The dollar hit a new all-time low against the euro overnight as investors freaked out over impending interest rate cuts and fears of an extended housing recession. [Wall Street Journal]

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  1. timmus says:

    The economy is partly propped up by about half a trillion dollars in Treasury securities owned by foreign investors. You can see why it’s bad for the dollar to keep dropping. If foreign capital flight gets momentum, it will not stop. Then it will be a good time to shop for mmunition, whiskey, and gold.

  2. Buran says:

    This just makes it even more likely that I’ll visit the friend I have in Australia before I get to go to Western Europe. As if $5 for a soda wasn’t insane enough…

  3. Full copy of the article is here: [biz.yahoo.com]

  4. crnk says:

    How does the dollar falling have to do with the “subprime meltdown” tag it was given. As we saw a couple of days ago, people are getting foreclosed on because they are on resetting ARMS, drive 2x mercedes, spend $700 a month on food for 2 people, and have $25000 in credit card debt……..people aren’t getting foreclosed on because the dollar is falling, unless they have a bet with the bookie about currency events.

  5. synergy says:

    @timmus: IAWTC

  6. Meg Marco says:

    @crnk: The dollar is falling because of fears about the subprime meltdown.

  7. PhilK says:

    @crnk: A large part of why the dollar is falling though is talk of a sub-prime bailout with the Fed cutting rates.

    Though I agree the tag was a slight stretch.

  8. timmus says:

    * RED PILL (lower interest rates): Increased money supply, dollar devalues, inflation, possible foreign investor panic. Mortgage/banking collapse is averted.

    * BLUE PILL (no change or higher interest rates): Dollar remains okay, inflation and foreign investment in check, but tightened money supply spurs a mortgage/banking crisis and many homeowners are hung out to dry.

    Probably oversimplified and not entirely accurate, but that’s about what it is that Mr. Anderson is trying to choose.

  9. HeartBurnKid says:

    @crnk: You’re mixing up your cause and effect; the falling dollar isn’t causing the subprime fiasco, rather the subprime fiasco is causing the falling dollar.

  10. Rusted says:

    @timmus: Blue pill would be more brutal in the short term but it would be better then trying to band-aid this mess.