Currency questions regarding the election

[rusty JEDI]

I am Canadian and playing onlinepoker in USD.

January 2002 i got my first neteller check at 1.61
Today it is all the way down to 1.30

That is obviously a big hit to the bankroll.

Any guess if the USD is supposed to do better or worse if Kerry gets in?

What if bush stays?

Thanks

rJ

[adios]

Interesting question and my answer is worth what you paid for it which is nada. I think the US $ will be stronger if Kerry is president as opposed to Bush. If Kerry is elected I expect a fair amount of gridlock which will hopefully result in less government spending which will be more helpful to the deficit which would help the US $.

[lu_hawk]

The budget defecit is bad for the dollar, but the trade defecit is even worse. Neither president will be able to influence the trade defecit in any meaningful way. Warren Buffett has recently had a couple of articles in Fortune that are very good at explaining the problems a nation faces when it has a huge trade defecit.

[riverflush]

The ironic thing about the decline in value of the U.S. dollar is that it ultimately leads to the U.S. being more attractive to investment by foreign firms. It's a self-adjustment period for the dollar vs. world currency markets right now, but this very weakening of the dollar is making U.S. exports less expensive and ultimately will raise demand on U.S. goods over time. This hike in demand should spike a return to more even levels in the trade deficit (it's a cycle).

The downside of a low dollar is that it makes imported goods we consume more expensive, which costs U.S. businesses more in raw materials, etc. If this weak dollar persists for too long, it could lead to instability in currency markets worldwide - which could cause a worldwide recession.

I don't think that is likely, as the U.S. manufacturing and GDP numbers are very strong - at 20+ year highs. We are well on our way down a positive road. Warren Buffet would disagree with that statement, and while I'm not denying his financial genius, many believe his "doom and gloom" trade scenario is wrong this time. He's out largely on his own on this topic. Time will tell.


I wouldn't correlate the value of the U.S. dollar with November's election, as our economy is truly out of the hands of Kerry in the short-term (next 2 years). Any policy change that Kerry may trumpet upon election won't have any real effects on the U.S. economy for a long while. You may see a stock market reaction to a Kerry win, but we shouldn't be looking to the NYSE or the NASDAQ as concrete indicators of the strength of the economy. There is a lot more at play here...speculative paper assets don't drive our economy, production does.