Thursday, March 6, 2008

Poor Guy.

It looks like people is going crazy about the everyday decreasing of dollar's value. Everywhere you go, you listen people complaining about the 'strong Euro' and the terrible consequences coming from it. Am I the only one in the world that doesn't feel the difference? I mean, ok, I have not so much money...ok, I have no money but come on, I know people with money and I'm sure that if tomorrow's papers will bring the news that dollar is back stronger than euro everyone will be happy without knowing the why. Preparing this post I was reading that last feb. 27 the US dollar ended sharply cheaper against the rupee, guys, indian rupee...can you imagine the face of Bush when he knew about that? Poor dollar it looks like an old designed car, nobody wants it anymore and everyone is ready to forget it. A month ago I was walking on Houston, close to the famous vintage store on the street, the owner of the place was shooting an advertisment about his taking euros as a payment for goods. Poor guy, even New Yorkers should like to dismiss it. But why the euro is going so good and the dollar so bad? The first answer could be that in Europe doesn't exist any George Bush, and that's exactely the answer I read on In a few words it seems that investors have a little confidence in the managing of US economy by Mr. Bush. Is not a case that during last President's years the US trade deficit has doubled. has a really interesting key to understand everything in a clearer way. The article a read has been written by Peter Morici, Professor at the University of Maryland and former chief economist at the US International Trade Commission. We can start saying that if you print too much money, it won't have any value, if tomorrow all the farmers of the world will start and produce apples, its cost will decrease untill zero. Offer and demand. Same thing with banknotes production. So, they produced too much money...who? Banks, obiouvsly. Are you thinking that everywhere there's a bad news there's a bank too? Good...cos I strongly believe that. Ok, banks created money as loans to american citizens to buy homes or refinance their mortage, in turn the banks got the cash needed by bonding mortages, as well as auto loans and credit cards debt, into collateralized-debt-obbligation -bonds backed by consumers promises to pay- for sale to fixed-income investors, hedge founds and other. Is eveything clear? Banks give money to people taking money from investors just by transforming the debt of the people in a bond. That's it. This is ok, but sometimes had happened that these banks didn't create legitimate bonds. Instead they sliced, diced and pureed loans into incomprehensibly arcane securities, and then sold, bought, resold and insured those contraptions to generate fat fees, big profits and generous bonuses for bank executives. The problem is that now investors ranging from US insurance companies to Saudi royals are not too much interested in buying bonds created by large US banks, and the banks can no longer make loans to many creditworthy consumers and businesses. Some people say that Federal Reserve has direct regulatory responsability for the large US banks. Now I'm planning to go back to Italy for Easter Holidays, I'm so scared cos the dollar is 1,50 and something against euro. Why am I scared? I told you, I don't know, as every Italian son I'm gonna sleep to my mother's house, I'm gonna eat my fantastic mother's food, I'm not gonna buy shoes or Gucci bags, I'm not gonna going to restaurants. In two weeks how much more money will I spend with a dollar at 1.50 instead of 1.20? Not so much I guess. So if someone is complaining about the euro-dollar situation, that means that he has to be very very very very very rich, so who the fuck cares if he lose some million dollars? Thank you for your time and attention.

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1 comment:

Audrey said...

I feel the same way. I live comfortably, modestly, am saving some money for when I get old. I moved it from stocks to inflation protected bonds and my dollars are okay for now, while the stock market is swinging up and down. If I lose my job (so many lost the news said today) I will sublet my NYC apartment and go live with my Mom while I find another job. But I will still love, create, make nice meals, write my stories, and live life.

If my friends lose their jobs, they can come live with me. Just because we live in a big city, doesn't mean we also don't live in a village, even if it's a virtual one.

I think all of our economies depend on each other. As soon as all countries in the world realize that we are all on this Earth together, things will improve.