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Posted by tendiamonds on 2007-09-25 01:54:55 +0000

Yeah, but they still have the Metric System! Ha! Metres!

Posted by pamsterdam on 2007-09-25 03:30:59 +0000

Oh my God. And I was worried when the pound went to 2 dollars...

Posted by G lib on 2007-09-26 05:09:39 +0000

er, $2.14 last time I checked (Saturday).

Posted by pamsterdam on 2007-09-26 05:38:22 +0000

Jesus. And the Euro's at $1.42 now. When I first moved over here in 2000, it was 1-to-1.

Posted by G lib on 2007-09-26 07:45:05 +0000

You win, we LOOOOOOOOOOOOOSE. thanks, GW.

Posted by tgl on 2007-09-26 07:45:59 +0000

Um, and Alan Greenspan.

Posted by ConorClockwise on 2007-09-26 08:07:34 +0000

Just multiply by my approximation of pi.

Posted by pamsterdam on 2007-09-26 17:36:21 +0000

Can someone smarter than me (pretty much anyone on this board) explain why this is happening and give a reasonable prognosis for the next 12 months? Or should I just pick up a copy of [shudder] The Economost?

Posted by tommy on 2007-09-28 11:41:24 +0000

Basically, the US dollar is falling relative to other currencies because of the US interest rate cuts. Theory: If you want to have some cash in a bank, you want to have the kind of cash that gets you the best interest rate. The lower the US interest rate goes, the fewer people want to have US cash, and the more people want to have other currencies. When more people start wanting the same thing (Euros,Loonies), they get more expensive, and when fewer people want something (Dollars), they get cheaper. Hence interest rate lowering => dollar falling. Armchair prognosis: The interest rate was lowered because of all the bad loans that were made: people assumed their house would skyrocket in value, and they could sell the house at a huge profit in 3 years. So, they took out loans that were cheap for the first 3 years, but which switched to a higher interest rate afterwards -- in many cases the borrowers cannot afford to pay the higher rate. Lowering the interest rate causes these adjustable mortgages to be more affordable, thus helping some percentage of people with such loans (but, of course, it really helps out the mortgage investment firms). This problem is not going away any time soon, though, so probably the dollar doesn't rise dramatically until the politics change enough that the regulators stop helping out the mortgage folks at the expense of the dollar.

Posted by pamsterdam on 2007-09-28 11:55:51 +0000

Tommy, I really appreciate you taking the time to explain this - I think a tiny lightbulb is flickering somewhere in the back of my tiny brain... So when I hear about interest rates being lowered on the news, they're talking about both the kind of interest rate which I get on my bank balance and the kind of interest rate I would have to pay on an adjustable interest rate mortgage? Meaning that lowered interest rates mean less bank interest coming my way, with the mitigating factor of having my (hypothetical) adjustable interest rate mortgage payments be a bit lower? And when interest rates are lowered, is that something that is fiddled with on an annual basis, depending upon "the economy"s needs? Is a decision like that made in a US-vaccuum, or is the international economic climate also considered? Sorry for all these questions - feel free to tell me to do my own research and leave you alone.

Posted by tendiamonds on 2007-09-28 12:43:52 +0000

Sorry I'd missed this. Good Job.

Posted by tommy on 2007-09-28 13:00:51 +0000

I'm no expert on finance either here, so take this with a grain of salt: As I understand it, the regulators only control the rates that banks charge each other for borrowing money. Each bank is free to charge you whatever rate they want for a mortgage, and pay you whatever rate they want on your saving account. But, the rates are indirectly coupled... the less a bank has to pay to borrow money, the more they can afford to give you a better rate on a loan. But, you're right, the flip side of that is that the less a bank is allowed to charge other banks, the less they can afford to give you a good rate on your savings. So, yes, when "the interest rate" is lowered it indirectly means better loan rates and worse savings rates. I'm not sure how often they fiddle with the interest rate. They ("The Fed") have a meeting every now and then -- maybe every 3 months? -- but they don't always change the interest rate. I'm sure they take the international climate into account, along with the US economy. I wouldn't be surprised if their main concern is to help out their buddies in the finance companies, though.

Posted by pamsterdam on 2007-09-28 13:12:42 +0000

Tommy, this is very helpful - thank you! Everything, as they say, is illuminated. Many thanks for helping me in my ceaseless quest to make some sense of this mad, mad world.

Posted by tgl on 2007-09-28 13:42:05 +0000

Is it really each other or what the Treasury charges the banks? The result being that the federally set interest rate effects what banks charge each other and so on down the line. Interest rates are going lower now, because of the subprime mortgage fiasco. However, let's not forget that they were already incredibly low as The Fed tried to stave off the "hard landing" when stock market tumbled in early 2000(?) and again after "The Day World Changed When It Really Didn't". The dollar has been in a slide for a while.

Posted by tgl on 2007-09-28 13:42:50 +0000

I'll give you zero loonies for that greenback?

Posted by MF DU on 2007-09-28 13:52:39 +0000

reading the Economist is fun. Minus 15 scene points...

Posted by tommy on 2007-09-29 14:21:53 +0000

That's probably right, tgl, about the treasury. I'm not totally clear on the details. Re low interest rates for a while now -- agreed.