Wall Street Story

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Thursday, November 15, 2007

They are killing dollar, aren't they?

Also milliards are frequently falling of famous list of 400 most rich Americans, which is every year prepared by leading economy magazine Forbes. If you wanted to be on that list in year 2007 you have to be heavy at least 1.3 milliard dollars, which is 300 millions dollars more than last year 2006.
Some people see on this list, and they are almost right, one of the marks, that in our era exists , as it was possible to claim for last decades in 19 century, very comfortable ground to grow numbers of extremely rich individuals. As it is mark in meaning that is opposite with production in economy, the meaning of dealing with finance is much more important now, we have 45 newcomers which are now on list, and they all come from tops of finance founds.
the valuers have off course the total right to look and overcome to that kind and similar conclusions, but what is interesting, that till now nobody asked, what is going on with dollar in which all that wealth is presented.
Evan if that question is not of such importance for that subject, as list of Forbes magazine , it is even more interesting that many of those important questions are discussed , as the dollar would be money, which has constantly equal value. In September of 2007, for example, the economy magazine Barrons published prediction of one of most prestigious strategist in business with oil, who claims that the price of "black gold" will from $80 for barrel fall to half the price, to around $45. Mike Rothman, former oil strategist of Merrill Lynch bank, who is now owner of investigation company, he is famous on Wall Street not only because of such opposite views , but also on facts that most of the times he was right, when his predictions were in opposite of public opinion. Now he claims that the position with oil pretty much the same as back in seventies. From 1999 the price of oil grow on same steps , which were walked through in mentioned decade, so the price from record $45 in first years of eighties dropped, so in middle of eighties the price was less than half of the mentioned record price.
The prediction is for most of us pretty common and welcome, but in prediction is missing the second important part of the story: What was in those times going on with money that is product of oil? After, beginning of seventies, the last connection between gold and dollar failed
the dollar in full power went to sail, which most of us considered more like sinking or diving. Obviously oil masters didn't became greedy in moment, as sometimes their behavior was explained and subscribed. What happened, it simply wasn't productive to give oil in same amount of money of which value was sliding down. So what happened, there was an offensive of plantar resources against collapse of money.
That is how suddenly became clear, how the trend of falling dollar and nominal more expensive oil ended. It was the big move in American monetary politics in passage from seventies to eighties, it was blackmailed with what seemed as final brake down of American money, when the price of gold in year 1979 raised on price of $850 per ounce. Which was also the mark of end of that moving. But not immediately, because the gain on dollar investments were kicking heads of in their positive turn (the state of us was paying 16% of interest to creditors
), so the global capital started to turn in dollar financial possession and was moving from material and other kind of owning. Dollar in those times became much stronger in relation to other kind of money (in spring of 1985 it was possible with one dollar to buy 3.5 german mark), consequence was that price of goods in dollar was falling and also price of oil. Not very rich countries, which were also so called socialist countries, payed enormous price for that turnabout. As Dutch economist Angus Maddison claims, was that price much bigger than rich countries were paying in big depression of thirties.
To discus about close history it makes sense only if there are any chances for such optimistic predictions, as it is point of earlier mentioned of oil fortuneteller, meaning that the price of that fuel will son fall on half.
It is hard to imagine bigger differences, as were in times of turnabout in dollar politics started sos action of american money, which was also the combat with rising price of oil, and now our time, present we took care with turnaround of monetary politics to grow of Stock exchange and killing of dollar.Probably nobody doubts that dollar had to pay for newest conclusion of american central bank, that they will lower rates for another half pro cent, so that will make investments in american dollar even more unattractive. In opposition with past times today there is no marks, that anyone would wish to value dollar would get stronger with with more income on financial owning in this currency. Also american press is writing a lot about it, that dollar had to pay the price of that step, even it would be much more honest and clear to say that that price was payed by out america creditors. Meanwhile there was no hearing from Washington with their famous words, which were repeated in any actions with american money, stong dollar is american national pride and interest.
Dollar looks like in free fall right now no one on globe cane not take as easy thing to make decision what to do now.
probably interesting reading, but i haven't tried yet black gold

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