The title of today’s column and the frigid weather some of us are experiencing may give you reason to think that I might be using a winter activity as some sort of economic metaphor. Dear reader, I wish I could. The situation is too dire for metaphors!
The fact is that our dollar is on a downhill roll and gaining speed faster than a ten-kid toboggan (oops…). Faster than I could have imagined.
It wasn’t too long ago that I suggested a few different ways to take advantage of the sliding U.S. dollar and few ways to protect your savings.
I know some of you took my advice. But others didn’t and they all lost significant spending power. Sure your account says you still have $25,000 in cash, but it is truly worth less than it was thirty days ago.
The slide in our dollar has accelerated recently. In fact, it took a 2% wipeout this year alone! And it’s only the third week of the year. If the trend continues we’ll all lose an additional 30% or so in spending power in 2004. That means your house, your car, your everything and anything that is measured in Greenbacks is worth that much less. Ouch.
We have already seen the dollar plummet against the Euro 30% or so over the past two years. In the last two months alone, it is down 12.5% against the Euro, 10% against the British Pound, and 11% against the Swiss Franc.
So, to say the least, I’m a bit baffled by U.S. Treasury Secretary John Snow saying last week that the United States “supports a strong dollar.” I guess he hasn’t been reading the financial section of the world’s papers. They have an ongoing battle, trying to decide how much of a decline in the dollar would actually constitute a “crash.” He might be too busy following the recent media exploits of his recent predecessor. Who knows?
Mr. Greenspan hasn’t let on that the roll downhill is intentional either. In fact he may be up for an “best actor” Oscar. We caught on to his plan some time ago but many still look to the Fed for a new policy or strategy that will halt this gruesome slide.
Mr Greenspan spoke on a variety of topics this week in Berlin and briefly commented that he was not really concerned about currency issues. He seemed more concerned that a cheaper dollar would harm European exporters. Hmm.
I guess he was on their turf at the time, so it seems that Old World manners and politeness are still favored over good old American honesty. Imagine if he told them that he has been gunning for their exports and those of many other nations for quite some time now? He might not get |invited back.
Your staff here at PROFIT CONFIDENTIAL has always kept truth and honesty alive, even if it hurts or seems inappropriate at times. Better to be honest and forthright than play “snake in the grass.”