Thread: The Dollar, The Euro, and Panama

Originally Posted by Lalaguayaba

So start investing in U.S.$ now while they are still 'cheap'; if they fall a bit more, invest again--that way any gains the dollar makes against the Euro in the next few decades will be gains for your investment program.

That's a much safer hedge that just 'wishing' that a given currency won't change value...

Cheers!

who knows if US $ will ever be strong as Euro in the future? i've seen that now canadian $ is worth more than US $ so that's a first. i don't it's value goes lower and lower.

Originally Posted by Nosfer

Who knows if US $ will ever be strong as the Euro in the future? I've seen that now Canadian $ is worth more than US $ so that's a first. I don't if [its] value goes lower and lower.

If the US$ continues to fall--and it may a bit, but not for too long, I'm sure, perhaps a year or two--then purchases into the US$ help to make it stronger. Any investment into a currency serves to strengthen the economy that produces it; that's been historically accurate for hundreds of years. Buying into the US$ now will incur great gains within 5-10 years--and that's a good deal. Stocks, bonds or other certificates, can only appreciate as seen from the investment view of the Euro.

As far as the CAN$ goes, the loonie is impressively high, and for the first time ever was worth more than the US$--but today it is at $0.973. It has hovered around that mark for months, sometimes at a record high; for that matter, so has the Bahamanian dollar. Both currencies are tied into the US$ as we are their majority trade and tourism partners.

If you think the US$ is going to fall some more, then look into selling it short on the currency markets; otherwise financial instruments will just appreciate in value as the dollar rises. The nice thing about investment in Euros, is that it is not just the currency of one country--you get all that risk spread out over a dozen small countries with large GDPs. That's awesome! But, since the Euro is relatively new, there are only 5 years of historical avgs to work with...

Happy investing!

I wouldn't invest in the dollar personally. I have a feeling it is going to continue to go down in value.

So....wait a year and then invest. The entire point is to invest in something with a low value and wait for it to increase....

Thinking that the dollar won't bounce back is fairly naive in the long run.

Cheers.

P.S. Aren't you American?

The losing US $ is a shame for all the people who have invested in it. Why does China continue to buy so much US money?

I believe China is actually buying US securities, T-bills, etc., not actual dollars. China is getting allot of US dollars by selling the US their exported goods. I am guessing here but I think what will eventually happen is that China will probably bail out the US in the coming year and if that happens then they own the financial sector of the US. I personally dont like the thought of that but the other option is the dollar turns into the value of the peso.

Exactly--and a bit of real estate to go with all those financial instruments as well. I was really just curious as to what Panman's idea of 'buying dollars' actually was, I'll have to wait on that I guess.

I think that lot of what is causing worry is the fall of the low-cost mortgage industry, lowered consumer spending--all these things that are contributing to a sense of perceived recession; that has helped the US$ to fall in international markets, attributing the lower value to increased risk.
I'm not seeing the massive Asian buy-out of the U.S. financial sector, and I'm also not seeing the devaluation of the US$--a loss of a few more percentage points perhaps, but with an upswing after next year's election (as usual.)

With that said, I am always cautiously optimistic!

Cheers.

What would happen to the other currencies in the world if China sold off all if its US$ and US debt?

The dollar would drop like a stone but I dont think China wants that since they own allot of US dollars. One thing to think about is the price of oil is pegged to the US dollar. What if that defacto standard was changed to be pegged to the Euro? That could really be a bad thing. I think the one thing saving the US dollar is the fact that so many countries own the US dollar or their economy is pegged to it, such as Panama, that the world does not want the dollar to drop to far. My personal opinion is that the dollar has the potential to loose another %50 on the world market, it already lost aprox. %40 in the last two years. Once again that is my opinion. Happy Thanksgiving.

Here's a really nice article on the current state of the economy, by a Nobel-prize winning economist--written in a highly accessible style, and from the pages of 'Vanity Fair.'

The Economic Consequences of Mr. Bush: Politics & Power: vanityfair.com

Cheers!

One great thing is to see the value of the dollar in Panama still. I am really looking forward to the move.

My personal opinion is that the dollar has the potential to loose another %50 on the world market, it already lost aprox. %40 in the last two years.

I agree. The dollar has a long way to go down. The Fed keeps printing money and real inflation is skyrocketing. Sooner or later Panama will want to get out of this and get its own currency, but until then it will remain a cheap paradise for Europeans and other euro holders (even more so than the US).

Why has the dollar done so poorly over the last two years? What is so different now then before?

The dollar may have lost allot of value in the two years but it has been coming for awhile.

Originally Posted by chris

I agree. The dollar has a long way to go down. The Fed keeps printing money and real inflation is skyrocketing. Sooner or later Panama will want to get out of this and get its own currency, but until then it will remain a cheap paradise for Europeans and other euro holders (even more so than the US).

Panama already has its own currency... the balboa. It's been linked 1:1 to the dollar since 1904 but as far as I know, it could be unlinked if the dollar continues to deteriorate. All that Panama needs is the political will and a few printing presses.

I actually asked a well-connected attorney the question if Panama would ever change it's currency? He told me and seemed quite confident that Panama will keep the dollar and would not try to print money again. Once again, that is what he told me so take it for what it's worth. Since Panama is run by banks and attorneys I think they are smart enough not to want to start printing money (it is tricky business). Much easier to use somebody else's.

If at some stage one euro buys three or four dollars I think they will reconsider

Why doesn't Panama use the euro?

1) The Euro is only 5 years old, and not every country in Europe uses it. Even with the 13 countries that use it now, the # of ppl using it is still less than those using the US $.
Euro - Wikipedia, the free encyclopedia

2) Why would a non-European country use it? Panama is in no way eligible to join the European Union.

3) Historically, Panama has long and deep ties to the U.S., since they rolled in to help them leave Columbia in 1903 and then subsequently built the canal.

Despite all the current negative hoopla, the dollar is still the most widely used currency in popular trade all over the planet--regardless of whether or not it is accepted as the local currency.

Cheers.

Originally Posted by kale

Panama already has its own currency... the balboa. It's been linked 1:1 to the dollar since 1904 but as far as I know, it could be unlinked if the dollar continues to deteriorate. All that Panama needs is the political will and a few printing presses.

Well, the balboa is the de facto currency, but it is only used in the coins, and U.S. coins are accepted as well. Panama does not print its own money, instead using US$ bills, which it then calls 'Balboas.' A little odd, maybe, since giving it a different name doesn't change the fact, that at the end of the day--it is still a US$.

Cheers.

Originally Posted by GordonS

Lala : Minor point but this is not the first time the $CDN is higher than the $US

How about: first time in last 5 years, or since the advent of the Euro? For the purposes of my comment (and please use a quote next time, if I don't where or when I said it, I cannot accurately rebut) that is enough accuracy for me. In the future, a pm works well, and an edit will ensue.

Cheers.

Maybe people will start using private money rather than government money, especially since most governments have stopped backing their paper money.

Private money?

I think he is talking about money that is not printed and controlled by a government. The Liberty Dollar is an example, or just using gold or something.

How about Star*bucks? Microsofties? Ibmoney? Dellars? These are all firms that are worth more than the GDPs of small countries. Perhaps you could get them to 'sell' money privately.

Cheers.

Actually now the you mention "private money" I am very well aware that there are online roll playing games such as Second Life (I think), that does have it's own currency and items I believe goods and services can be actually bought and sold but that is limited to the virtual world. Precious metals always have an actual value but try to break a gold ingot at the grocery store for a six pack of beer. Obviously a country needs to have a defacto standard of some kind of universally accepted and trusted currency. Who knows what the outcome will be but at this point anything is possible.