# How low can a $ go?



## adgrant (Aug 13, 2003)

cosmos said:


> What does the US $ have to do with Home Prices? Please show the correlation. The Fed lowering the bank rate and discount rate will not affect you, it will only allow banks to make more money on you. As far as the $ is concerned that is just people shifting out of the $ and into more "stable" investments. It is a fact that despite housing, the US economy is strong and doing well. We may not see the growth we have seen in the last 3 years, but the fact remains that when the dollar goes down, it only increases US manufactering. So the people that work here produce more because foreign people buy more stuff.


The Fed just cut its lending rates 50 basis points to try and avert a recession caused by the credit squeeze. Since it did that, the dollar has fallen against the Euro and British Pound (it was stabilizing) and the yield curve is steepening (rates are dropping more sharply at the short end). If housing prices continue to drop and more people have problems, expect further rate cuts which would suggest the dollar will fall further. Perhaps you should check out today's Financial Times, the headline on the front page was "Dollar hit as homes data shows oversupply", followed by "Fears grow that the effect of turmoil is spreading" and "Investors bet on more Fed interest rate cuts".

BTW The banks aren't making any money from lending me money because I am not borrowing any. They are giving me money (or at least the one I work for is). However, for those unlucky enough to have ARMs that are about to reset, the rate cut may help them particularly if their ARM is indexed off the 1 year CMT (Constant Maturity Treasury).


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## #5880 (Feb 11, 2006)

You can derive the relativistic equation for energy e^2 = p^2c^2 + m^2c^4. Here p is the magnitude of the three dimensional momentum, m is the invariant mass of the particle, and c, of course is the speed of light. I repeat that this equation follows from the postulates, the basic definition of relativity. 
...

On the other hand suppose m=0; in this case the particle is massless and the equation reduces to \inline e = pc, the energy is the size of the three-momentum times the speed of light...

so at some level there is this basic assumption or observation about the universe:

"there is a certain speed that is the same to all observers"

nothing said about light or massive or massless or any kind of boson, that would be too clunky----just that the universe has a preferred scale of speed that reads the same in all frames

later, after some algebra and thinking about particulars, we learn that massless things actually GO this speed, and that, as it so happens, light goes this speed

Correct me if I am wrong, but it seems as if the basic postulate does not even assume that anything travels at this speed, not to mention saying anything about light. I just says that in the universe there IS this speed which looks the same regardless of your perspective.

and the equations you mention derive from that, by some algebra

I'm sure this is oversimplifying, but it is a striking idea and immediately prompts one to ask "what if there were two invariant scales instead of just one?" Are there maybe several quantities in the universe that look the same to all observers---a speed and at least one other type of physical quantity.


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## adgrant (Aug 13, 2003)

cosmos said:


> We may not see the growth we have seen in the last 3 years, but the fact remains that when the dollar goes down, it only increases US manufactering. So the people that work here produce more because foreign people buy more stuff.


True, up to a point. A pity though that so many U.S. companies have moved their manufacturing to China which pegs its currency to the U.S. Dollar.


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## adgrant (Aug 13, 2003)

From Today's WSJ

"Euro-Trashed? Why You May Want to Buy That BMW Now"

"As the dollar continues its long slide against the euro, prices of vehicles made by such auto companies as BMW AG, Porsche AG and Volkswagen AG's Audi unit have steadily crept upward ahead of U.S. and Japanese vehicles over the past few years. But while car makers have largely avoided substantial price increases so far, some analysts are warning that could change as soon as next year."

"So far, European car makers have been able to hedge against currency fluctuations by buying contracts that guarantee certain exchange rates. But many of these contracts are set to expire soon, analysts say. Hedging lessens the Europeans' need to quickly change prices with every currency fluctuation, but the strategy is of limited value during long periods of weakness for a particular currency, Mr. Healy says. "They offer mitigation but nothing more," he says"

Finally :

"The BMW 3-Series sport sedan's base price has risen about 20% over the past five years, for example, before accounting for inflation. The car now costs $32,400, compared with $27,100 in 2002."


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## cosmos (Jan 18, 2002)

> The BMW 3-Series sport sedan's base price has risen about 20% over the past five years, for example, before accounting for inflation. The car now costs $32,400, compared with $27,100 in 2002."


Humm, ok, lets compare apples to apples here. The 2002 car was a completely different model and on top of that the new one comes with much more standard features than the previous model had as expensive options.

Also how can one NOT count inflation? Do people on avg not make more money in 2007 then they did 5 years ago in 2002? On avg. the wage of US workers has risen roughly 3.4% year over year, that X 5 years is roughly 17%, so percentage wise, the increase in price vs. income has been almost on par with each other.

This is an unfair comparison and other factors need to be taken into consideration before a throwing out numbers and examples like this.

Now onto the whole hedge issue. How many BMW's were produced in 2002 compared to 2007 in the USA and how many more will be built next year and so on.

If BMW was in the same financial model they were at in 2002, than yes, I guess the assumptions could be used; however BMW is not and has a clear understanding of how sensitive the USA consumer is to its products.

I'm just sayin.


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## adgrant (Aug 13, 2003)

cosmos said:


> Humm, ok, lets compare apples to apples here. The 2002 car was a completely different model and on top of that the new one comes with much more standard features than the previous model had as expensive options.
> 
> Also how can one NOT count inflation? Do people on avg not make more money in 2007 then they did 5 years ago in 2002? On avg. the wage of US workers has risen roughly 3.4% year over year, that X 5 years is roughly 17%, so percentage wise, the increase in price vs. income has been almost on par with each other.


Apples to Apples, the "Option Adjusted Price" of a 2002 is still quite a bit lower than the 2007 3 series. The 2007 does have a more powerful engine of course but it isn't a radical improvement in other ways.

I do agree with your inflation arguement but it does suggest that BMW's margins on the 3 series have been sinking. However, many 328s are actually built in South Africa whose currency has probably not been as strong as the Euro.


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## DXK (Jun 1, 2007)

There are indications that the Europeans are going to fight aggressively to prop up the Dollar. They are meeting next week to discuss that they can do to keep euro from going up since it's starting to hurt their exports and the economies. Not sure yet if it's going to be a full scale intervention (like the French want) in the financial markets (buying the dollars) and / or pressure on the european central bank to lower the rates and make euro less attractive.
So there is some possibility that we have seen the highs in the euro.


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## cosmos (Jan 18, 2002)

The dollar has also been rebounding a bit, (very little bit) from last week. It might improve a little more.


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## adgrant (Aug 13, 2003)

cosmos said:


> The dollar has also been rebounding a bit, (very little bit) from last week. It might improve a little more.


It may. The rebound was probably due to good employment numbers (including revised numbers for August). The improved numbers lessen the probability that the fed will lower its rates again soon.


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## b-y (Sep 14, 2004)

pilotman said:


> ...
> 
> Plus, the cars built in America have had noticeably inferior quality than their german/south africa counterparts.


Can you provide any credible evidence to back this up? :dunno:

I only know of one study in this area, and it is a couple of decades old. There was a detailed comparison of VW Rabbits assembled in Pennsylvania with the equivalent models assembled in Germany. Consumers did believe the German-built were more reliable and fault-free, although the repair data indicated the opposite was true.


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## Alfred G (Apr 1, 2007)

Andrew*Debbie said:


> Absolutely and I hope BMW AG does it.
> 
> More importantly, why don't any of the *American* car companies offer a program?
> 
> Sure, not too many Germans would come to the US for a Chevy Cobalt. Then again, they might if the price was right. There are a few US built cars that would be attractive to a niche market. Corvette and Jeep come to mind as potential USD cars.


I was at the Deutsches Museum today (traffic department; Theresienhöhe) and they have a beautiful 1959 Cadillac Eldorado there.

Back then a German car club offered something similar to your idea... :thumbup:


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## Alfred G (Apr 1, 2007)

Euro reached another record high:

Monday Nov 19th: 1 EUR = 1,4765 $


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## cipher5 (Aug 20, 2007)

I'll hold onto my euros and wait to exchange them for dollars


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## Kanuck (Feb 18, 2003)

Alfred G said:


> Euro reached another record high:
> 
> Monday Nov 19th (9:23am EST): 1 EUR = 1,4765 $


Tues Nov 20th: 1 EUR = 1,4802 $


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## Andrew*Debbie (Jul 2, 2004)

Alfred, I'm sure we can find you a Pink Caddy of your very own. How difficult is it to import American Cars in to Germany? Here in the US it is all but impossible to import a EU car unless it is over 25 years old.

There are some American Built cars that would appeal to enthusiasts. Ford GT for example. There are also some very good American built bicycles. At the current exchange rate, everything is a bargain. How about flying over to New York to do your Christmas shopping?

Please come buy something, anything. America needs your money


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## Alfred G (Apr 1, 2007)

Andrew*Debbie said:


> Please come buy something, anything. America needs your money


OK, I'll help poor America out. 

Seriously: I'm thinking about taking a vacation with my family in Florida next February, but I don't where to go, since I've never been there. :dunno:

I would like to swim in the sea, visit interesting nature&sites and stay at a nice resort.


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## gesoffen (Jun 18, 2004)

pilotman said:


> Plus, the germans are very sophisticated and knowledgable when it comes to cars, you don't think the germans know that some BMWs are built abroad? I am quite sure they know this....


I remember when the Rabbits built in Westmoreland, PA, USA were being sold in Germany due to low demand here in the US (gas crunch was off, VW started down a poor reliability slide). The German Golfs were still selling well but the USA built Golfs sat. I remember my relatives specifically commenting that Germans specifically avoided those cars due to USA's poor auto manufacturing reputation at the time. Within a few years those Rabbits/Golfs had sagging headliners, loose trim, and poor fit and finish above and beyond the rest of the VW brand.

Granted, the Germans have become more consumer oriented than they were 20 years ago (as has the US), but they still take many items VERY seriously - cars (more generally, transportation), bier and fußball are the big three.


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## gesoffen (Jun 18, 2004)

Alfred G said:


> OK, I'll help poor America out.
> 
> Seriously: I'm thinking about taking a vacation with my family in Florida next February, but I don't where to go, since I've never been there. :dunno:
> 
> I would like to swim in the sea, visit interesting nature&sites and stay at a nice resort.


Alfred, I'll be visiting Germany at least twice next year - how about we just exchange bank accounts! Of course that means you'll get the short end of the deal.

Seriously, depending on the age of the kids, Disney might be an option for a few days (definitely, not my cup of tea) but I'd recommend the keys.


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## Andrew*Debbie (Jul 2, 2004)

Alfred G said:


> OK, I'll help poor America out.
> 
> Seriously: I'm thinking about taking a vacation with my family in Florida next February, but I don't where to go, since I've never been there. :dunno:
> 
> I would like to swim in the sea, visit interesting nature&sites and stay at a nice resort.


We've been to Orlando. Hated it. Only worth it if you want to take the kids to Disney World. Long drive to the Ocean. +1 on the Keys. It is a long drive from Orlando to Key West.

North Carolina Outer Banks are worth considering too. Maybe too cold in February though. http://www.outerbanks.org/

Have you considered Hawaii or San Diego? The original Disney Land in Anaheim is an easy day trip from San Diego. Wild Animal park and the SD zoo are both worth seeing. San Diego beaches could be too cold in February though.


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## Andrew*Debbie (Jul 2, 2004)

gesoffen said:


> I remember when the Rabbits built in Westmoreland, PA, USA


Before we met, Debbie owned one of the American built Rabbits. It was a terrible car. Since then we've owned VWs built in Germany and from the Mexico City plant. At one point we had 2 Jettas. One from Mexico and the other was built in Germany. The plate in door frame was the only way to tell where either car was built. They were of equal quality. We put about 200,000 miles on the Mexican built Jetta and kept it over 8 years. It was a good car.

Quality at BMW's South Carolina plant is nothing like VWs American mistake. US built BMWs are upto BMW's world standard. The Z4 is one of the most reliable cars in the BMW lineup.

For that matter contemporary American cars were better then what came out of VW's US plant. I don't know what VW did, but they sure did it badly.


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## chrischeung (Sep 1, 2002)

DXK said:


> but at some point, there will be a combined intervention from all sided to stem the fall.


The problem is, there is no clear "point" in sight. The ECB is arguing against not reducing Euro rates since inflation is a concern in Germany. So if Euro interest rates remain high...


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## DXK (Jun 1, 2007)

chrischeung said:


> The problem is, there is no clear "point" in sight. The ECB is arguing against not reducing Euro rates since inflation is a concern in Germany. So if Euro interest rates remain high...


It is likely that the current variation in economic growth between U.S. and the rest of the world will not continue for very long; therefore, the gap in level of inflation will narrow and the differential in interest rates will diminish. I bet that 3 years from now both $ and American stock market will be higher than it is now. I hate to agree with W. but aside from the debt situation (which will get to equilibrium at some point and the markets will clear), the fundamentals of the American economy have not deteriorated to a degree that current market psychology seems to suggest.


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## DXK (Jun 1, 2007)

Gran Turismo said:


> Over the weekend, 1 US$ has fallen below 1 Swiss Franc for the first time in history.


CHF always goes up when there is uncertainty in the world. I have told everyone I talked to to put their money in CHF once it became clear what W. and Co. is up to and with debt bubble.


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## chrischeung (Sep 1, 2002)

DXK said:


> the fundamentals of the American economy have not deteriorated to a degree that current market psychology seems to suggest.


I certainly hope so. However, I'm planning for things go get worse, just in case.


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## Andrew*Debbie (Jul 2, 2004)

cosmos said:


> $1.5726 Yeah, dollar getting stronger!!


$1.58 a few minutes ago.


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## DXK (Jun 1, 2007)

Among other things BMW said it's going to increas production in U.S. because:
"By building the cars in the U.S., BMW also can save money on wages, since its South Carolina workers earn less than German workers." 
I don't think they mean it's due to exchange rate that they have also stated they are hedging separetly.
The question is: is this good for America? Is this good for our standard of living? 

It is not clear how much of the salary differences can be attributed to goverment provided benefits in Germany. i.e. health care. 
Of course for folks in SC and other states that have lost jobs and don't have too many alternatives, this is very good news.


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## Andrew*Debbie (Jul 2, 2004)

DXK said:


> The question is: is this good for America? Is this good for our standard of living?


Of course it is. Tiny, but a plus. There aren't just the jobs at BMW either.

There is the Lear plant in Duncan SC that makes seats for BMW.

Michelin just expanded their SC plant. They have about 8,000 employees.

There are who knows how many smaller companies supporting these large plants.


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## Alfred G (Apr 1, 2007)

New record April 10th : 1 Euro = 1.5912 US-$

1 US-$ = 0.63 EUR


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## cruise_bone (Jun 6, 2007)

DXK said:


> With all due respect, the war, which was surely the dumbest foreign policy decision in the last 30 years, has very little to do with the current crisis. It is the easy availability of capital, the abuse of debt (by both consumers and financial companies that sold risky instruments), and speculation in real estate. As Cosmos has noted, the internet mania that also ended badly was a result of speculation in the financial markets that resulted in unjustified evaluation of companies which made no profit.
> Both of those downturns were caused by the excesses in capital markets not by the war. What the war does, it contributes to the deficits (and therefore to the lower $ ) and takes away from the needed programs / investments by the government that might've gone to alleviating the crisis.


Are you kidding me? You are wrong it had very little to do with it, especially when you consider the very important fact that it was financed with a Tax CUT. DOH!!!!!


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## cosmos (Jan 18, 2002)

Thought I would revive this thread.....Dollar is the strongest against the Euro I have seen in years. 

e1.00 = $1.405

If this trend continues, BMW will send (or at least not reallocate) more cars to the States.


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## adgrant (Aug 13, 2003)

cosmos said:


> Thought I would revive this thread.....Dollar is the strongest against the Euro I have seen in years.
> 
> e1.00 = $1.405
> 
> If this trend continues, BMW will send (or at least not reallocate) more cars to the States.


Since I am going to Paris in a couple of weeks, I am very happy to see that. OTOH my 401K took a real beating yesterday (thanks Congress).


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## beewang (Dec 18, 2001)

cosmos said:


> Thought I would revive this thread.....Dollar is the ...


Why??!!

You going there again??!!


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## beewang (Dec 18, 2001)

adgrant said:


> ... OTOH my 401K took a real beating yesterday (thanks Congress).


Why??!!

Are you retiring soon??!!


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## cosmos (Jan 18, 2002)

Why??!!

Are you investing my money??!!


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## Gig103 (Sep 10, 2007)

cosmos said:


> Thought I would revive this thread.....Dollar is the strongest against the Euro I have seen in years.
> 
> e1.00 = $1.405
> 
> If this trend continues, BMW will send (or at least not reallocate) more cars to the States.


I wish it was $1.405 when I was there -- Our trip probably couldn't have been more poorly timed if we tried! €1.00 = $1.58 when I was there for three weeks.


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## adgrant (Aug 13, 2003)

beewang said:


> Why??!!
> 
> Are you retiring soon??!!


Not as soon as I would have liked it seems.


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## Andrew*Debbie (Jul 2, 2004)

***8364;1,00 is about $1.3539. It approached $1.35 yesterday.

£1.00 is at $1.70125

Strongest the dollar has been in ages. If sterling falls below $1.70 it is time for a "How high can the dollar go" thread.

Could it be that smaller investors are pulling deposits from uninsured european banks and moving them to insured US accounts?


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## mrbelk (Dec 5, 2003)

Gig103 said:


> I wish it was $1.405 when I was there -- Our trip probably couldn't have been more poorly timed if we tried! €1.00 = $1.58 when I was there for three weeks.


No kidding; same as us.

Somehow I think that, even as bad as the US Economy is; we're better equipped to pull through quicker and stronger. Just a hunch.

The adage "When America sniffles, the world gets the flu" still holds. The Euro zone is in big trouble with many countries fighting significant double digit unemployment and tons of social programs they have to pay for.

-MrB


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## adgrant (Aug 13, 2003)

Now down to $1.3298 which is great since we are flying to Paris this afternoon.


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## Zhaunk (Jul 27, 2005)

mrbelk said:


> No kidding; same as us.
> 
> Somehow I think that, even as bad as the US Economy is; we're better equipped to pull through quicker and stronger. Just a hunch.
> 
> ...


More like "when America passes out plague infested blankets the world economy dies"...


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## MB330 (Oct 18, 2005)

delete


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## The Other Tom (Sep 28, 2002)

MB330 said:


> 2010.02.05


Time to buy....


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## DXK (Jun 1, 2007)

..


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## MB330 (Oct 18, 2005)

delete


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## DXK (Jun 1, 2007)

MB330 said:


> No, this screen shot from my company web site.
> Charges not shown.


I don't know what kind of business your company is in and how it calculates the rates, but at the official Forex it's 1.36


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## skywalkerbeth (Jul 19, 2007)

why so many deletions?


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## DXK (Jun 1, 2007)

skywalkerbeth said:


> why so many deletions?


Apparently, the currency traders read the Bimmerfest and they got confused so it spook the markets


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## MB330 (Oct 18, 2005)

skywalkerbeth said:


> why so many deletions?


My fault - I publish something, that I should not publish on public forum. :tsk:
Sorry!!!!!


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