Originally Posted by fobunited
Just because the dollar is below the Euro does not mean the world (or America) is coming to an end. The dollar is not and has not been the strongest currency. The pound has been worth more than the dollar for longer than I can imagine.
The value of the dollar affects different aspects of business as well as the lives of Americans, especially those wishing to travel abroad. We must also remember the flipside: a strong Euro compared to the dollar makes European goods that much more expensive, and therefore that less attractive to American goods.
With America being one of the world's largest consumers of goods, the decline of the dollar versus the Euro also hurts European business.
Take this business case, although limited, as an example. An international airline is planning to purchase new aircaft. They have their eyes on the Boeing Dreamliner as well as the Airbus A380. From a purely cost effective standpoint, the Boeing would be more attractive due to value.
Of course the above example is extremely limited in scope, but I think the point is clear: the declining dollar in comparison to the Euro makes American goods more attractive to international buyers, which is something the domestic market needs.
China and Russia (throw in Brazil, India, Vietnam, etc.) are all considered Emerging Markets. Yes, their debts are low and cash reserves are high, but that money is going to go towards building up their respective country's infrastructure. Considering how much the US and US investors are vested in these countries, and their growth correlates to the growth of the United States economy.
If I was a celebrity or whatever and wanted a form of currency as an investment choice, why not choose the Rupee instead? It has more growth potential than the Euro.
How ignorant and uneducated...
China's infrastructure was expanding unbelievably in the last 10 years while their debt was disappearing and their reserves increased. They are definitely not saving up to expand infrastructure. They are doing both. Shanghai was a village 15 years ago, today is 20 years ahead of NYC. Same for Beijing, Shenzhen, Guangzhou, Chengdu and many others. Of course, with the population ratio of more than 5x than the USA, it will always be a challenge for them to make everyone happy...
Russia is doing it all more quietly...
As for the weak dollar hurting European markets... The only ones hurt are us! Go and get a $15 hamburger in Paris, and so on. They have so many other ways to invest and make money than the US.
It has "more growth potential" than Euro???!!! Is that the way to look at it. So does ENRON, then. They are dead now, but if you start them up today, your chances are great...
The US economy is on the big downturn today. in the early 2000's we had a small (cyclical) recession that we just rode out. If that happens again in the near future, the way out will be much tougher. On top of it, we will have 70 million people retire very soon...
To sumarize -- with your savings worth much less today than 10 years ago, with no respect in the world, with (at least) three huge emerging powers and economies in the world looking to take it over from us, with the war that is dripping a little we have every day and with 70 million workers that will stop producing and start taking in next few years -- the outlook is scary!