The dollar closed early this week at a record low…  Monday it took 1.3419 USD to buy one Euro.  It hasn’t gotten much better. 

From an expatriate American blogger in Germany we get this -

I went to a lunch today where the American ambassador to the Netherlands spoke about European-American relations.  One subject he touched on was the weak (to put it mildly) dollar and our massive trade deficits.  I was not heartened.

By the way, the dollar closed here today at less than 75 euro-cents.  Yet another record low.  Having purchased a house here a few months ago, I'm going to make out just fine.  If I were a Republican, I'd say the rest of you can go f*** yourselves.  But I'm not, and I really wish the morons who are running things in Washington would figure out that if you keep borrowing trillions of dollars with no plausible plan for paying it back, eventually the world will treat your currency like the piece of crap that it is.

From a friend who teaches graduate students at a highly-regarded business school in upstate New York -

"...if you keep borrowing trillions of dollars with no plausible plan for paying it back, eventually the world will treat your currency like the piece of crap that it is."

WOW!  Ain't that the truth!  But you certainly don't hear many inside the beltway attributing our weak currency to decisions being made by our wisest ones on high!

Reminds me of the yellow ribbon I saw on a car today - "I © Our Overlords!"

Ric, the News Guy in Atlanta, adds this -

Also worth mentioning is that the Bush administration, having played coy during the campaign about which of three alternatives it will resort to in funding its multi-trillion dollar Social Security privatization plan - raise taxes, cut benefits, or borrow money - announced just this week that it will do the latter.

A bad idea?  Apparently many economists think so. (See John Cassidy's Talk of the Town piece about the falling dollar, entitled "Going Down", in the December 6^th issue of The New Yorker, published before Bush's recent announcement.)

Just as Chase Bank is the real owner of my house in the sense that it is the entity that loaned me most the money, China and Japan are already pretty much the real owners of this country.  It's been said that if either of those two countries wanted to destroy us, all they'd have to do is trade their dollars for euros.  Then again, that might make it less likely that they'd get their payoff on our bonds.  Still, Bush might be well advised to try not to piss those people off.

But how times have changed! Just over a hundred years ago, the hinterland vote in this country tended to favor the politicians who didn't engage in fancy financial shenanigans.  Let's hope, for all our sakes, that the red states are not now in for the rude awakening of their lives!

And one last comment, concerning this Social Security thing: Am I the only one who, whenever he or she hears the word "privatization," mentally substitutes the word "abolishment," just to help keep things in real perspective?

Steph up in Canada –

Close.  I hear a guy on a loudspeaker instructing all to "Abandon ship! - Every man for himself!"

And don't bother asking the captain where all those lifejackets we were accumulating went.

And this on the web at Uggabugga -

Don't beat around the bush:

We read again about Republican plans to change the accounting in order to hide massive shortfalls connected to Social Security "reform".  And over at TAPPED, they have a quick summary/comment on the subject.

Let's not waste time here.  The Republicans want to end the Social Security Insurance program.  That's all there is to it.

Any move away from the safest and most reliable system, of universal enrollment and government issued bonds, is a move away from the original intent. It is not reforming the program.  It's ending it.

Ah, regular readers know I have a conservative friend who has often said this about Social Security - "Abolish it, because why should I have to pay for your retirement if you're so stupid and lazy as to not have saved any of your own money and taken care of yourself? - It's just not FAIR!  I will NOT pay for your negligence!" 

He's the majority now.

Rick says this –

Not really.  Don't forget those post-election polls that showed that folks apparently just voted for the man, not for what he wants to do.

Besides, if the majority of Americans really wanted to abolish Social Security, you wouldn't see the conservatives going to all the trouble of calling it "privatization".

So what is going on – massive and unprecedented debt, the dollar dropping like a rock with a chance of the economy collapsing as no one may want to buy out debt (our bonds) as it’s just a bad deal - and the shared risk pool of funds built since the thirties to keep old folks from starving, like our parents and all that, into which everyone has paid, needs to go away?

The Republicans used to be the party of fiscal responsibility – the grown-ups who would act prudently and keep things stable.  Times have changed.

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Just a note, if you had put one thousand dollars in the stock market in 2001 you would now have – depending on your strategy, and assuming you didn’t get Martha Stewart type information, or if you did, you didn’t get caught – about the same amount of money.  Not much loss or gain.  If you had converted that one thousand dollars into Euros in 2001, late in the year (buying 1117 Euros at .85 USD each at a total cost of 1000.45) you could sell those same Euros today for 1577.18 USD.  Your gain?  A little under fifty-eight percent. 

So, invest in America?  When OPEC starts trading in Euros, not dollars, they will insulate themselves from this type of bad investment.  As the dollar steadily loses net worth in the exchange markets, and you’re still asking for dollars for your oil, you just have to jack up your prices, don’t you?  You’d be crazy not to.

It will be an interesting day when OPEC says to the United States, you can buy all the oil you want, just pay us in Euros.  That’s the day we go “third world.”