2012 Elections in the USA

[QUOTE=El Alamo; 428214]This Libya story is a sinister plot of brave Americans sacrficing their lifes while their government turns its back refusing to come to their aid. All because Obama has ulterior motives that prevents Obama from acting in the best interests of America.

Obama's ulterior motive is a core belief that America is evil and that America is the root cause of international tensions. For Obama to provide military aid to Americans being brutalized in Libya would require Obama to admit that his 'apology tour' through the middle East resolved nothing and admit that the same forces that harmed us in the past are still seeking to harm us. This is something Obama cannot do. To Obama, America is the villain and America should apologize and accept violence directed towards us as a just response for America's sins.

It is no wonder that Obama blaimed the violence in Libya on an obscure, months old utube trailer. This fits in nicely with Obama's belief that we are to blame and that we are provoking these assaults.[/QUOTE]I want to laugh, but you have been going on for so long, I really think you are serious. As to why you dislike Obama, why don't you come clean. Obama can't zip up his fly without you interjecting that he is screwing America.

Bllack Shirt, you might be right. Obama probably cannot zip up his fly without screwing America. It is known as instinctual or ingrained behavior

[QUOTE=El Alamo; 428214]This Libya story is a sinister plot of brave Americans sacrficing their lifes while their government turns its back refusing to come to their aid. All because Obama has ulterior motives that prevents Obama from acting in the best interests of America.

Obama's ulterior motive is a core belief that America is evil and that America is the root cause of international tensions. For Obama to provide military aid to Americans being brutalized in Libya would require Obama to admit that his 'apology tour' through the middle East resolved nothing and admit that the same forces that harmed us in the past are still seeking to harm us. This is something Obama cannot do. To Obama, America is the villain and America should apologize and accept violence directed towards us as a just response for America's sins.

It is no wonder that Obama blamed the violence in Libya on an obscure, months old utube trailer. This fits in nicely with Obama's belief that we are to blame and that we are provoking these assaults.[/QUOTE]The most astonishing thing is, not only does this guy actually believe this nonsensical crap, he's not too embarrassed to admit it publicly. Jeez, you really should just hide under the bed until the big scary black man goes away.

Where did you watch that?

K Foxed Up.

[QUOTE=El Alamo;428216]Bllack Shirt, you might be right. Obama probably cannot zip up his fly without screwing America. It is known as instinctual or ingrained behavior[/QUOTE]

God said Rape is OK. Why do you Republicans say that is OKAY?

[QUOTE=El Alamo;428216]Bllack Shirt, you might be right. Obama probably cannot zip up his fly without screwing America. It is known as instinctual or ingrained behavior[/QUOTE]In your press releases, you and Donald Trump are quite similar. But he has just made a fool of himself this time. Hanging around Key West, you must be loaded, too. But if you have the same hair-do, then all is lost.

[url]http://news.yahoo.com/why-gop-fear-romney-presidency-121512172--politics.html[/url]

Interesting read regarding a possible Romney presidency.

Consumers Report evaluated the solar panels Obama wasted trillions on. Their conclusion "the solar panels work great until you put them in the sun"

Apparently, when put in the sun they burst into flames.

There is still hope. Obama is now touting electric forks to halt the rise of the oceans and cure the world.

Yes sir, our economy is in good hands with Obama

[QUOTE=WorldTravel69;428223]God said Rape is OK. Why do you Republicans say that is OKAY?[/QUOTE]Wt, there you go again.

I don't know of a single person, Republican or otherwise, who believes that "rape is okay".

In fact, [u]YOU[/u] don't know of a single person, Republican or otherwise, who believes that "rape is okay".

Publishing completely idiotic statements does not reflect well on your character.

Thanks,

Jackson

Rape is what God Wanted?

[url]http://nation.time.com/2012/10/24/ind-gop-senate-candidate-stands-by-rape-comment/[/url]

[QUOTE=Jackson;428230]I don't know of a single person, Republican or otherwise, who believes that "rape is okay". Jackson[/QUOTE]Jerry Sandusky? The Boy Scouts of America? The Catholic church?

[QUOTE=WorldTravel69;428223]God said Rape is OK. Why do you Republicans say that is OKAY?[/QUOTE][QUOTE=WorldTravel69; 428231]Rape is what God Wanted?

[url]http://nation.time.com/2012/10/24/ind-gop-senate-candidate-stands-by-rape-comment/[/url][/QUOTE][QUOTE=Dickhead;428232]Jerry Sandusky? The Boy Scouts of America? The Catholic church?[/QUOTE]Gentlemen, this election is [u]NOT[/u] about some obscure Senate candidate who misspoke when making a statement about sexual assual.

Please do not let the Liberals divert your attention from what's really important:

[size=3][b]- 8.3% unemployment
- $3.80 per gallon gas
- $1,000,000,000,000 annual budget deficits
- $16,000,000,000,000 national debt
- $51,074.84 of national debt owed by each citizen[/b][/size]

Thanks,

Jackson

The Obama campaign has prohibited discussions on the following topics.

- 8. 3% unemployment.

. $3. 80 per gallon gas.

. $1, 000, 000, 000, 000 annual budget deficits.

. $16, 000, 000, 000, 000 national debt.

. $51, 074. 84 of national debt owed by each citizen.

Allowed talking points are.

** 1) Big Bird.

**2) Bullshitter.

**3) Volunteering to lose your virginity to Obama.

Interviews with Obama are restricted to.

**1) Nickleodeon

**2) Characters from Sesame Street.

**3) Empty Chairs.

**4) Zoo Animals.

**5) Flipper.

**6) Rin Tin Tin.

**7) ET

**8) Pimp with a Limp.

**9) his wife Michelle.

With the promise that all questions revolve arround Obama's favorite sport, color, animal, food or favorite music group.

[QUOTE=Jackson;428233]- $3.80 per gallon gas. Jackson[/QUOTE][url]Http://wallstreetpit.com/92107-highest-and-cheapest-gas-prices-by-country/[/url]

As can clearly be seen, out of 55 major countries, US gas prices rank 45th, and when adjusted for income (I. E, how many hours of work to buy a gallon of gas) , rank 50th. Seems like a strange issue to focus on. Especially for supply-siders!

The unemployment rate is now 7.8%. That's down from a high of 10.2% in 2009.

Gas prices were over $4 in Bush's last year 2008.

Deficits and debt are driven mostly by legacy Republican policies of unfunded wars and tax cuts. Republicans want to continue with low-tax, high-defense spending policies. Democrats want to reverse these fiscal trends.

Folks, don't let Republican talking points distract you from the facts and the underlying policies driving our debt.

[ATTACH=CONFIG]28558[/ATTACH]

Since the comment has been taken completely out of context by the media and even the Republicans have failed to properly address it, permit me to attempt to restore it to its original context.

The candidate was addressing the very small number of abortions which were preformed due to the victim being impregnated by the perpetrator of a rape, which is true.

I also find it amusing our liberal friends now wish to invoke the name of 'God' regarding this matter after liberals in general have attempted to erase any reference to such entity from the public domain and government for years even though such entity's name reoccurs through out all our founding documents as well as on our currency.

[QUOTE=Jackson; 428230]Wt, there you go again.

I don't know of a single person, Republican or otherwise, who believes that "rape is okay".

In fact, [u]YOU[/u] Don't know of a single person, Republican or otherwise, who believes that "rape is okay".

Publishing completely idiotic statements does not reflect well on your character.

Thanks,

Jackson[/QUOTE]Yet you apparently don't think that publishing completely idiotic statements reflect on El Alamo's character, because he's littered this forum with them recently.

[QUOTE=Jackson; 428233]Gentlemen, this election is [u]NOT[/u] About some obscure Senate candidate who misspoke when making a statement about sexual assual.

Please do not let the Liberals divert your attention from what's really important:

- 8. 3% unemployment.

- $3. 80 per gallon gas.

- $1, 000, 000, 000, 000 annual budget deficits.

- $16, 000, 000, 000, 000 national debt.

- $51, 074. 84 of national debt owed by each citizen.

Thanks,

Jackson[/QUOTE]It IS, however, in some measure about a general attitude among Republicans, including Romney, NOT to repudiate this sort of stupidity, and to continue to support those candidates efforts after they make these type of moronic comments.

[QUOTE=Esten; 428237]Folks, don't let Republican talking points distract you from the facts and the underlying policies driving our debt.

Dah! Could the underlying policies driving our debt be a President spending money like a drunken sailor while preventing job creation with onerous taxes and job killing regulations?

[QUOTE=Esten; 428073]Individuals and corporations sit on their cash, or invest in financial instruments or in other countries. Wall Street is already a huge parasite on the US economy. Low tax rates on capital gains and dividends, for example, only facilitate the transfer of wealth to Wall Street and wealthy investors. Republicans can't deny this. But they will defend it. Either by saying "But it's their money" (which is basically an admission it's not good economic policy). Or by blaming others, such as the government, for the failure of the wealthy to invest in a way that creates jobs. And their solution will always be the same, that basically we need to kiss their ass even more and hope for that wealth to trickle down.

World's Rich Are Hoarding $10 Trillion in Cash.

[url]http://blogs.wsj.com/wealth/2010/07/13/worlds-rich-are-hording-10-trillion-in-cash/[/url][/QUOTE]So it's not "their" money? Taking as much as you can from people is good economic policy? Communist governments and malevolent dictatorships are the best at taking people's money, so I guess they're the best at economic policy.

The cash and financial instruments the wealthy corporations and individuals are sitting on is in bank accounts, certificates of deposit, bonds, treasury bills, money market funds, etc. The money is used by borrowers to buy houses, expand businesses, fund the federal government deficit, and pay for schools, roads and bridges. Still, despite the billions or trillions being "hoarded", there's not enough domestic savings. So a large part of our federal government deficit is funded by the Chinese and other foreigners.

Depending on where you are, the top tax rate on interest income is currently between 35% and 47%. Next year, the top rate goes up 8.4 percentage points on interest income paid to individuals. Maybe that combined with low interest rates will cause behavior to change the way you want. I for one am going to spend more money on top flight hookers. You might as well spend it if otherwise the government is going to take it.

[QUOTE=El Alamo; 428243]

[QUOTE=Esten; 428237]Folks, don't let Republican talking points distract you from the facts and the underlying policies driving our debt.

Dah! Could the underlying policies driving our debt be a President spending money like a drunken sailor while preventing job creation with onerous taxes and job killing regulations?[/QUOTE]Well, as the graph Esten posted makes clear, that certainly WAS the case under George W. Bush, but not so much under Obama.

Well, guys, I don't know how to break this to you but there are no undecided voters on this forum and there are no undecided voters in all the United states that will be influenzed by the impressive intellectuals on this board.

This has been a lot of fun. My advice on election night is to sit down, take a deep breath and don't forget to take your medication.

[QUOTE=Member #2041;428246]
Well, as the graph Esten posted makes clear, that certainly WAS the case under George W. Bush, but not so much under Obama.[/QUOTE]

Bush and Obama and Congress spent like drunken sailors. What's your point? Romney knows how to balance budgets. He's proved that at Bain and with the Olympics. Ryan, at considerable political risk, has actually come out with proposals that would balance the budget.

Don't want anyone to get upset and go out and do a random shooting but my guess is Benghasi will become synonymous with 'Remember El Alamo'. The difference is that Santa Ana will be Obama.

[QUOTE=Tiny12;428248]Bush and Obama and Congress spent like drunken sailors. What's your point? Romney knows how to balance budgets. He's proved that at Bain and with the Olympics. Ryan, at considerable political risk, has actually come out with proposals that would balance the budget.[/QUOTE]Member 2041 doesn't have a point, he just makes snide remarks and childish insults. He's the new version of
badboy 13, he shouldn't be allowed access to a computer without adult supervision. IMHO

Agreed. Maybe Jackson should filter the posts of member 2041 to reduce the number of migraine headaches member 2041 has induced.

[QUOTE=El Alamo;428252]Agreed. Maybe Jackson should filter the posts of member 2041 to reduce the number of migraine headaches member 2041 has induced.[/QUOTE]It wouldn't be the first time that people censor opinions that they can't refute with logic and actual, legitimate data. We recognize it for what it would be, a tacit admission of defeat - when self-proclaimed Libertarians determine that they can't handle free speech that they disagree with.

[QUOTE=Punter 127; 428251]Member 2041 doesn't have a point, he just makes snide remarks and childish insults. He's the new version of.

Badboy 13, he shouldn't be allowed access to a computer without adult supervision. IMHO[/QUOTE]Don't confuse your inability to understand the point I am making with there not being one. It should be pretty obvious to anyone literate that the point is the hypocrisy, the inability to actually deal with facts, and the glaring double standards demonstrated by the right wingers here. That being said, I did mention that one would need to be literate to grasp it, so you're excused on that basis, Punter 127, as is El Alamo.

In any case, I'll do you all a favor and cease posting on this Election thread, since this entire discussion, given it's participants, is clearly a worthless enterprise.

Member 2041, Why don't you stay on, but stop implying the rest of us are morons, idiots, illiterates, hypocrites and, worst of all, litterers. Moveon and SnakeOilSales have moved on, Matt Psyche only comes by to this thread occasionally, WT69 likes Gary Johnson and the flat tax, and Esten disappears for long stretches. You're now the only consistent token liberal Democrat.

Member 2041.

Calm down. The world is not coming to an end. A landslide defeat for Obama is not the end of the world.

But please, get your prescription refilled

Too hard to tell who is going to win, it will be VERY VERY close. If I was a betting man I would probably say Obama. I think between the tea party and the state of Arizona (and other states wanting to stop anybody who appears to be brown in color) just about killed any latinos voting for Romney. The 47% comment didn't help him either. Obama care is going to be tough on lots of working families and I for one am not happy with it.

My. 02

[QUOTE=Tiny12;428255]Member 2041, Why don't you stay on, but stop implying the rest of us are morons, idiots, illiterates, hypocrites and, worst of all, litterers.[/QUOTE]I'll pass, as I can't see any constructive purpose in continuing these discussions in this particular forum. BTW, I've never IMPLIED any of that mentioned above. Whenever I believe something to be the case, I say so, and I'm pretty sure I actually said so here.

I don't know who will win but if Obama does win, the (non-Cuban) Hispanic vote will for sure be a huge factor. AZ and CO are swing states with many latinos and Romney only has something like 10% of the vote. Of course the Hispanic turnout % is lower than average so that'll mute the effect of that. I don't think the stupid rape / abortion comments will affect the presidential election but they could affect the Senate majority, which is going to be pretty close as well. The IN guy might still win but the other one looks like toast.

Shit, it could be win-win for me if Romney gets elected but can't repeal the health care bill due to no Senate majority. I don't agree with his tax ideas but they do favor me from a selfish standpoint. I don't agree with all the right wing abortion stuff but I don't plan on needing an abortion any time soon. In fact even a sluggish growth scenario doesn't necessarily hurt me and would keep rents down. A lot of my jobs have been in fields where the worse the economy was overall, the higher was our demand, or else I benefited from inflation (because I had COLA and a fixed rate mortgage) , so it requires some different thinking to figure out whose policies are actually going to be better for me.

Selfishly I want higher interest rates and a stronger dollar. No idea which guy is going to give me that.

After following the campaign for several months, I have discerned the following differences between the Republican platform and the Libertarian platform:

[QUOTE=Dickhead;428260]Selfishly I want higher interest rates and a stronger dollar. No idea which guy is going to give me that.[/QUOTE]Too bad the Democratic ticket isn't Rubin / Volcker instead of Obama / Biden. Seriously.

Romney / Ryan would be better in the short / medium term. I don't know about the long term. If you believe what Obama and Boehner are saying then we will go over the fiscal cliff if Obama is re-elected. That means a recession and USA credit downgrade are much more likely. Which in turn means lower interest rates for a longer period of time and a weaker dollar. Also, Romney doesn't like Bernanke, because he believes his policies weakened the dollar and he believes Bernanke went overboard on quantitative easing, to lower interest rates. Romney would probably appoint a more hawkish Fed chairman when Bernanke retires, who would support higher interest rates and a stronger dollar.

In the longer term, if Obama is indeed going to carry on with his spending plans and is not going to raise taxes on the middle class or cut entitlements, then we're headed for a debt crisis. Normally that would mean higher interest rates and a weaker currency. But given the dollar is the world's reserve currency, will we have to raise real interest rates (which I assume is what's of interest to you)? That's a question. You probably have a better idea than I do. High real interest rates and massive government debt would be very painful to deal with. Could we go along with interest rates way below inflation and solve the debt crisis that way?

All of the above assumes politicians are telling the truth. Obama and Boehner might be likely to bend, and Obama if re-elected and if he has the votes in Congress might raise taxes on the middle class. Or just leave tax rates on everyone where they'll automatically be as a result of the end of the Bush tax cuts on Janauary 1.

I believe Romney's policies are more likely to promote growth, which in turn would cause higher interest rates and a stronger dollar. You'd probably disagree though.

[QUOTE=Tiny12; 428279]Too bad the Democratic ticket isn't Rubin / Volcker instead of Obama / Biden. Seriously.

Romney / Ryan would be better in the short / medium term. I don't know about the long term. If you believe what Obama and Boehner are saying then we will go over the fiscal cliff if Obama is re-elected. That means a recession and USA credit downgrade are much more likely. Which in turn means lower interest rates for a longer period of time and a weaker dollar. Also, Romney doesn't like Bernanke, because he believes his policies weakened the dollar and he believes Bernanke went overboard on quantitative easier, to lower interest rates. Romney would probably appoint a more hawkish Fed chairman when Bernanke retires, who would support higher interest rates and a stronger dollar.

In the longer term, if Obama is indeed going to carry on with his spending plans and is not going to raise taxes on the middle class or cut entitlements, then we're headed for a debt crisis. Normally that would mean higher interest rates and a weaker currency. But given the dollar is the world's reserve currency, will we have to raise real interest rates (which I assume is what's of interest to you)? That's a question. You probably have a better idea than I do. High real interest rates and massive government debt would be very painful to deal with. Could we go along with interest rates way below inflation and solve the debt crisis that way?

All of the above assumes politicians are telling the truth. Obama and Boehner might be likely to bend, and Obama if re-elected might raise taxes on the middle class.[/QUOTE]Well, a recession is associated with lower real interest rates (yes, I only care about real and not about nominal) , but a credit downgrade is associated with HIGHER real interest rates. I think the likelihood of a recession or even a depression is greater under Romney, personally, because of the demand side of thing. I'd ask the supply siders how come Hayek was never allowed to teach in the economics department (his PhDs were in political science and law but that is not the reason). When you look at a fiscal cliff, you have to look at both sides of the balance sheet. Ever since I took that intro accounting course at one of the great programs Doppelganger recommended, I realize you need to look at net liabilities and not gross liabilities. If you do that, the per capita NET indebtedness (negative international investment position) per citizen is only a little over $9k per person, assuming a 300 million population (source: US Dept. Of Commerce Survey of Current Business Conditions, July 2010 pp 9-10). That's not good but it is not Armageddon either. So I am of the belief that since the debt and trade deficit did not appear over night it is not necessary to balance the budget over night. I fear excessive belt tightening under Romney. It could be too much too fast.

Also I should point out that as long as the US dollar remains a vehicle currency, a current account deficit is almost inevitable because of what is known as the "Triffin dilemma." We have to supply dollars abroad and that creates a current account deficit. You have to ask yourself if the benefit from the seigneurage or interest free loan that results from having over 60% of the dollars outside the country is worth the risk to the current account as well as the risk of a run on the currency. I'm not really smart enough to figure that out but I DO know that the financial account now dwarfs the current account. Also roughly half of our current account deficit is traceable to China which means at least the problem is identifiable.

Similarly, and importantly, a recession in isolation STRENGTHENS the currency. I get really scared when righties don't understand stuff like this. Let's have a brief review of the current account and exchange rates.

A current account deficit is more likely with (as compared to other countries) : A higher price level (inflation makes your goods relatively more expensive than theirs so exports decline and imports increase) , growth in GDP (because it increases demand for imports; righties often get this backwards) , higher interest rates, lower tariffs and other barriers to entry (reduces imports) , and more attractive investment opportunities ([url]http://www.econlib.org/library/Enc/BalanceofPayments.html[/url], for example, but this is mainstream thinking).

Focus on that last one. Do we have a deficit because of excessive inflation, low productivity, and inadequate savings? Maybe. Or is it because US investments are viewed as being safer? Look how everyone ran to the dollar in late 2008 and early 2009 even though everything looked really dismal in the US as well. Then focus on the fact that the when you can settle a deficit by moving the foreign exchange rate instead of having to drain international reserves, the deficit is less urgent by definition. Not saying the deficit is a good thing, just saying that the righties often think in terms of a post-WW II Bretton Woods environment instead of a world with floating exchange rates.

Now, on to the determinants of exchange rates. US economic growth WEAKENS the dollar. Repeat that 500 times. Why? Because it increases the demand for imports. That increases the demand for foreign currencies while the supply of dollars is finite. US inflation weakens the dollar. Higher US interest rates (again, as compared to other countries' interest rates) strengthens the dollar; foreign capital flows to the US, increasing demand for dollars since the US investment is denominated in dollars.

So this: "Normally that would mean higher interest rates and a weaker currency," no. Sorry about that.

Let's look at what happens if real short-term interest rates remain low. This is supposed to be stimulative to borrowing and capital investment and thus should lead to job creation in the long run. So then the spread between LT and ST is supposed to reflect the consensus estimate of future inflation. Let's look at the spread between the 30 year T-bond and the 3-month T-bill. Right now it is 2. 92%.0. 12% = 280 basis points. 10 years ago it was 5. 16%.1. 64% = 352 basis points. 20 years ago it was 7. 65%.3. 00% = 465 basis points. My concern would be that such flatness would lead to excessive risk taking or "yield chasing" if it continues. That could be good for the equity markets in the short term but if you think about the graying of America there is a need for higher real yields on fixed income. This should happen on its own during times of economic growth, absent government intervention. So the government invention to keep interest rates low benefits the deficit but could be anti-growth if none of us old fuckers has any money to spend because we are getting 0. 01% on our money markets and don't want to invest long term since we could be dead. I would start gradually tightening the money supply at this point, while keeping the fiscal tap turned on a bit longer.

I don't thinking removing the subsidy on student loan rates was a very good idea. That has very long term implications for demand and consumption. OTOH I favor higher admission standards to keep some of the loans from going to waste.

[QUOTE=Dickhead;428281]but a credit downgrade is associated with HIGHER real interest rates. .[/QUOTE]You're right. In my own mind I was associating a credit downgrade with a weaker currency. When the USA was downgraded in August 2011, interest rates went down, probably because of the Fed. Having just looked at exchange rates too, to be truthful, the dollar got stronger afterwards too.

[QUOTE=Dickhead;428281]Similarly, and importantly, a recession in isolation STRENGTHENS the currency. .[/QUOTE]I don't believe this, if it's "in isolation". I looked at USA recessions back to 1969 and actually can't see a correlation between recessions and the strength of the currency. I think this is because USA recessions aren't usually in isolation. If the USA is suffering other places are too. You pointed out the example of people running to the dollar in 2008/2009 and that's a good point. Most of the steep recessions I'm familiar with in recent times have been correlated with weaker currencies. Since the late 1990's, Thailand, Indonesia, South Korea, Russia, and Iceland are a few examples. Conversely, regardless of what the theory says about current account deficits, when you're seeing growth, you see money coming into a country, to take advantage of investment opportunities and higher interest rates, so are more likely to see an appreciating currency. In other words, in the real world, the effects of growth on interest rates and investment flows swamp whatever effect the change is on imports.

How do you explain Australia? It goes through a long period of strong growth, always has big current account and trade deficits, and the currency is very strong.

[QUOTE=Dickhead;428281]So this: "Normally that would mean higher interest rates and a weaker currency," no. Sorry about that.[/QUOTE]OK, again, in the countries I've followed that's what happens during a debt crisis. Iceland in 2008 or Indonesia in 2007. Latin America in the 1980's. Zimbabwe. Germany in the 1920's. And that's what would be happening in Greece right now if it had its own currency. Governments take on too much debt and start printing money. Inflation goes up. Interest rates go up. And the currency becomes weaker. As I mentioned, I don't know what would happen in the USA since, as you say, the dollar is a vehicle currency.

[QUOTE=Tiny12;428287]Conversely, regardless of what the theory says about current account deficits, when you're seeing growth, you see money coming into a country, to take advantage of investment opportunities and higher interest rates, so are more likely to see an appreciating currency.[/QUOTE]That is the[B] non[/B]-current account, my friend. That explains some of the results you indicate, particularly in SE Asia where it was the financial capital pulling out. In fact because nothing happens in isolation, the theory behind determinants of forex rates is incomplete. So if you want to look for correlation, you're going to need to control for the other variables to "isolate" the effects. That is what Barro tried to do in that paper you posted. It's hard. The other thing about forex is that expectations play such a big role. Market expects the euro to weaken, so they sell euros, so it weakens. Self-fulfilling prophecy. Also, my guess is that when you looked at the "strength of the dollar," you were looking at the dollar versus a weighted average basket of currencies. That won't work, because as I said, what matters is the growth rate in GDP of country X versus a given country Y or Z. Your regression should be the change in the Euro/$ exchange rate versus the change in Euro zone GDP/change in US GDP and etc. for each of the major currencies. In fact I recently did that for the euro and dollar for the last twelve years, using monthly observations, and got the expected negative correlation. The r value was about (negative) 60% and 8 of the 11 signs (12 years so 11 changes) were negative (opposite). That's not a great r-value, which is consistent with an incomplete model. If you compare the average strength of the dollar vs. many currencies, then you are simultaneously comparing it to different countries in different stages of growth versus recession. It isn't too surprising you would not get much correlation doing that.

Now, a brief quiz. So foreign money comes in to take advantage of higher interest rates. What does that then do to interest rates? You need to think about interest rate arbitrage.

Dickhead, While I frequently disagree with you, I also learn from you, so thanks. We're getting off topic so I'll either send you a PM or continue on the thread that Punter kindly set up for this.