13 Thoughts About the U.S. Dollar and the Economy

I'm no economist, but I read a few things here and there that catch my attention. With the writers' strike in effect, I look to the stumbling economy for entertainment. Here are 13 thoughts about the U.S. dollar, finance, and the economy.


DOLLAR VALUE

1. Tourists from Canada, South America, etc. are traveling to the U.S. for bargain basement deals, despite the travel hassles. I've never known the U.S. dollar to be at par with its Canadian counterpart, so this was a real testament to the current state of the economy.
   
   
2. Foreign tourists will no longer be able to pay the entrance fee at the Taj Mahal in dollars. Apparently, the 22% decline in the dollar impacted India's tourism revenue.
   
   
3. As the dollar decreases in value compared to the Euro (a/o today,$1.47 buys 1.00 Euro), dollar holders have less spending power because imports are more expensive. As Americans buy less, European exporters sales decrease, thereby impacting their economy.
   
   
4. In 2005, the Chinese Yuan was revalued so that it would no longer be tied to a fixed rate against the U.S. currency. As the Chinese economy gets stronger and the U.S. dollar weakens, I'm curious to know if this has impacted our Chinese imports. I haven't seen an analysis of it, though.
   
   
5. Oil is purchased in dollars. What does that mean?
   

   "Oil producers sell their products in dollars. These dollars are used to purchase other goods in international markets. As the dollar lost its value starting in 2002, oil producers could afford to buy less in international markets with their dollars. To compensate for this loss of buying power, they may have raised the dollar price for oil."

   MONEY & THE ECONOMY
   
   
6. Rapper Jay-Z and other celebs are touting the Euro, not the dollar. And just when I figured out what cheese is.
   
   
7. Another possible rate cut, brought to you by the Fed. Bernanke's feeling the strain on the economy caused by the housing and mortgage mess, higher gas prices, tighter credit conditions, and stock declines, which means he's open to another drop in the fed rate.
   
   
8. Banks Pay the Price for Risky Mortgage Bets - Financial institutions have been making a mint by employing a complex system where they bundle mortgages into one item and sell it to other major financial institutions. Some bundles are riskier than others. Back and forth, back and forth these bundles went until the real estate market started to soften. The backup plan on handling all high-risk loans was based on the theory that real estate goes up, not down; a borrower facing default could sell the property and pay off the loan. Once property values started dropping, selling the property was no longer viable. An obvious factor in the billions being written of at financial institutions this year. I'd like to know their profits on these transactions prior to this year, though.
   
   
9. Reading Pays- Especially When It Comes to Credit Card Updates - Here's an interesting tip that I didn't know about. In the tiny text of the mind-numbing amendments to your credit card agreement, you might find an option to reject changes such as APR increases by writing a letter. That's worth skimming it over a bit closer going forward, methinks.
   
   
10. Be Careful When Police and Firefighters Ask for Money - In general, I don't make donations to any organizations that contact me. I have a few organizations that I routinely donate to, and if I'm considering a donation outside of that circle, I research their efforts at Just Give.
    
    
11. Plonkee addresses the reasons why people don't donate to charities, and knocks them off one by one. My take on it is that if you have money to spend on gifts for others, then you have enough money to donate to those who need your help. 'Tis the season to give 'til it hurts, people ;-)
    
    
12. In the excitement of buying a home, first time home owners don't always think about the non-mortgage related costs, which can be significant. The biggest, for us, is property taxes, which in California increases about 1% annually. Other states property taxes are fixed to the market value of the property (see tips here for contesting property assessment), which seems to me as a frustrating liability. I like knowing what I owe and not having it tied to a vague estimate of market values.
    
    
13. Speaking of housing, it looks like prices are still falling, for a net 13% from this time last year. I can tell you that although the median sales price for a new home is now $217,800, it's closer to half a million in Los Angeles. Since this is the median, a substantial number of homes here are in the million dollar range, which means that for the past few years, first-time home buyers had the choice of opting for a questionable loan (e.g., no interest, zero money down), or continuing to rent