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Saturday, December 8, 2007

A lighter shade of green

We have been seeing a declining dollar for bit now. With the Dow on a string of positive closing days as we approach the Fed meeting to decide on a possible rate decrease, there is optimism. Will the Yuan get a restructuring to help offset China's inflationary concerns? Will the oil rich countries begin to revalue their commodity pricing(oil) to a basket of different currencies? Will the recent government's decisions to get involved in mediating to reconcile the subprime debacle help with consumer confidence?

With a China Yuan restructure we would see a bit of help in the exchange numbers with the United States. Perhaps we could add to this with maintaining the import laws and product safety from China and other trading partners. These steps are already in place they just need to begin to be enforced. These moves would give a boost to our export numbers immediately.

Over the long term, if the oil region would revalue their oil pricing to a basket of currencies there would be a more balanced overall price point to the other regions that import the crude. Perhaps this move would spread the value throughout the various consumers of their product without putting so much responsibility on the greenback. This action in the short term would hurt the dollar, however, in the long run a hold a more stable means of controlling the currency fluctuation and barrel pricing increases necessary.

As the government begins to get involved with the United States subprime situation to help bring some band-aid to the crisis there are many who feel the government should stay out of this one. Is this type of involvement necessary for the government?

So many questions?

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