Hmmm...Dollar slide vs. Euro began in 2004. "W" was unelected in 2000. US had strong dollar policy for four years after "W" took office.
Hmmm...Current dollar price of a barrel of oil is around $55 (not $75 which was the peak price last Summer).
Hmmm...Fed Reserve sets interest rate policy which directly influences dollar trading value - not W.
Hmmm...Single largest US trading partner has been for many years and remains Canada. So relative trading value of USD$ vs. CDN$ much more relevant than Euro.
Hmmm...Other largest trading partners for finished goods (oil, as a commodity. is multi-sourced) are Japan and China both of whom have huge trade surpluses with US.
Hmmm...China has refused to revalue Renimbi despite repeated requests by US to do so in order to address serious trade imbalance.
Hmmm...Fed adopts "low interest rate, cheap dollar policy" beginning in 2004 in order to achieve effective revaluation of Renimbi.
Hmmm...China and other "tiger economies" have now begun to buy Euros vs. Dollars in seeming confirmation of Fed strategy.
Reality, US trade and economic interests are in Western Hemisphere and Asia - not Europe.
Reality, Americans do not wake up every day weeping and gnashing their teeth because Europeans don't like us. In fact, with each and every passing day, Europe becomes less and less relevant to America; particularly as the ever rising tide of new American immigrants arrive from Latin America and Asia, not Europe.
Yes, Roger, simple economics. And perhaps it should begin to dawn on you that America increasingly does not need Europe and will slowly begin to realize it does not care about it either.
Well, the last sentiment is simply pitiful, but just to prove that I DO read what you write,
Dollar slide, figures for January and July each year: '01, $0.94 and $0.96 -- '02, $0.88 and $1.01 -- '03, $1.06 and $1.13 -- '04, $1.26 and $1.22 -- '05, $1.31 and $1.20-- '06, $1.21 and $1.27
Now, I may have gotten the numbers slightly wrong, overestimating the maximum strength of the euro (which I recalled at $0.90, or $0.95 +/- 5 cents), though I got the dollar more or less right (it dipped below $1.35 to the euro on Christmas Eve). You, on the other hand, appear to have forgotten when Dubbya came to power.
Yes, I'm perfectly prepared to believe that oil is currently $55 a barrel -- or 42 euros. This doesn't affect the argument about exchange rates.
Did I ever say Dubbya set the exchange rate? No, I said it was a date we could all remember. As the numbers above indicate, it correlates very well with the fall of the dollar, and you may draw your own conclusions about this.
As a point of information, no-one 'sets' exchange rates any more for hard currencies (that's one of the definitions of a hard currency). Yes, the Fed sets interest rates -- but next to economic performance and a stable economy, interest rates don't matter much.
'Fed strategy' -- Yes, of course they need to encourage people to denominate in euros, as you say, to diminish the incredible trade deficit with a vicious, genocidal, imperialist communist regime propped up by greedy Western powers (NOTE GEORGE -- ALL greedy Western powers not just USA, which I will repeat because you'll probably miss it otherwise, NOT JUST USA). Hence the ever-weakening dollar.
If oil is redenominated in euros then the USA will REALLY feel the draught. My own belief is that there is a good chance that this will happen within a decade, after which the euro will quite shortly take over from the dollar as the reserve currency, just as the dollar took over from sterling. The dollar will then weaken just as sterling did: $4.03 to $2.80 in 1949 (roughly 30 per cent again -- seems to be a magic number). How do you fancy a $6500 Leica?
No, the vast majority of Americans don't weep and gnash their teeth over these things -- mostly, as the figures and arguments above demonstrate, because too many of them are ignorant of either the facts or the likely consequences of those facts. Most of the ones who do understand a bit about economics, globalization and interdependence are worried. This includes the Fed...
My apologies to anyone who thinks this is unduly political, but as I say, I'm trying to explain WHY things cost more if they are made in Europe or indeed Japan) and bought with US dollars. THIS IS NOT AMERICA BASHING; it is an argument based on the historical facts of exchange rates and reserve currencies.
Sure, the US can live without Europe, if they don't want to buy Leica cameras, Ilford film, German cars, French and Italian fashions, French wine, and so forth. In fact, if the dollar declines another 30 per cent, as postulated above, they won't be able to afford a lot of this stuff even if they wanted it.
No doubt there some rednecks who would be happy to see this happen; but what the rednecks don't realize is that if the US doesn't buy anything from Europe, there is nothing at all to stop Europeans putting up trade barriers to block US imports -- which are hardly numerous, as the EU could buy most 'American' manufactured goods straight from China or the other countries to which the USA has sub-contracted its manufacturing.
The rest of the world is not quite so ready to write Europe off, so the US would be isolated, with a declining and increasingly irrelevant currency, unable to afford imports, reduced to selling raw materials and commodities, with a labour force that would rather work overseas -- which is pretty much the definition of a third world country.
NOTE AGAIN GEORGE -- I am not saying that the USA IS a third world country, or even that it will become one. Nor am I saying for one moment that I want it to become one, though I am sure you will not believe me when I say that. What I am saying is that this is not an impossible scenario. It is an unlikely scenario, because the Fed aren't fools -- but give the rednecks their head, and it could happen.
The UK fell pretty low: in the early 1980s, the pound sterling was within a nickel or less of parity. Yesterday, it stood at $1.92, down from $1.95 and above the previous week. Having seen what happens when exchange rates go against you, in the real world, makes it hard for me to ignore them.
Cheers,
R.