Declining Dollar And Economy

The news that came out on Thursday that the implied AAA Credit rating of the United States will eventually be downgraded. The dollar was hit hard again on Friday and that could have some serious implications when it comes to stabilizing our economy. What are implications of a weak American dollar. The first problem is high inflation and a perceived greater risk of holding the currency and dollar denoted assets. The greater perceived risk, investors will ask for a higher rate of return. This means that interest rates will be going up in America. The biggest problem is a significant exit of foreign capital from our markets. Therefore, can you imagine conversations between China, Japan and Russia the largest holders of our debt. The United States is forced to pay higher interest rates to attract capital, the economy slows as the cost of debt services increase. The Obama administration may want a weak dollar because it will help domestic production relative to our continued reliance on imports. Therefore, by generating some inflation is a means of devaluing our outstanding massive amount of debt. Whomever, is in debt currently can actually pay back those debts in future dollars that are worthless. Finally, we can stem the decline in the value of the dollar by increasing short term interest rates, that is, Federal Fund Rates currently sitting a 0-.25% will have to go higher. Higher rates means slowing down the economy. Although given the current economic turmoil, the Fed may have to increase the Federal Fund Rate even sooner than they desire and we could suffer through a nasty curse of STAGFLATION. The Obama Administration must find a credible way to protect the value of the dollar. This could be the first step in the downfall of America.

Blue And Red State Unemployment Rates

The unemployment rate in so-called Blue States are still extremely high in America. These are states that President Obama won by a large margin in last year Presidential election. The unemployment rates in blue states are 20% higher than red states that Sen. McCain won in last year Presidential election. The unemployment rate nationally is 8.9% but if the number don't start improving soon the Democratic Party may face the prospect of 2010 mid-term election losses in both Governor and congressional races. The Republican and Democratic Party are vying at 40% to 39% for leadership in the Rasmussen conducted generic poll. Rasmussen says that Democratic support has dropped for a high of 50% and Republican support has risen from a low of 34%. Democrats began the year with a seven point lead over Republicans for the first several weeks of 2009 Rasmussen Said, that began to slip and the Republicans actually took a two point lead in the middle of March. Since then, the range has been dead even to a four point lead for Democrats until the Republicans regained the lead. The key to the mid-term elections is the President approval rating matters more than economy and Congress itself in determining the outcome of mid-term election results. The President will need to have a 65% approval rating to avoid losing ground in Congress in the 2010 mid-term elections. President Obama average approval rating is 60% the same a President Jimmy Carter at the same time in history. There is a big risk that states that voted for President Obama might be disappointed by his economic results so far. The state of Michigan has been hit hard by the failures of Chrysler and General Motors failure despite spending billions of taxpayers dollars. The state of California is on the the verge of economic collapse and has a 11% unemployment rate in March and April and Governor has threatened to fire 5,000 state workers to reduce expenses is face of a 21 billion dollar shortfall. This is why today in a forum Treasury Secretary Geithner was reducing expectations when it comes to a economic recovery. Geinther said that unemployment rate will not drop and the economic recovery will not be felt by the Average American for a long period of time.

Gov. Palin Vetos Stimulus Money

Governor Palin on Thursday became the first and only Governor to turn down federal stimulus money for energy efficiency, a move that Federal Administrators called disappointing for the state with some of the country highest energy costs. In announcing, the veto of the 28.6 million funds. Palin said she would not accept money to the adoption of building codes by local governments. Alaskans have a long history of independence and opposing many mandates from Washington D.C.. Palin said in announcing the veto. Gov.Palin had earlier accepted 900 million dollars in other federal stimulus funds. The Governor believes that building codes should be made by local and state governments. Democrat state legislators had urged Gov. Palin to accept the stimulus money, because they were close to the federal mandates. Sen. Begich a Democrat said, that nearly a third of the requests sent to his state office from local communities and nonprofits were related to energy reduction. With the highest energy prices in the nation it is disappointing that our Governor, is turning down Federal stimulus funds that could help out families and our communities reduce there energy bills. Begich said. The Democrats and some Republican will possibly override the Governor Palin veto. The state legislator needs three quarters of to override the veto. Finally, Gov. Palin said that there was not a lot of support for for the Federal government to coerce Alaska communities to adopt building codes.