We began a cranky rant about the fall of the U.S. Dollar last October when, for several days in a row, the dollar kept hitting new lows.
Well guess what?
Right, your dollar today is worth even less to the rest of the world than it was in October. As of 10:10 AM January 7th, according to Bloomberg News, you’d have to cough up slightly more than $147 toilet paper bucks to buy 100 Euros. That’s before the banks that convert the currency for you add on their own commissions, of course.
Which means that if you haven't done so already, you can probably cancel your low-budget trip to Paris. Or even your medium-budget trip.
Republican apologists for laissez-faire Bushonomics keep saying the collapsing dollar is a good thing. A cheap dollar, they say, encourages people to buy American products. It encourages foreigners to come here and spend money. So it’ll make us all rich.
Yeah, and I’m the tooth fairy.
I’ve already pointed out here that we make hardly anything in this country any more except for partly hydrogenated corn oil. Cars? Almost nobody abroad wants to buy a GM or a Ford car. The car makers, buoyed by the lack of government pressure to come up with really fuel-efficient cars, is running on the innovation equivalent of empty. Chrysler is such a mess that its foreign owners dumped it.
Computers? Most of the stuff in them is made and assembled someplace else, even if the brand name is American. Ditto cell phones. Don't even get me started on kids' toys.
As for tourism – well, some very well-to-do European friends came to New York the other week. They were just the kind of money-dropping, shopaholic tourists who could perhaps could help to restore the U.S. dollar by converting a counterbalancing load of Euros into dollars and leaving them here. So guess what happened?
Tour-onomics 101: The tourists come.
The tourists spend. The tourists leave.
So does their money.
They spent roughly $750 a night for a hotel room here. Times seven nights comes to $5250. Good, right?
Wrong. They stayed at the Peninsula Hotel, one of the many U.S. hotels that’s now foreign-owned. In this case, owned by a group in Hong Kong. So where are all the profits going? Right.
But…but…aren’t a good many of those dollars going to the hotel’s employees?
Right, and as low-wage workers taking jobs that "Americans don't want," a good many of them are here to work and send money back to their families in Mexico, Ecuador and other places in Latin America. Once again, you can hear the loud sucking sound of money draining out of the U.S. economy.
Well, what about hotel taxes that go to the City of New York?
Fine, the city can use the money to repay its bond debt, a good deal of which is held by…guess who? Uh huh.
But the visitors shopped, didn’t they?
You betcha! They were after high-end, super-fashionable merchandise so they quickly trooped off to find it at the palace of chic, a high-fashion department store called Barneys.
Umm, small problem. Barney’s ownership these days is ensconced back in the good old UAR. That’s the United Arab Emirates, folks. And the clothing itself was made in China, Indonesia, Mexico -- anyplace but the USA.
Will they buy your home
out from under you?
While they were here, the visitors looked into buying a little pied-a-terre as an investment that they could at least for now rent out to New Yorkers. It’s condo buyers like those who are helping to keep New York real estate prices unaffordable for many New Yorkers even while real estate prices in the rest of the country are plunging. (The other source of apartment price support is American bankers who can devote most of a barely-taxed $12 million bonus to an apartment purchase without blinking. But that's a story for another day.)
Anyway, foreigners buying real estate here is good, right? If they buy some little not-particularly-special Manhattan flat, they’ll leave a cool $875,000 here, give or take a little, for a one-bedroom apartment. We’ll all benefit from that, right?
Wrong, because some desperate New Yorker will end up renting the space from them for roughly $4,500 a month, and guess where most of that money will go? Right. Straight back to the land of the Euro.
The man with the
Somehow, all this brings to mind a TV spot currently on the air in New York. It features a one-legged ex-smoker, standing on crutches, who describes how he tried to ignore the fact that his smoking led to diabetes, which led to a time when one of his legs became infected with gangrene. He ignored it when his leg changed colors. He ignored it when it began to smell. Now he's a one-legged anti-smoking spokesman.
That’s an almost perfect metaphor for the Bush administration’s management of the U.S. economy. Plunging dollars? Z-z-z-z-z! Something in the economy doesn't smell right? Z-z-z-z-z!
But wait, you say – isn’t the President about to “do something” by moving for a tax cut again?
Here’s what that’ll do: It’ll make the U.S. less able to repay its staggering $9 trillion-and-counting national debt. Which will further reduce the incentive to invest in America. Which will further reduce the value of your toilet paper dollar.
The fallout from Republican-Bush laissez-faire is cascading into self-evidence like dandruff on a dark suit. Wait until I start ranting about America's secret inflation. Maybe later this week or early next.