A Lack of Confidence Despite Bailout

Even though the US congress passed a $700 billion dollar bailout package last week many Americans lack confidence in the current economy and are uncertain about the future. This uncertainty has affected consumer spending with many putting off major purchases and spending less on consumer goods and services.

The Credit Crunch and the US Economy

Credit is a major part of the US economy and with the current credit crunch many Americans are finding credit much harder to come by. Due to the subprime mortgage mess banks have tightened lending requirements putting access to credit out of the reach of many Americans. Since consumer spending is one of the leading economic indicators a reduction in retail sales could have serious ramifications for the economy across the board. Despite the passage of the bailout bill and the rally of the US dollar on forex markets many Americans find themselves faced with hard economic decisions to make.

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The Rate of Inflation Under the Bush Administration

The CPI inflation calculator uses the consumer price index to measure the purchasing power of the US dollar and has been calculated every year since 1013. For example in 2000 it took 17.39 to purchase what $1.00 would purchase in 1913. In 2008 the figure stands at 21.57 one of the biggest hikes since the 1970’

s. This figure does not speak well for the economic policies of the Bush administration.

The current economic crisis faced by the US can, in part, be traced back to the deregulation frenzy of the GOP controlled congress of the 90’s with the partial cooperation of the Clinton administration. With many of the safeguards in place since FDR’

s New Deal rescinded many financial institutions began to engage in risky and sometimes irresponsible behavior. Many Forex traders say that this behavior puts the dollar at risk.

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Tentative US Agreement Reached

Forex Traders and the US Dollar

The recent plan by the US to buy 700 billion dollars worth of toxic debt from US banks has thrown Forex markets and traders into a state of bewilderment. With rising oil prices and an unresolved presidential election the future of the US dollar is uncertain. Although banks made temporary gains fx traders and investors are concerned because investors are concerned about the price at which banks may have to sell their assets.

Forex Trading, the US Dollar and Politics

Investors and Forex traders worldwide are waiting to hear the details of the bailout which are unclear. Another complicating factor is the political nature of the bailout with the Bush administration and congressional Democrats differing on who and what should be bailed out. Said senate majority leader Harry Reid of Nevada, “The Bush Administration has called on Congress to rubber stamp its bailout legislation without serious debate or efforts to improve it. That will not happen.” To complicate matters even further some senate Republicans are calling the Bush plan ‘Totally Unacceptable.”

Congressional debate on the issue is expected to last well into next week.

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Forex Traders and the US Economic Crisis

The recent crisis in the US has Forex traders and investors in a serious quandary. Despite a short rally the dollar has been taking a serious beating on currency markets. The Forex market as a whole still remains a place where astute investors and fx traders can still find opportunities.

Political Haggling and the Markets

Unfortunately for international markets, political haggling over the details of the bailout are expected to last longer than predicted. The Bush administration faces some opposition from members of their own party and there are fears that the opposition will use this opportunity to tack on unrelated amendments to the bailout legislation. There are also fears that political maneuvers will delay a vote and effectively stop the 700 billion dollar bailout.

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