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Thread: Another consequence of the weaker dollar

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    God/dess Deogol's Avatar
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    Default Another consequence of the weaker dollar

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    "The LA Times is reporting that the new Nintendo Wii Fit is hard to find on US shelves, due not only to strong demand but also the United States' declining status in the world economy: '"[Nintendo] is also is shrewdly maximizing its profit by , reaping the benefits of the strong euro," says Michael Pachter, an analyst with Wedbush Morgan Securities.

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    Banned Melonie's Avatar
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    Default Re: Another consequence of the weaker dollar

    ^^^ actually, this is far from unique. Toyota is doing exactly the same thing with it's Japanese built hybrid vehicles. The motivation of course is that, with the US dollar having fallen by more than 10% against the yen recently, and with production costs based in yen, continuing to sell the product at a fixed US dollar price cuts deeply into the company's profit margin. Thus the companies choose to maintain the fixed US dollar price rather than risk the loss of US customer 'loyalty' if they increase US dollar prices to maintain profit margin, but instead strictly limit the amount of goods offered for sale in the USA in order to minimize the effect of the adverse exchange rate i.e. poor profitability. Even so, Toyota's profit margin is hurting since they don't have the same sort of gov't incentives on hybrid vehicle purchases available in most other countries.

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    Default Re: Another consequence of the weaker dollar

    Frankly, I'm not as concerned about the price of useless trinkets. My worry is that the rest of the world is abandoning the dollar as an exchange medium- that means that foreign governments can tell us how to run our country as finance shifts to Shanghai and London. What's worse, that removes many of our soft power options to lean on countries that burn our embassies or sell nukes as well as get our "allies" to do the same.

    The empire was fun while it lasted.
    Last edited by Ook; 06-10-2008 at 11:04 AM.

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    Banned Melonie's Avatar
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    Default Re: Another consequence of the weaker dollar

    ^^^ for a fact, the US has benefited greatly from the 'seigniorage' provided by the US dollar's world reserve currency status in the past. As you point out, this is rapidly drawing to a close as more and more foreign countries reduce their US dollar holdings or price their world market products in Euros / yen instead of dollars.

    This fact, combined with the new development of increased foreign ownership of US investment banks, and combined with the new development of increased worldwide investment by 'Sovereign Wealth Funds' operated by foreign governments, increasingly places the US dollar and US financial policy on the 'receiving end' instead of being in the 'driver's seat'.

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