Hi there,
I'm not an 'economist' but increasingly I find myself reading all the financial stuff, trends, etc and will be using the stuff I learn to provide insight on my forthcoming website (it's taking ages becuase its a secondary element to my work) with a slightly different slant as in making the info Trackable (using personal finance software) accessible and useable to people who may not have otherwise needed or wanted to know it.
The Current downturn in the US Dollar value against the pound is something to be concerned about in the longer term - like it or loathe it - the fact remains what happens in the USA has a rippling effect on the rest of the world. Currently, it looks like the growing bubble since the dotcom burst is at it's peak and although analysts don't predict a 'burst' or 'crash' many people who took on unrealistic debt in the form of mortgages are now realising they can't afford it. It's called the Mortgage 'sub prime' sector in US speak - which I equate to being those who got on the ladder with the tempation of cheap fixed deal mortgages and bank loans etc - then overspent and now cannot pay back. Result - deferred payments, mortgage defaults en masse - and the financial companies now owed ALOT of money. That is the main reason given in many current articles as to why the dollar is losing alot of value - of course, factor in the other major elements such as world trade etc and these big elements soon add up to even more of ALOT of money!
Now the financial bigwigs and the US government need to work carefully in order to 'recover' from this without a crash or burst. Raising of interest rates could help - it'll deter more people taking out vast loans now. I don't know if thats a 'good' way or not - if it is, maybe a gradual manageable recovery will occur. The US dollar is likely to lose more value before there's any turnaround - we've gone past the £1 = $2 mark, so maybe it'll bottom out at $2.1 -2.2 before theres a turning point (according to some articles)
Everyones situation is different, I can't see that 'many' US families here will be 'forced' to go back to the US becuase of it (obviously for a few this indeed may be the last straw) whilst it may take some time to turn, at that point I can see it affecting more people over time and coercing them to think of going back etc. I think many will 'sit it out' for as long as possible.
On more of a postive note - there is no doubt the value will strengthen at some point and go back to it's normal(ish) £1 = $1.5/16 USD level (in recent/last decade or so), as pricing is so (comparitively) cheap in the USA for most things, many people - including me! - are buying up good over there - I'm going for the big stuff and looking at properties and keeping options open with all my US family dotted around for other opportnities - I think with a sizeable amount of 'foriegn' investment into the US, the turn around could be helped along.
So all of you, pay off debts, credit cards you have there whilst you have this excellent rate! any leftover - buy stuff from there too!
There's of course much more to it than the above - that's goes into more political and full on economic variables and outcomes etc which will play a big part but I don't want to get to in depth on it here - even though it affects everyone. suffice to say, I hope the growing rift between USA and China gets controlled and reversed sooner rather than later...
hope this helps a bit!
cheers! DtM! West London & Slough UK!
