good at it sure is not a member here. I would be sure to avoid anyone that would claim they could. That magic answer could make anyone a very large fortune to the point you wouldn't need to care about the price of boats.

I see your point... anyone wealthy could have a team to do all necessary boat research, but I like to imagine that if I were in that situation I'd still take the time to amass the requisite skills to acquire, handle, and maintain a boat. This and other forums are information-rich in many ways.

I only suggest Merk in the context of the original question because it seems to be the easiest way to invest in a basket of international currencies... and that is entirely at the mercy of world markets. Most of that stuff is impossibly intimidating, and my only actual advice would be to develop a relationship with a trusted and nearby advisor (not whoever happens to answer at a distant call center).

Cheers,
Steve

[maxingout]

This is a bad time to be looking for a catamaran in Europe. The demise of the dollar means that you will pay way too much for a yacht. It could end up being a classic case of buying high so that later you could sell low and lose a ton of money.

I would check out used cats on this side of the Atlantic. That way you can hedge your financial risk to a significant degree. You will probably have to be patient and wait for a motivated seller to come along.

[Ex-Calif]

if someone knows what the USD will do in the coming 6-12 months please let me know - I think i have a handle on the last 6-12 months.

IMH - non expert - Opinion - As long as the interest rates are held down and the US is in debt, and our balance of trade sucks - don't look for a strengthening dollar.

[Brandywine]

I would have to agree with most of the above just figured I must not be the only one in this"Boat" so to speak. it just cuts down on the number of options we will have when the time comes...

[delmarrey]

It's an election year! Anything could happen. But that's as far into politics this should go!!!

I've seen a big rise and fall a couple of times in my life and it seems we've been dropping steadily since the early 80's, I think due to all the manufacturing going out of country. Business owners are selling out the country to fill their own pockets.

Watch the movie "Other Peoples Money" with Danny Deveito (sp?). It really shows how corporate America craves for the $$$ over support of our community/Country. "Lest we forget".

[waterworldly]

If you check out long term interest rates (fisn.com or other sites that are clearing houses for CD's across the country) you will see that they are trending UP, not down, dispite the FED. Also if you look at treasurydirect.gov, you can go to the historical section and see that in every case that there has been a politial shift in the White House, the long term treasury rates have spiked. (don't drool all over your keyboard for the Reagan years rates of 14%!)These events and other evidence points to a rise in long term rates over the next 24-36 months, which should strengthen the dollar to some extent or at least stop it from being in freefall, which is what you will probably will see first in the next 6-9 months, especially after the first of the year. The low dollar feeds inflation, you cannot have low interest rates, low dollar and low inflation. American consumers will just have to buckle down, perhaps moving to sailboats? Or at least adopting some of the sailing livaboard community's more frugal ways. Let's just not hope it gets "trendy", we know how that drives up prices! There is no painless way out of this mess, you just have to ride it out.

[GordMay]

The dollar exchange rate (like interest rates) trend is the trend, until it isn't.
The US dollar declined 58% vs. the Euro during 2001-2007, and also down against many others, including 37% vs. the Canadian dollar.

[jdoe71]

I guess even the rich are feeling it, here's a quote from the Bumfuzzle website from Sept. 22/07:

"I knew the U.S. dollar was in the tank versus the rest of the world, but as of today the exchange rate against the Canadian dollar was just one thousandth of a percentage point shy of even. That's just plain embarrassing. Our entire lives we've been able to point to our northerly neighbors and laugh at their sad little currency. And now look what's happened. Another year and Americans probably won't be able to afford to vacation in Canada either. "

I guess while they were enjoying their laugh, the world was changing. Not that all Canadians are overjoyed about this, we had a sweet little trade surplus due to our "sad little currency". There is no joy in Mudville, on either side of the border.

[GordMay]

The “Bum’s” vacuous lament that “Our entire lives we've been able to point to our northerly neighbors and laugh at their sad little currency” is an artifact of their relative youth.
Exchange rates are exchange rates, only until they change - and they have & will do again.

[ess105]

Originally Posted by waterworldly

If you check out long term interest rates (fisn.com or other sites that are clearing houses for CD's across the country) you will see that they are trending UP, not down, dispite the FED.

Errr - don't you also have to take a look at what they are trending up from and to. Look at this picture nicked from CNN website.



Yes - the overall trend is up. The question you have to first ask is : Are the long term yields up or the short term down?

1M interest rates are trading about 3.4%. Kind of gives you a clue as to where the market is placing it's bets.

One should also remember that a rising yield curve is normal. People expect more return for taking on more risk. The longer you lend people money, the more risk there is of default so the longer term interests rates are normally higher.

[Ex-Calif]

Well if making foreign goods more expensive and discouraging foreign consumption is the plan, then it might be working. Certainly making people reconsider buying foreign durable goods and heaven forbid financing them is the first step in our addiction.

Unfortunately, what makes European boats thousands of dollars more only makes Chinese "Cr*p" slightly more expensive and may not discourage consumption of household items...

[Tspringer]

Normally, telling the future is something I leave to fortune tellers with crystal balls and such but in the case of the Dollar no crystal ball is required.

The dollar has nowhere to go but down. Over the past 7 years its down 58% to the Euro. Over the next 7 years it will decline by an even larger percentage. The dollar has no future.

Why? Easy: Folks say the US is no longer a manufacturing center. Thats incorrect. The US today leads the world by a huge margin in manufacturing our number 1 product to the world: debt. Today, total US debt equals 340% of GDP. This is up from 270% in 2000. The last time the US had debt levels like this was at the height of the Great Depression (just above 250%). This includes personal debt, corporate debt and Govt. debt. Whether it be Treasury Bonds, Corporate Bonds, Mortgage Backed Securities, or any number of "Derivatives" (what Warren Buffet calls "Financial Weapons of Mass Destruction") the US is manufacturing tens of Trillions in debt.

We have real Govt. deficits approaching a Trillion $$$ per year. (pay no attention to the CBO deficit figures, they are based on accounting practices that would land you or I in prison. Instead look at the numbers from the Comptroller Generals office which audits the US Govt.s books to General Accounting Standards). We have a national debt over $9 Trillion. Worst of all we have locked in entitlement commitments that over the next 30 years will yield funding shortfalls (and thus additional debt) of over $35 Trillion. THIS is really the core issue. There is simply no way the US Govt. can fund its looming entitlement commitments without incurring additional debt on a level that ensures the destruction of the dollar.

Regardless of short term Fed actions relative to interest rates the bigger issue is the long term Fed liquidity actions. Since 1995 the overall money supply has tripled. This is a key reason why inflation is such a Fed fear.

Any way you cut it, US debt levels and future Govt. debt requirements are going to yield huge increases in outstanding debt. This will continue to yield a ballooning money supply which will yield inflation. In the not so distant future, the amount of new and refunding debt the US will demand is going to exceed the entire planets excess savings rate. This will occur within the next 15 years as baby boomer entitlement demands peak.

At some point, the Fed will begin directly purchasing Treasury debt at auction. There will be no other choice if Federal obligations are to be met. This will in effect be monetizing the debt and the result will be hyperinflation and the ultimate destruction of our monetary system.

This kind of scenario isn't a far fetched question of "IF" its going to happen. It is. There is no way around it. Forget about this politician or that politician.... there is nothing any politician can do about this issue at this point. We are past the point of no return. The only question is the timing.

So if your holding dollars and your liquid at all you need to move your money into a safer foreign currency. The Yen looks good right now as do Swiss Francs. Check out Everbank.com for ways of depositing funds in a foreign currency.

Another idea that may have some merit would be to purchase a nice used boat here, sail it to the Med and sell it for Euros. Then the dollar trade could work for you.


Terry