Thursday, March 06, 2008

Silver Lining

So, about two months ago, the Dow crossed 12,000. And it's about ready to do it tomorrow morning -- there was no end-of-day save today, so those may be over. Or maybe it's Thursdays. Or maybe they just try to fake you out by not pumping money in at the end of the day every now and then, whoever they are. But, the Dow Jones Industrial Average is at 12,040. The low tomorrow's going to be below 12. Again, I expect it to hang around ten for a few years.

I like reading 'Today's Markets" in the Wall Street Journal because it explains market movements so neatly. It's like hanging out with Dark Ages physicists, "Well, you see, birds stay aloft because of the intrinsaec (they used 'ae' a lot in the Dark Ages) attraction between feathers and clouds. Fluffy attracts Fluffy -- It's a Charaecteristic of the Third Elemental Ring."

But, just think what the Dow would be doing if the dollar weren't deflating like crazy! It's much cheaper for a sovereign wealth fund to pump 6 billion dollars into our stock market than it would have been ten years ago!


Malice Blackheart said...

The advantage of a deflated dollar is that you wind up getting more Canadians, (as well as other foreigners), rushing across your borders and feeding your economy, so that should help cushion the blow, and before long, the dollar will bounce back.

Rionn Fears Malechem said...

Thanks, Malice. That should allow a fair amount of money to flow into our manufacturing ba... oh. Darn. Well, still, those Canadians can reinvigorate our economy by enriching the local storeow... oops.

How many Canadians do you think there are? While 75% of them live within 150 km of the border, that's still only 24m people. And we've made the border difficult and unpleasant to cross.

While Canada doesn't face the loss of their dollar as the global reserve currency, it's facing its own similar housing bubble. And high oil prices and a moribund construction sector (thus a decreased need for two by fours) are probably hitting the Canadians pretty hard.

So, while your school teachers may have told you that devaluing a country's currency is good for it (notice all the happy Argentinians?) (a) we're not really set up to receive the benefits, and (b) it ain't gonna be Canada that saves us.