US Protectionism through Weak Dollar

The US government is pretty slick by protecting US manufacturers with a weak dollar. The weak dollar guarantees that our manufacturers and international conglomerates have an upper hand in the international business and trade arena. Sure, China has and is keeping the Yuan/Renminbi weak, but we don't control China. In addition, we have always run a trade deficit, but the weak dollar is leveling the current playing field for us, but hurting everyone else. Furthermore, the weak dollar protectionism is a new form. Think about it, the weak dollar is of course not a tariff or a restrictive quota, but the US Fed has been systematically decreasing the dollar, which is impeding global free trade; thus, protectionism. This is why foreign reserve banks are following the dollar and there is so much concern over replacing the US Dollar as reserve currency and commodity pegs. The US must be very careful with the weak dollar and I am surprised Bernanke of all people is not showing more signs of fear. Bernanke, of all people, is a student of the Great Depression and it was protectionism that exacerbated and kept the World Economies depressed for so long.

New Alarm: Rising Temp Labor Force, another step in becoming the next Japan

According to the employment numbers released yesterday, temporary labor jobs were the bulk of jobs created. We are paralleling the formation of Japan's stagflation economy. Read the following link written last month regarding our current deflationary pressured economy.

http://tekatlonworldbusiness.blogspot.com/2009/09/united-states-next-japan-taste-of.html

Hello, can we sound the alarms! Since the 80's Japanese bubble, Japan has been stuck with an economy of older workers and the young workers are stuck with temporary work. Sound like our Greying of America? Then, when Japan's bubble burst, deflation continued and businesses no matter what were unable to make a profit because of the deflation. Furthermore, after 20 years, Japan is still at a 0%interest rate. Sound like the United States? We too are at 0% interest, in a deflationary period, have a greying work force again since their retirement is blown and now the job increases are from temp labor? Scary? and remember that the labor report is for the past month, if it was for this month, it maybe less scary, since we might be able to justify for seasonal jobs, but it is too early to count these into the figures. In addition, Japan and the US are favorable carry trades. Trade the Australian Dollar and the US Dollar and you can reap an additional 4% on your gains. The only thing I do not see happening is US housewifes start currency trading, like the Japanese housewives the past 2 decades. The only way the US dollar will increase in value is by increasing interest rates, but the economy is to frail for rate increases. That is why Obama this week asked China to increase the value of the Yuan/Renminbi. Don't hold your breath on China doing this yet.

The fragility of the United States Economy is very apparent. As Warren Buffet and Lloyd Blankfein have agreed to do an Andrew Carnegie, JP Morgan or any of the Titans of Industry from the Great Depression type of charity work. Aditionally, their are meetings with the government committees and CEO's and Economists on preventing the economy from dropping. CEO's including Rupert Murdoch, Wilbur Ross... some very powerful people. The United States government is and should be very worried right now, especially with upcoming elections and public polls.

Commercial RE and Credit, Look for Commodity Country Buyers

Credit is still crunched and commercial real estate will take a large hit with new builds and development teams. Building a new building takes a lot of credit, far more than turning over an existing building. However, transition teams will win out, expect office buildings to change original zonings and plans to accomodate different types of businesses. During 2001 to 2003, during a less severe credit crunch caused by 9/11 and still influenced by the dotcom boom and bust, I assisted in opening a couple of hotels that used to be office buildings in New York. Credit was hard to obtain and the win win for both the lessee and the lessor was to transition buildings that were corporate headquarter buildings for many years into hotels or other not planned or zoned for businesses. Unfortunately, the lag behind plans to actuality in real estate take many months.
Aditionally, look for buyers from Asia, Australia and strong commodity currency countries such as Canada, Russia and New Zealand to start looking for cheap buys in the United States, just based on the exchange rates. Commodities are pegged directly to the dollar, so is you trade gold, XAU/USD, or any other commodity, for now, you are also trading the dollar. As the United States keeps interests rates low, at zero, continue to watch these commodities soar, easy long-term plays, but take profit or lock in profit whenever you can dont get greedy. Expect these commodity countries to start looking around the US after 1st quarter next year, before any threat of an interest rate increase, which is the only way the Dollar will appreciate, in this current economic state. Although in this current economic environment foreign currency traders may look at tax cuts as a positive sign for the dollar, since US unemployment numbers are heavily followed, since there is no expected interest rate increases. Tax cuts will give employers an incentive to hire.