June, 2003

The dollar is weak-kneed against all the world's currencies, behaving like a grouchy old uncle that no one wants to invite to dinner when compared to the euro and yen. The euro, that patched-together common currency of Europe that we scoffed at as irrelevant for so many years is now stronger than our buck.

Who cares?

Well, I care because I live in Europe and get my social security in dollars, so my dollars are currently buying almost 30% less than they did a year ago. But a weak dollar makes US exports cheaper for foreigners to buy and that certainly offsets an occasional expat trying to pay the rent. But ask Ford or Chrysler how much dough they're making on cars they sell in Europe or elsewhere outside the US. It's not so good for American tourists either, but, what the hell, no one's traveling since 9-11 and SARS anyway. Americans don't notice what their currency is doing unless they're dabbling around in international markets and most of them do their dabbling at the supermarket, where Euros and Yen and Czech crowns don't pay for the hot dogs. I never noticed when I lived in the States either---gas and rent and a new pair of jeans don't change in price, so why would I care and why would you?

Because while you can fool all of the people some of the time and some of the people all of the time, you can't fool a currency trader at all---not ever. Governments that try it watch their cash reserves slide down the drain and seldom are able to change their currency status for more than a few days or weeks. I applaud the Bush administration's determination to let the dollar do what it will, without support.

I'm less enthusiastic about this administration's tax giveaway and the unfunded tens of billions here and fifties of billions there they pitch at their buddies. Fastballs when the congress is busy elsewhere and long, slow curves when anyone might be looking. Of course the congress is always busy elsewhere, it's what they do best. Their busyness elsewhere allows George Bush to operate this country on a MasterCard---not his MasterCard, our MasterCard.

The current rate of unfundedness, that difference between what government gathers in taxes and what it spends in our name, is a billion and a half a day. One thousand, five hundred million bucks each and every 24 hours and that includes weekends. No days off for deficits and no vacations. There is apparently no such thing as "over limit" to the government MasterCard and the guys who keep shoving it in the ATM don't have to make the minimum monthly payments, which is currently all of our cash, plus that embarrassing $45,000,000,000.00 a month.

Phew! That's a chunk of change. And you thought your card was maxed out.

The dollar is something our government promises, so we don't have to go around trading chickens for some dental work. The dollar is what replaces bartering, and that promise and (more importantly) how much people believe that promise is what makes a dollar weak or strong.

Strong dollar: You believe the United States is mindful of its financial obligations, a good bet to pay them back on time and not getting in over its head. You think its industry and commerce is healthy, its business future sound and its reputation is honorable. Stuff that would make a local banker smile and shake your hand.

Weak dollar: You think the United States is borrowing like a banana republic, is sliding the payback to "future generations" (whoever they are) and is already seriously over its head. You think its industry and commerce is staggering and its reputation is self serving and short-term greedy. Try selling that program to your friendly banker.

The current administration is talking strong-dollar talk, but walking the weak-dollar walk. And that's not just my opinion, because while I value my opinion, it's not really an Alan Greenspan kind of opinion and doesn't haul a lot of water. But the currency traders are on to what's happening and they are as unpolitical in their day-to-day work as it's possible to be---numbers guys---cold eyed, ruthless---ready to sell out grandma and her farm. Thank God for them, they are our conscience when we're too addled by terrorist alerts and the constancy of lies coming out of Washington, to pay attention.

Harry said "the buck stops here."

I wish the same could be said for the decline of today's dollar, which isn't even pausing on its way to the basement. It could get worse and probably will, as the Republican dominated congress looks for new ways to grease the rich, to 'offset' that public outcry that made them ante up honestly with an equal child credit for the poor.

We're going to be stuck with paying off Bush's MasterCard, long after the man's built his presidential library---"The Sting," without Redford and Newman, in boring black and white.

Get out of the Archives and read what Jim's writing today