AFSCME 3357-HOF'S BLOG

The Dollar's Looney Fall

According to Bloomberg.com, for the first time in 31 years, the U.S. dollar is worth less than the Canadian dollar, the Loonie. Each Euro is worth around 1.4 US dollars. So if it seems that you aren't making much more than you used to, don't worry, it's not worth as much anyway (????)

In theory, the weak dollar makes it cheaper to build cars in the US than in Canada, and definitely cheaper than in Europe. So, naturally, General Motors plans on importing the Saturn Astra from Belgium any day now. If terrorists keep blowing up stuff in Mexico, then maybe we'll have a better chance of keeping the car manufacturing plants in the USA.

Ironically, the fall of the dollar is tied to the reduction in short term interest rates by the Fed. The Fed reduced the rates due to problems in the mortgage industry and the credit crunch. The market reacted by raising long-term 30 year fixed interest rates. The Fed's short term rates have no direct effect on the LIBOR rate that is the benchmark for many/most variable rate mortgages. The LIBOR rate is still high, as high or higher than last year, so don't look for your variable rate mortgage to reset at a lower rate anytime soon.

What am I babbling about? Who knows? time to quit. It's Friday.