Tag Archives: Dollar

AIG Bailout

As I am sure you can guess, I am not happy with the bailout of AIG.  They are not being forced to feel the pain and so the dollar may feel the pain as a result.  This was a bad move.  Protect the policies but not the managers, they showed they do not deserve to money they earn.  Hey, so much for the “We Know Money” slogan!  Told you they didn’t get it.

Anyway, I am still waiting for the dust to settle to do the post analysis, of which I assure you will be worth the read.  The only one’s who were happy today were AIG employees who now get paid thanks to the bailout.  The markets drop of 450 points on top of the 500 earlier this week, shows nobody else is happy.

Since we own their butts, I would like to put in place a pay for performance salary policy and $7 an hour wages at AIG.  That way, we get our $85billion back faster before they benefit.  Once we get our money back they can go back to what they were making but not while my dime is paying for their stupidity.

I was right about their fall, trust me, if they screw us over, the dollar will fall and then who is going to bail us out?  Here’s a hint, nobody.  Do you think the Chinese, Russians or Europeans are going to help?  Don’t hold your breath.  Most would enjoy watching us go down.  Of course if we go, they go, but they dont’ see that until it already is too late. 

I’d also like to thank the AIG employees who come to my blog to the tune of 50 a day.  Since I’m your new boss, please get your ass back to work and stop surfing the net!

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A Weak Dollar is just Dumb

We currently are experiencing a very weak dollar, for many this is news, but really a weak dollar isn’t news, it’s been around for 30 years and the reasoning behind a weak dollar are as out dated as writing on clay tablets.  A strong dollar is what is needed, as strong a dollar as is possible and here’s why.

 

Back in the 70’s, when we actually had a manufacturing base in the US, people realized that a strong dollar made it hard for people in developing nations or what was called the third world back then, found it hard to buy US goods because their currency was so weak.  So instead of trying to improve the quality of life and value of the currency for these other people, the then new idea of globalization and free trade, came around and said “lets have a weak dollar so our stuff is cheap overseas.”  People went along with that idea, probably not realizing what a bad idea it was.

 

So since the mid 70’s the dollar has been weakened intentionally.  So when I hear conspiracy theories about the intentional weakening of the dollar by Bush, I kind of shake my head.  Yeah he is weakening it, but not like he is the only one who was doing it, so was Clinton and all the others before since 1975.  Now this doesn’t excuse anyone from knowing the facts on the issue.  The idea back then was to make our products competitive, back when manufacturing was king of the economy.  Fast forward to the present, manufacturing is not king, the consumer is.

 

So all those manufacturers who wanted to sell cheap stuff to people in the developing world, decided to go produce their goods there, leaving we the consumers as the king of the US economy.  Now the logic of that is another debate, which I am not discussing here so please refrain from debating this point.  70% of the economy is driven by consumer spending, about 10-15% by manufacturing, so we have a weak dollar to help 10% at the expense of 70%.  A strong dollar means everything is cheaper, gas, food, cheap junk from China at Wal Mart, etc…  A weak dollar means all those things cost more.  You spend more money to buy the same donut that was 63 cents last year, now is 67 cents, same donut, it doesn’t taste any better!  So as you spend more on the same thing you can’t spend enough on all the things you want and the consumer engine slows down and so does the economy.

 

It is unfortunate that the free traders fail to realize that their policies are failing.  First off, if they were so concerned about people in other countries being able to buy their products, they should have focused on quality of life, not price.  So the theory was flawed from the start.  Second, why are we the consumers paying the price for all this?  If you want to have a strong dollar and as a consumer, you do!  Fight to impose taxes on companies that outsource and are just branding companies trying to sell you junk that is probably tainted with lead anyway.  But first you need to ensure we vote in people who understand a weak dollar is just dumb and will fight to have the strongest dollar possible.  When the corporations complain about it, who cares, they are 10% and they will leave and have left us to produce overseas.  In fact it should be a law that a company can not lobby unless 70% of its manufacturing is based in the US.  That would solve a lot.

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Filed under Business, Consumer Activism, Consumerism, Globalization, International Trade, Politics, The World