The U.S. Dollar Sinking Even Further

Martin Weiss, Ph.D. examines the falling dollar in comparison to rising foreign currencies. In this issue of Money and Markets, Dr. Weiss takes a closer look at the decline in the U.S. dollar and how it's affecting the global marketplace.

Jupiter, Fla. (PRWEB) July 19, 2007 -- Martin Weiss, Ph.D. examines the falling dollar in comparison to rising foreign currencies. Dr. Weiss takes a closer look at the decline in the U.S. dollar and how it's affecting the global marketplace in this issue of Money and Markets.

The U.S. dollar has just been slammed for the fifth week in a row and no one in Washington is lifting a finger to support it.

The dollar has plunged to a 26-year low against the pound, a 30-year low against the Canadian dollar, and an all-time low against the euro.

The dollar is falling against the Brazilian real, the Mexican peso and even the currencies of smaller, previously impoverished countries.

It is being driven lower by some of the most persistent flood tides in history: America's $800 billion trade deficit, Asia's persistently rapid growth, Europe's surprisingly strong revival, and Latin America's remarkable leap onto the world scene.

But now, higher interest rates are also unthinkable. The U.S. housing market is too shaky and the mortgage market is too leveraged. So the dollar continues to fall, while foreign currencies continue to soar.

And be sure to remain aware of lagging U.S. stocks. Although the Dow is rising, foreign stocks are leaving it in the dust. And sinking bonds: U.S. stocks are up, but U.S. bonds are down.

A key reason for the decline: The world's biggest owners of U.S. bonds are not American residents. They're in Japan, China or Germany. And every time the dollar falls, those investors lose money.

Also, as foreign currencies surge, the price paid for foreign goods must go up accordingly, eroding the purchasing power of money invested.

Last year, the United States imported $217 billion worth of crude oil, six times more than the total value of imported computers flooding into the U.S. by the millions. And because of the surging cost of the euro and other foreign currencies, price hikes on thousands of other imported goods are already in the pipeline.

Think the dollar decline will end soon? Think again. The U.S. trade deficit, long ignored in Washington and on Wall Street, is out of control. It's closing in on $800 billion.

China and Japan also happen to have the currencies which have risen the least against the dollar.

Last year, China's surplus with the U.S. was $232.6 billion. So far this year it's $96.3 billion, up 17% from the equivalent period last year. Unless there's a radical change in direction, China's surplus for the full year will grow by roughly 17% as well.

China and Japan are not the only countries that have large and growing trade surpluses with the United States. Based on the latest January-May data released last week, there are now 102 countries that have trade surpluses with the United States.

Canada and Mexico have surpluses of $27.9 billion and $27.5 billion, just in the first five months of the year. And last year, their surpluses (America's deficits) were $72.8 billion and $74.1 billion, respectively. Germany has a surplus of $18 billion so far this year, after $47.8 billion last year. And Nigeria and Venezuela chalked up huge surpluses due to their large oil exports to the United States.

"Countries, which, in their wildest dreams, would never have imagined a trade advantage with the United States, now, have substantial surpluses as well: Bangladesh, Nicaragua, Botswana, Swaziland, Malawi, Zimbabwe and even the small French outpost in Antarctica have reported surpluses with the United States in the first five months of 2007! This just goes to illustrate the depth and breadth of the primary problem driving the dollar lower against scores of world currencies the out-of-control U.S. trade deficits," says Dr. Weiss.

For more information and to read the full article, visit this link:

http://www.moneyandmarkets.com/press.asp?rls_id=852&cat_id=6&

About Martin Weiss & Money and Markets

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Maryellen Murphy at 561-627-3300 or visit www.moneyandmarkets.com.

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