Sliding Dollar Turns U.S Into World's Discount Mall

Stuff doesn’t matter until it does. The dollar is classic example, standing like an elephant in the room that nobody wanted to see or deal with until yesterday, when a key China official said that China should shift to stronger currencies than the dollar.

Suddenly the falling dollar, which has spun by the Goldilocks crowd to be a positive event because of its impact on exports, is seen for what it is: A sign of weakness by the U.S. As Morgan Stanley’s Stephen Roach wrote in the New York Times two months ago, “No nation has ever devalued itself into prosperity.”

The dollar is now the economic equivalent of the Blue Light Special, and we all know what happened to K-mart. I sit here not as an economist or a student of the economy, but as an American reporter of business matters and the stock market who tries to simplify things — and from my vantage point the falling dollar has done little more than make the U.S. the discount mall to the world.

I’m at a loss to understand why that should be a good thing, especially as other countries decide they’d rather invest in Tiffany (TIF) than Target (TGT).

With that, I’d like to get the discussion going. Anyone?

Comments

[bergl328:]

Why are you surprised? When was the last time the good of the people came before the good of corporate profits?

2007 Nov 08 05:32 AM

[EL-GRECO:]

Why is it surprising that the dollar is where it is? It has been bombarded by negative propaganda for the last 3 years... If only the same level of propaganda were accorded to the spectacular rise in US exports this year as has been accorded to the deficit, people, investors, might have a slightly more positive view of things. It is a sad possibility that the stock market which is the obvious alternative to wealth creation to the now defunct property market should be so vulnerable to speculators (see oil price and the dollar) and rogue corporate practices (see banking and mortgage execs). If we do get a recession, it's coming thanks to them.

2007 Nov 08 06:16 AM

[EL-GRECO:]

Enter your comment hereWhy is it surprising that the dollar is where it is? It has been bombarded by negative propaganda for the last 3 years... If only the same level of propaganda were accorded to the spectacular rise in US exports this year as has been accorded to the deficit, people, investors, might have a slightly more positive view of things. It is a sad possibility that the stock market which is the obvious alternative to wealth creation to the now defunct property market should be so vulnerable to speculators (see oil price and the dollar) and rogue corporate practices (see banking and mortgage execs). If we do get a recession, it's coming thanks to them.

2007 Nov 08 06:30 AM

[Gerald:]

At what point does the Federal Reserve become accountable for failing to protect the value of the US$? Nobody can stop economic cycles and so it is an understandable natural phenomenon for countries to go into recession periodically. However it would appear to be reckless to lower interest rates when interest rates are already low by historical standards and commodity prices are raging like fire. Money lost on real estate and subprime mortgages cannot be recovered and there is really no way to repair the situation unless we can go back in time.

2007 Nov 08 10:56 AM

[David Roskoph:]

Herb, this is the price for perpetuating the myth that recessions are an economic anachronism; something enlihtned minds have overcome. We can pretend we have perpetual prosperity but the cost is our place on the economic globe. Our dollar is being fiated out of existence just so we can sleep at night and not worry about the debt bomb it is creating. This is an absurd ruse to keep the masses locked into a buying frenzy. Smell the green tea America, we are following Japan's "bad debt = good receivable" model into a deflationary spiral.

2007 Nov 08 01:24 PM

[wixeywaxy:]

When I was a young man a person could travel in Europe very cheaply, not now of course. My wife and I spend a couple of weeks each Fall in the Southwest, Gr. Canyon, Zion, Lk.Powell etc. Now you see mostly foreigners. Everything is reversed. It's very tough to get reservations because the travel agents book them all a year ahead and obviously find it easy sell them to these visitors. Most Americans are oblivious to the fact that our government's leaders have squandered our prosperity with their insistence on dominating the world. For a picture of how this has happened I suggest reading "Brothers" by David Talbot. WW

2007 Nov 08 09:12 PM

[Questioning:]

I know commodities are cited. But is that the best or only good way to play an export boom?

2007 Nov 09 11:41 PM

[brij srivas...:]

Law of comparative advantage,Mr.Greenberg

2007 Nov 10 04:29 AM

[Sr. Pessimist:]

The US Dollar empowers the US Government. The US Government is corrupt even by capitalist terms. Capitalism not only has an expiration date, but American capitalism in this particular global situation is already deep under water. It's a good thing to devalue the power of the capitalists. The bourgeoisie are ravaging the earth, whereas the proletariat would exercise the discipline to conserve what's left of it. With a weak buck, currency becomes more of a commodity, and the value of work output itself becomes the new scarcity. It's a delightful polarity shift if you ask me.

2007 Nov 10 10:07 AM