An Answer?
Maybe the answer to my last post is that there is no next bubble. The International Herald-Tribune is not exactly a radical, conspiracy theorist kind of news source. In an article from yesterday’s edition, they talk about the real possibility of the dollar just collapsing over the next couple of years–just like it did in the 70s.
Which, of course, if it happens means that you end up with the possibility of a one term Democrat getting blamed for the fiscal stupidity of a two term Republican (again). If this IHT article ends up being prescient, maybe we’d be better off with another Republican winning the presidency in 2008.
September 15th, 2007 at 1:11 pm
on TOOBBS, someone pointed out to me that the US$ was at C$1.03 — and i just sat there, flummoxed, remembering how as recently as 2002, it was at 1.50 or so. [i spent my 30th birthday in toronto, smoking felonious amounts of cannabis. well, felonious if i were in the usa. which i wasn't. oh well.]
living in what is possibly one of only two countries where the dollar has gained in recent years [the other would be zimbabwe], i’m almost thankful at times for the conditions that are keeping the rand above 7 to the dollar [an internal political succession battle that won't be resolved until christmas].
back when the rand was at 6:1, there were talks that it was 20% undervalued. eek. at 4.80 rand to the dollar, i’d have to leave and go back to the usa. there would be no way i could afford to live here. 5.85 to the dollar was putting tears in my eyes, and if i had waited another month to buy my house, it would have been at 6.80:1 instead of 6.20:1 … 4.80 would make south africa the kind of expensive that west africa is, as the CFA region is essentially the eurozone, given their peg. i’ve already told the boy that we aren’t getting another car until there is a president zuma, largely because of the exchange rate. the communists and cosatu, who back zuma, want an exchange rate of between 8 and 9 rand to the dollar, and only then will automobiles become cheap enough to consider buying. my next car will be either new or near-new, and not just new-to-me.
if mbeki wins the succession battle [that is, if anybody except zuma becomes he next head of the anc], then the rand will be back to around 6. that will hurt; i’ve become accustomed to the rand being at around 7 for the past year. if zuma wins it, then the rand will drop. the degree to which it drops will depend on what idiocies come out of zuma’s mouth between december 2007 and the elections in 2009. but a low rand in time for the world cup would be a very good thing, at least for that month of partying - not that south africa gets that many wintertime tourists relative to the summer, but still, it will be better than most other winter seasons.
all that said, there was a time where i could have said that i couldn’t see mboweni messing with interest rates in a manner that would negatively affect the exchange rates, but given the way he is absolutely screwing the middle class here [my mortgage payment has risen nearly R400 in a year due to interest rate hikes], i wouldn’t put it past him.