ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Wednesday, March 19, 2008

Conversion Rate Euro to Dollar

In case anyone has any doubts about what rate cuts to to the dollar.

Your Co-Conspirator,
ARC: MontereyJohn

Comments (8)
Brian said...

Oh jeez. I never said that rate cuts wouldn't affect the dollar what I said was that you can't fix the dollar by diving us deeper into a credit crisis and recession by jacking up interest rates!

Yes rate cuts may hurt the dollar, in the short term. But who cares? It's like saying that we should buy flood insurance when the house is on fire.

Monterey John said...

Brian, relax, I'm not saying don't relax credit. I'm saying be aware that it comes at a very high cost. To ignore the precipitous loss in value of the dollar is not a really good idea.

Diesel is $4.12/gallon here in LaLa land.

Coming to a service station near you soon!

Brian said...

Yeah, well that's LaLa land for you... its hovering around $3 here...

Now avgas... ugh.. thats $5/gal....

Jason said...

Gasoline prices are easy to point to because people are so familiar with them. However, how important are they? My understanding is the gasoline makes up less than 3% of average household expenditures. It seems like you're focusing on the wrong thing.

The Fed has two official mandates: price stability and job growth. However, in the short-term, it has only one mandate -- the purpose of its creation over 90 years ago -- PROTECT THE BANKING SYSTEM. We can debate the merits of that, but that's what it exists for and that's what it did last weekend and that's what it will continue to do. Price of gas is really irrelevant.

Brian said...

You are absolutely correct, Jason. My example of gas prices here was more in relation to a value of money that I spend only on a recreational activity (i.e. flying) so therefore it seems to hurt more.

I haven't tempered my driving habits (or my choice of a SUV) due to gas prices.

One particular triviality of avgas is that something like the entire US production for a year is made by 2 refineries in about 3 days. So the price is not very fluid. The main difference between different airfields is due to "other" services, courtesy cars and the like.

Brian said...

I will point out that Gold is oil is now below $100.. So that rate cut must have helped end some of that speculation in the oil market.

Monterey John said...

Did you see what happened to gold yesterday? Bubble city my friend.

Might be the same for oil, but I don't think so. Folks actually USE oil.

How important is oil???

If I have to answer that question, I freakin' give up! It is a bit more that a part of the family budget.

Energy is priced in BTUs. Oil goes up, natural gas, LNG etc folow. There go the utility bills. Then there is the issue of transportation of everything we buy and use in this country. Then there is the cost of fertilizers.

The snowballing effect here is going to be considerable.

Brian said...

How much snowballing is there then if the price of oil drops from 110 to 80? to 75? to 65?

I definetly think we're at the begging of the commodity bubble breaking. And financial stocks are at a steal. The BSC failure might just be the catalyst for credit investors to get back into the market.

There's a LOT of cash on the sidelines..