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Dollar strengthening, oil prices falling? WHAT?!

Of course, you wouldn't know any of this if you only paid attention to the mainstream media, but believe it or not, things are getting better -- through no action, obviously, taken by the Democrats currently in power. The do-nothing Congress has done just that, nothing, and miraculously, things are slowly recovering:

The dollar surged to a two-year high against the pound and a six-month peak against the euro on Friday, as fears about spreading economic gloom triggered a sell-off in commodities.

Against sterling, the US currency notched up its 11th consecutive day of gains - its longest uninterrupted rise in more than 35 years - as markets became increasingly convinced that the US was best-placed to weather the global downturn.

The strong dollar rebound undermined sentiment in the gold market, where prices fell below $800 for the first time this year to $774.90 a troy ounce, almost a quarter lower than early March's record $1,030.80.

Prices for crude oil, platinum, copper, aluminium, corn and soyabeans have also retreated from records hit this year, prompting speculation that commodity prices have reached a turning point.

"The golden age when commodity prices could only go up is gone," said Marco Annunziata, chief economist at Unicredit.

Military tensions between Russia and Georgia have offered little support to the price of gold, while oil prices have continued to fall in spite of interruptions to two key pipelines carrying crude from the Caspian sea to Turkey.

The long-running surge in commodities and resulting inflationary pressures had been a main factor in slowing global economic activity - playing a bigger role than global financial turmoil, for instance, in the eurozone. The eurozone economy shrank in the second quarter for the first time since the launch of the euro in 1999, while Japan's economy contracted 0.6 per cent, its worst performance for seven years. The US staged at least a modest recovery in the same period.


Gosh, who would imagine that the dollar would be experiencing its longest uninterrupted rise in 35 years? That so does not fit in with the doom-and-gloom outlook that liberals and the mainstream media like to espouse. I mean, jeez, aren't we supposed to be in the middle of a depression?? This is just so untimely! Couldn't possibly have people feeling optimistic and in control of their futures, right? Better have them panicked and afraid so that they'll run to the government to fix it.

Of course, it's such a coincidence that the market does better whenever the government stops interfering. I wonder why that happens.

Also interesting: everyone else in the world "hates" us, but whenever they need rescuing, who is it they come running to? Oh, that's right! The United States. Got it.

But don't worry, folks. We'll get back to your regularly scheduled programming here shortly. Don't you dare get optimistic about the economy... it's going to plummet any day now, I tell you, plummet!

Hat Tip: Purple Avenger at Ace of Spades


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Comments (20)

Everything goes to shit--bl... (Below threshold)
hyperbolist:

Everything goes to shit--blame the Democrats!

Things rebound slightly--no thanks to the Democrats!

It would seem, Cassy, that you fail to understand the extent to which Congress dictates the goings-on of the cosmos.

hyperbolist:Actual... (Below threshold)
cirby:

hyperbolist:

Actually, it's more "people think things are crappy because of the Democrats telling them how horrible things are" and "people realize the Democrats were lying their asses off and stop listening to them."

Things rebound slightly-... (Below threshold)
Clay:

Things rebound slightly--no thanks to the Democrats!

Should the Democrats get credit for the 'slight' rebound? Why? What exactly have they done to effect the rebound (before they went on their 5-week recess, of course)?

Also, I can think of more reasons than not that the dollar's surge and the drop in oil prices are related. What caused the drop in oil in spite of the Georgian unrest?

Give it a few months, this ... (Below threshold)
epador:

Give it a few months, this might only be a blip on the bottom sediment we're resting on. However it is indeed heartening. Rather than blame or congratulate a particular political party, I believe the quality of our country, despite its political parties efforts, is to be congratulated.

CassyYou clearly h... (Below threshold)
joe:

Cassy

You clearly have not got a single clue about economics; in fact I dont think you have much of a clue about anything. Perhaps it is a function of your relatively tender years or complete and naivety, but you seem to be completely incapable of making a point without belittling democrats and upping the other side.

Nothing personal, but you just cut the mustard when it comes to making interesting posts.

<a href="http://quotes.ino.... (Below threshold)
Headzero:

http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax

Perhaps you should look a little farther back than the current month.

A primer on markets:<... (Below threshold)

A primer on markets:

FOREX and commodity futures markets can be summed up as an expectations game because they deal in FUTURES CONTRACTS; that is, contacts for the delivery of a specific commodity, at a specific price, at a specific time in the future.

These markets have flourished because they allow producers and speculators to enter into contracts to perform on the acceptance or delivery of the abovementioned contracts.

For example, if I am a corn farmer (producer) and I know that I can reasonably assume that my farm will produce about 500,000 bushels of corn (NB liberals, that is bushel, not Bush) every year then it is also reasonable that I am interested in what the price of my corn might bring. In fact, I may want to sell my corn before I even plant it if certain buyers (corn merchants, speculators) are willing to pay a price that is attractive enough for me.

Hence the term Futures, wherein a person will contract to sell something in the future that this same person (the farmer who has not planted or harvested his corn yet) does not currently have. It is literally a contract for the delivery or acceptance of a commodity in the future.

These markets have evolved from simple commodity contracts (such as corn) to all manner of deliverable contracts or "promises" that include everything from corn to the future value of the S&P 500, to the future value of the dollar to the future value of cotton to the future value of orange juice and bacon (pork bellies).

The significance of Cassie's point is that the dollar has increased in value on the futures market. We can argue all day about why it has increased (for example, corn traders argue every day about rainfall, crop yields, foreign purchases etc....it's literally an unending argument). A reasonable argument as to why the dollar has spiked in value after an historic down trend is that traders believe LESS dollars will be sold in exchange for oil and other items purchased by the US.

The US presently purchases over $700 Billion in crude from producers other than domestic companies, which purchases are the single largest component of what is known as the trade deficit. This is the largest transference of wealth in the history of the US economy, and one result is a LOWER value of the DOLLAR.

If that trend were to show signs of reversing, it is VERY REASONABLE to assume that the dollar will INCREASE in value. Which it has.

So what's your problem with this, Joe #5?

I don't know Cassy.<p... (Below threshold)
LiveFreeOrDie Author Profile Page:

I don't know Cassy.

I'm for a strong dollar. It needed to happen. But both a strong and weak dollar both come with their own set of problems.

We are over debt spending. It's a real problem. And the economy really has kinda sucked for non corporate players, regardless of whether we have officially been in a recession or not. All the growth has been up high.

Actually, it's more "peo... (Below threshold)
Brian:

Actually, it's more "people think things are crappy because of the Democrats telling them how horrible things are" and "people realize the Democrats were lying their asses off and stop listening to them."

No, it's more like things are crappy and the Democrats are telling them the truth, while the Reupblicans keep lying and telling them everything's fine, as things get crappier and crappier (except for Exxon). Then eventually (as all things do) we'll hit the end of the crappiness and a rebound will appear on the horizon. Then the Republican meme will start that see? They were right all along and the Democrats were lying.

I see you're getting a head start.

Gosh, who would imagine ... (Below threshold)
Brian:

Gosh, who would imagine that the dollar would be experiencing its longest uninterrupted rise in 35 years? That so does not fit in with the doom-and-gloom outlook that liberals and the mainstream media like to espouse.

So the dollar falls to a 15-year low, then falls some more, then recovers for 11 days back to the 15-year low, and that's enough for you to declare everything peachy?

At what level does everythi... (Below threshold)

At what level does everything become peachy?

Certainly 11 days recovery from a 15 year low is one number; tell us what number makes everything peachy.

Should the Democrats get... (Below threshold)
Brian:

Should the Democrats get credit for the 'slight' rebound? Why? What exactly have they done to effect the rebound (before they went on their 5-week recess, of course)?

Well, according to Cassy, this rebound is because "the market does better whenever the government stops interfering." You can't chide the Democrats both for doing something and for not doing something. Well, you can, but it just reveals more about where you're coming from.

What caused the drop in oil in spite of the Georgian unrest?

Here's a candidate:

The Energy Department has reported the steepest drop in oil consumption in more than a quarter century. The slowdown in U.S. energy use is one of the major factors pulling crude oil prices down from their historic highs of a month ago. ...

As consumers and businesses hit the brakes in the first half of the year, oil consumption in the U.S. fell by 800,000 barrels a day, the biggest decrease since 1982.

Certainly 11 days recove... (Below threshold)
Brian:

Certainly 11 days recovery from a 15 year low is one number

It's not 11 days recovery FROM a 15 year low. It's 11 days taking us BACK UP TO a 15 year low.

tell us what number makes everything peachy.

I didn't say any number did. But after a multi-year drop it might be smart for you to hang your hat on something a little bigger than an 11-day rise.

I didn't say any numb... (Below threshold)

I didn't say any number did....of course you didn't.

you just established a calender of sorts,right? Or what is it?

then falls some more, then recovers for 11 days back to the 15-year low, and that's enough for you to declare everything peachy?

or this?

It's not 11 days recovery FROM a 15 year low. It's 11 days taking us BACK UP TO a 15 year low.

Man up, Brian. Put a number on it.

I didn't say any number did. But after a multi-year drop it might be smart for you to hang your hat on something a little bigger than an 11-day rise.

So tell us where to hang our hat....no smart ass answers, put a number on it, genious. How much variance do you want? Obviously 11 days won't work for you but surely you have a number in mind given your note of historical "multi-year drop(s).. What is it?


i seem to remember over a m... (Below threshold)
Oyster:

i seem to remember over a month ago when the price of crude dropped $11 in one day and everyone felt a certain relief that things may be getting better. Well, not everyone. We got the usual, "A one day drop doesn't mean anything." Then a few days later, "A few days drop doesn't mean anything."

Over a month later, the price is still dropping. Where it will settle at is anyone's guess. But for now it's still dropping and suddenly it's gotten a little harder to keep saying the glass is half empty so they're not so vociferous about it lately. But here's a new one! The dollar has risen for 11 consecutive days and another glass is half-empty.

I have to agree whole-heartedly with epador: "Rather than blame or congratulate a particular political party, I believe the quality of our country, despite its political parties efforts, is to be congratulated."

This is what I've said in the past. These people, our congress, our government, are not America. WE are. In spite of them we are a resilient and resourceful lot.

Brian: "What caused the ... (Below threshold)
Les Nessman:

Brian: "What caused the drop in oil in spite of the Georgian unrest?

Here's a candidate: ....."

So, Brian is for high gasoline prices. Thanks pal. Wonder if the he and the Dems will admit that they're for high gasoline prices 'for our own good'. We know they are, but will they admit it?

The only thing that's going... (Below threshold)
jc:

The only thing that's going to save the dollar is that all of the other world powers also have a central banking system and also can't control government spending, so their currencies will also suck.

Think the Euro will hold once Europeans discover they can have big government programs and pay the bills without raising taxes?

Self loathing leftists like... (Below threshold)
WildWillie:

Self loathing leftists like Hyper. They hate enjoying anything in life and refuse to let anyone else. ww

No, I have a great time, Wi... (Below threshold)
hyperbolist:

No, I have a great time, Willie. Life is good. The economy, though, is a separate issue.

So the dollar falls to a... (Below threshold)
nehemiah:

So the dollar falls to a 15-year low (by Brian)

15 years takes us back to 1993. So the decline started one year after the new president took over in 1992.




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