Dollar Falls to Record Low Against Euro, Swiss Franc on Rates The dollar fell to a record low against the euro and Swiss franc on concern credit-market losses will slow economic growth, prompting the Federal Reserve to lower interest rates again this year. Currencies in New Zealand, the U.K., Australia and Norway gained on speculation a group of six Arab nations will change their fixed exchange rates from the U.S. currency. Freddie Mac, the second-biggest buyer of U.S. mortgages, posted its largest- ever quarterly loss and said it may cut its dividend to weather ``significant deterioration'' in the housing market. ``There are lots of forces working against the dollar,'' said Robert Fullem, vice president of U.S. corporate currency sales at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``The market sentiment toward the dollar is very negative. You are going to see further declines in the dollar.''
Freddie's quarterly loss more than doubles Freddie Mac's third-quarter loss more than doubled as mortgage prices collapsed and credit tightened, sparking additions to loss provisions and leading to consideration of cutting the company's dividend in half, financial results showed Tuesday. "Weakening house prices and deteriorating credit have hurt Freddie Mac's results, as well as those of other participants in the mortgage market," said Buddy Piszel, chief financial officer, in a press release. "You can see the impact of these trends in our credit results and throughout our financial statements." It will take time for the mortgage market to turn around and improve, according to Freddie.
Citigroup, Bank Credit Swaps Rise on Subprime Concern The risk that banks and brokerages from Citigroup Inc. to Bear Stearns Cos. will default on their debt is accelerating as analysts increase their estimates of losses from subprime mortgages, credit-default swaps show. Contracts on New York-based Citigroup, the largest U.S. bank by assets, rose 16 basis points to 95 basis points over the past two days, according to broker Phoenix Partners Group, setting a record today for the seventh time this month. Contracts on New York-based Bear Stearns have climbed 24 basis points the past two days to 174 basis points, about a six-year high. A rise signals investors are less confident in a company's creditworthiness.
The dollar's decline: from symbol of hegemony to shunned currency The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible. After months of huge and sustained turmoil on the money markets, lack of confidence in the world's totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar."An American businessman over here who is given the choice would take anything but the dollar," David Buik of Cantor Index said yesterday. "I would want to be paid in yen, and if not yen then the euro or sterling."
Ron Paul and the Money Question GOP presidential candidate Ron Paul of Texas is calling for the return of sound money, i.e., an eventual restoration of the gold standard. With the U.S. dollar’s purchasing power falling on foreign exchange markets, Dr. Paul has diagnosed the greenback’s condition correctly; the Federal Reserve is debasing the nation’s monetary unit. All the other candidates have not addressed the money issue because they either do not understand how the Federal Reserve’s policies are causing the dollar to depreciate, or they have been told by the financial elites not to talk about the FED. It is astonishing that as the dollar has lost more than 50% of its value against the Euro in the past four years, the silence is deafening in the presidential debates, except for the insightful statements by Dr. Paul about our nation’s monetary system. Dr. Paul has pointed out time and time again how the FED manipulates interest rates by injecting new money into the economy fueling the unsustainable boom that inevitably ends in a bust.
OPEC ministers eye dollar weakness OPEC's finance ministers will discuss the effect of the weak U.S. dollar on oil revenues before the next meeting of the Organization of Petroleum Exporting Countries' energy ministers in December. The falling U.S. dollar came up as a topic at OPEC's heads of state summit meeting in Riyadh, Saudi Arabia, this weekend, when a proposal by Iran and Venezuela to price oil against a basket of currencies, rather than the dollar, failed, according to media reports. Still, the issue of the weak dollar and its effect on oil producers' revenues remains of key interest, because oil is priced in dollars. The finance ministers will discuss the U.S. dollar and other issues at their next meeting, to take place before OPEC's energy ministers meet in Abu Dhabi, United Arab Emirates, in December.
Mortgage meltdown seen spreading to credit cards As shares of Citigroup Inc. tumbled on Monday, analysts pointed to signs that the mortgage meltdown could be spreading to the banking giant and other major credit card players. "We're starting to see signs within the industry that credit quality is dropping," said Justin McHenry, research director at market tracker IndexCreditCards.com. "That's causing major credit card companies to at least consider taking out larger reserves to protect themselves against more people defaulting in the future." But he also forecast an erosion in Citigroup's credit card business. Tanona says he foresees "deteriorating consumer credit trends and higher corresponding provisions and charge-offs" for the company in the future.
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