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Post by unlawflcombatnt on Mar 3, 2006 17:05:24 GMT -6
Updated 12/24/06The U.S. dollar continues to decline agains the Euro. This can be seen at the Euro-USD chart at the link below Euro-Dollar chart on Yahoo. This can also be extrapolated from Kitco's 1-year Gold chart below showing prices in both Euros and U.S. dollars. The direct link for this can also be found at 1-year GoldNote specifically how the price of gold in USDs increased in relation to the price in Euros starting on February 27th. As of 12/24/06, it appears the dollar has declined about 12% in relation to the Euro for the year 2006. Does anyone have any thoughts on this?
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Post by lc on Mar 3, 2006 22:33:27 GMT -6
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Post by unlawflcombatnt on May 14, 2006 15:41:39 GMT -6
An excerpt from today's Sunday Wall Street Journal by Gregory Zuckerman revealed a somewhat less optimistic view of the economy than some are claiming. However, even here, at least some of the "facts" used are overstated. In the article he states " The greenback is down almost 5% this year, according to the U.S. Dollar Index." Since I know good and well that the dollar is down much more than that based on any index, I decided to investigate further. Below is a copy of today's (5-14-06) 6 month Dollar Index. This information can be found at: INO.com Futures, Stocks, FOREX, and Options QuotesEven by this index, the dollar is down 6.5% this year, not "almost 5%." Furthermore, this represents almost a 10% decline in Dollar value over the last 6 months, according to this index. Even this appears to be an understatement. When calculating from Gold price differences between the Dollar vs a weighted combination of the Euro, Yen, and British Pound, the decline is much larger. The link for this can be found at Kitco.com at: www.kitconet.com/charts/metals/gold/2a-euro-us-6m-Large.gifThe link for this can be found at Kitco.com at: www.kitconet.com/charts/metals/gold/2a-jpy-us-6m-Large.gifThe link for this can be found at Kitco.com at: www.kitconet.com/charts/metals/gold/2a-gbp-us-6m-Large.gifWhen calculating the 6-month decline in the USD compared to a combination of declines in relation to the Euro (0.6 fraction x 14.1%), Yen (0.28 fraction x 11%), and the British Pound (0.12 fraction x 12.3%) the result is a decline of 13%, not 10% like the so-called Dollar Index indicates. It appears from the graphs that the Dollar has declined about 10% this year, not "almost 5%." Though this is technically only my own opinion, I don't see any other way to interpret the actual "facts" involved.
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huck
Contributor
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Post by huck on May 14, 2006 17:05:36 GMT -6
" The greenback is down almost 5% this year, according to the U.S. Dollar Index." But then "THEY" say, "Indexes are sort-of like percents right? and so it was at 89%, right? and went to 84%, right? so then thats a drop of only 5%, right?" Such is the no-brainer approach to indexes i guess. These are the same people that think that if your income went down 10% last year, if it then goes up 10% this year it all balances out. 100-.(10*100) is not the same as 90+.(10*90), but that doesn't stop people from trying to "balance" percents like that. Where did the weights you used come from?
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Post by lc on May 14, 2006 19:49:58 GMT -6
(Partial Restoration of Deleted Post)
".... I would like to hear your input on this we have been talking about creating an index to track dollar devaluations since M3 won't be published. This is actually right up your alley......"
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huck
Contributor
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Post by huck on May 15, 2006 0:20:09 GMT -6
I would like to hear your input on this we have been talking about creating an index to track dollar devaluations since M3 won't be published. This is actually right up your alley. Beyond technical problems of reasonable data acquisition in a timely manner this still is not an easy problem. It is a false to just say "the dollar is down" with out adding the qualifier of what it is being measured against. Lets first suppose a "market-basket" of currencies, do you evenly weight it by holding 1 "denomination" of each or do you weight it, GDP/(sigma GDP) is one interesting weighting, but then if 50% of the trade in dollars comes from yen then that weighting may not be practical either. One solution would be a "market-basket" of techniques. I worked with a grad student who went in such a direction with commodities , in effect he tried grouping technical buy/sell metrics to limit account volatility which then helped reduce the risk of large account fluctuations. He had some success with that technique, but we chatted at a point where account volatility was still at issue, "what good is being up 75K$ if you could still loose 50K$ if corn limit closed down one day". I pointed out that the same way he used the tool to "join" technical methods he could use it to then super group commodities. He then went looking and found triplets that accomplished this, such as (soy,bellies,gold) and indicator-metrics that served to average out each others fluctuations in the short term and yet still make money in the long term. Losers and "steadies" were also identified as well. But there was a big problem here too, the triplets and their indicators only worked for short periods of time, say 5-7 years. Ya see even back then this was "accepted practices" and other people were doing it too. You would find something that worked in the short run, but then others would find it too, and with all of "you" trading on the same schedule the advantage is lost. I hear ya, WTF does that have to do with this? Imagine the triplet as your market-basket of currencies and commodities, if you could create a method that accurately modeled the weighting(your indicators) of the number that your trying to create as a baseline, and then that model can be used to spot small variances in the "market basket" component costs that you can then exploit via throwing huge sums of money at the small imbalances. (think LTCM). and if you can do it other people can do it too, and when all of you start doing it at once you just end up all screwing each other since only the brokers make commissions, and the activity via that path to reach average will change its weighting so your model is not accurate. SO, to truly do what you want your model has to be fluid, and self adjust to respect the way those small imbalances regulate themselves naturally(even LTCM was natural, just big). And when your model is fluid like that you cant trust its doing the right thing anymore, even if historically it has done well, yet if it is static you just know its out of date. In the long term you loose, its sort of an uncalculateable problem. you cant apply a metric to the dollar being up or down without referencing it to some formula that is almost already obsolete. Doesn't mean you cant track your "market-basket" just realize it is not true, just and approximation. In a way the dow-jones is such a metric, it has value but is just one model of the value of the stock market, it can go down while the overall value of American stocks went up. the technical problems are tiny compared to creating the proper "shopping list". data acquisition is a problem for free, but a 50$/mo subscription should get ya all sorts of real-time download formats for the data you desire. The same subscription may also even let you track your model via their on-line tools, but that just means they get to know what your doing, right? I'm not going to be much use in suggesting what or how many to buy each week/period. some use regressions, non-liner, and even chaos methods to determining what to put in the basket and how to weight it.
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Post by lc on May 15, 2006 9:32:04 GMT -6
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Post by psychecc on May 15, 2006 15:47:14 GMT -6
Just want to let you all know that I appreciate the opportunity to read your interesting thoughts on the ecomony, the dollar, etc. I often don't understand enough to even pose intelligent questions, but I do learn from you and just wanted to say thanks for those of us who stop in to read, though we don't often comment.
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Post by unlawflcombatnt on May 15, 2006 17:03:36 GMT -6
Where did the weights you used come from? Here is my original explanation of how I weighted this. I've since removed Canadian, Australian, and Swiss currencies, since their combined contribution is only 10% of that of the combination of Euros, Japanese Yen, and British Pounds. As a result, I increased the fractional contribution of the latter 3 so it would come out to a total of 1.0. I started by measuring dollar devaluation based on the 6-currency change in Gold prices vs. the change in price in USDs. (On verifying this, the change in Euro vs. USD is exactly the same as the % change in gold prices between the 2 currencies over any given time period.) I initially used the following currencies: Euro, Swiss franc (CHF), British pounds (GBP), Japanese yen (JPY), Canadian currency (CAD), and Australian currency (AUD). (Again, I've since reduced the number of currencies used to 3.) I weighted the contributions by the relative GDPs, which should represent the relative transaction values of each currency. The Euro GDP needed some modification. From the CIA site, the Euro GDP was $13.3 trillion. However, 3 European Union countries don't use the Euro (United Kingdom, Sweden, and Denmark.) So their GDPs were subtracted from the $13 trillion to give a total Euro GDP of $10.5 trillion. (subtracted was the U.K.'s $2.2 trillion, Sweden's $0.35 trillion, and Denmark's $0.25 trillion.) The GDPs used were as follows: 1. Europ--$10.5 trillion 2. Swiss---$0.367 trillion 3. UKing---$2.2 trillion 4. Japan---$4.8 trillion 5. Canad--$1.0 trillion 6. Austrl---$0.63 trillion The total GDP of the 6 currencies used was $19.5 trillion. So the % difference in USD gold price and other currency price is multiplied times the other countries GDP divided by $19.5 trillion. For example, the (original) way I did this was for Euros was to "weight" Euros by dividing $10.5 trillion by $19.5 trillion. This gives a fraction of 0.54. (changed to 0.6%.) So for Euros, the 60d difference between USD gold price and Euro gold price is 5.6%. I multiplied this by the fractional contribution of Euros by 0.54. This comes out to 3. This 3 is added to the totals derived from the same method of the other 5 countries. For example, Switzerland's difference from the USD gold price was 5.8%. Swiss GDP was $0.367 trillion. Dividing that GDP by $19.5 trillion = 0.019. Taking 0.019 times 5.8 = 0.11. So 0.11 is added to the total. When this is done with all 6 currencies, the sum is 4.7. Therefore, the average dollar devaluation over the last 60 days was 4.7% measured in these 6 currencies. Below is a simplified copy of the 6-currency difference in gold prices compared with U.S. dollars. Below are the links to the 60d change in gold prices Euro: www.kitconet.com/charts/metals/gold/2a-euro-us-60d-Large.gifSwiss. www.kitconet.com/charts/metals/gold/2a-chf-us-60d-Large.gifU.K. www.kitconet.com/charts/metals/gold/2a-gbp-us-60d-Large.gifJapan www.kitconet.com/charts/metals/gold/2a-jpy-us-60d-Large.gifCanada www.kitconet.com/charts/metals/gold/2a-cad-us-60d-Large.gifAustralia www.kitconet.com/charts/metals/gold/2a-aud-us-60d-Large.gifThe following is the link to the CIA site that has the individual country GDPs. www.cia.gov/cia/publications/factbook/geos/as.htmlAgain, since I eliminated the 3 of the currencies, I increased the fractional contribution of each of the remaining 3. (Euro: 0.6, Japanese Yen: 0.28, British Pound: 0.12.) I realize that the value of the dollar (and other currencies) is affected by other factors, such as it's value as a "storage of value." My calculation is admittedly not an exact estimate. But this should give some idea of the relative value of the dollar compared to other currencies. Also, I'm using the currency differences as mostly a measure of relative dollar devaluation, not inflation per se.
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Post by unlawflcombatnt on May 29, 2006 16:24:03 GMT -6
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Post by lc on Nov 10, 2006 9:38:14 GMT -6
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Post by unlawflcombatnt on Nov 10, 2006 16:48:25 GMT -6
LC,
Thanks for the article and the link. Very interesting.
Another interesting point was the false claim of "price controls" that the pharmaceutical companies would be subjected to if Congress allows Medicare to negotiate prices. What complete hogwash!
The Pharmaceutical Cartel doesn't want any controls on prices on government purchase of drugs using taxpayers' money. And they claim private insurers will align their prices with those of Medicare.
That's exactly what happens with physicians. Why should physicians be subject to exactly the same price price controls the pharmaceutical companies are pissing and moaning about?
It's OK to have, in effect, price controls on physician services. But heaven forbid the same controls should be applied to the Pharmaceutical industry.
Of course, it's all about Corporate America and big business over small business and middle America. And about protecting the "investor class" at the expense of middle America and the working class. It's all about big business and Corporate America spending their efforts on lobbying Congress & government for more taxpayer handouts, while lobbying against any breaks for the non-investor class.
It's not called "welfare" when handouts go to Corporate America. It's called "business-friendly" legislation. In contrast, when it goes to the less affluent it's called "socialism" and "the Welfare state."
All I can say at present, at least for the time being, is "hooray for the Democrats." If nothing else, there should at least be some reduction in Corporate Welfare.
We'll see how it goes after that.
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Post by lc on Nov 11, 2006 10:22:32 GMT -6
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Post by unlawflcombatnt on Nov 12, 2006 22:51:23 GMT -6
Unlawful, I heard a charming report yesterday about how companies are opting for overseas medical treatments for employees to curtail the costs of medical insurance. Once the procedure is complete and the patient returns home they have few legal recourses in the event that there are complications. Once patients (victims?) come home, they may well need American medical care. It's standard medical protocol to follow up on any surgery or major procedure done with the doctor who performed the procedure (since the performing surgeon is the only person who knows for sure what was done.) Obviously this is not going to happen if a patient has a procedure or surgery in a foreign country. And there's almost 0 connection between doctor's fees and medical insurance premiums and payments made by patients. Doctor's reimbursements are fixed in stone by Medicare. All American doctors get paid exactly the same amount of money for the same procedure. Insurance companies base their reimbursements on Medicare rates, so those reimbursements are almost fixed in stone as well. Medicare reimbursements have been reduced 4% for 2006. This means private insurers will reduce reimbursements roughly the same amount. Yet insurance premiums, co-pays, and deductibles continue to rise. That's happening because insurance companies are simply increasing their profit margins, despite no increase in physician pay-outs. The reduction in insurance "costs" incurred by insurers won't decrease insurance premiums the slightest bit. It will simply increase insurance company profits. If people want medical costs controlled, start with the insurers whose profits are at record levels. American medical education is widely acknowledged to be the best in the world. It's not a contestable issue anywhere on the planet. Farming out patient care to foreign countries forces Americans to receive care from physicians that have not received the best medical education in the world, and will reduce the quality of care in this respect alone. Added to this is the non-follow-up policy that will also be implemented, as well as removal of any legal protection of patients from malpractice. And medical care won't cost a dime less. Except for the insurance companies.
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Post by lc on Nov 12, 2006 23:03:07 GMT -6
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Post by unlawflcombatnt on Nov 12, 2006 23:30:11 GMT -6
And it won't cost a dime less. Except for the insurance companies.
It will cost less for the companies providing employees insurance. It already does. Again, it doesn't cost patients a dime less. Health care costs are rising for everyone, including yours truly. The cost reductions are not being passed on to patients. But the poor medical care is. That's because the Corporations that run and control American medicine, aren't sucking up 80-90% of the health care dollar in foreign countries. Depending on the survey used, physician reimbursements account for only 9-19% of healthcare spending. Eliminate the Corporate stranglehold on medicine, and all the government handouts, tax breaks, and legal protections for Health Insurance Companies and HMOs, and you'd eliminate 70-80% of health care costs. It will go beyond bankrupting American doctors. Few potential physicians will be able to afford medical school, and many who can afford it won't want to. It's a standard endpoint for American Medical graduates to finish medical school in $100,000 to $200,000 worth of debt. (Some of us are in even more debt.) Malpractice rates are rarely less than $20,000/year, and many can't get malpractice insurance for under $30-40,000. Some can't get it for less than $60,000. Some can't get it for any price. Also, in order for a physician to even obtain a Medicare billing number, it's necessary to have a fairly high-rent office. A smaller, less expensive office won't satisfy Medicare's stringent billing requirements. Who's going to even want to go into Medicine if physicians' costs and debt continue to rise, while reimbursements continue to be cut? We'll simply have to import doctors into this country, because no Americans will go into the field. Many simply won't be able to afford it. We're already doing it. And we already are formally insane in this respect.
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