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Decline of the dollar

US Dollar falls 50% against Brazilian Real

US Dollar devalued against Brazilian Real

Since 2003, the US dollar has fallen almost 50% against the Brazilian Real. What caused this to happen and what does it mean for the future of the dollar?

The reason for the strong real is the excess of Brazilian exports over imports. Government policy resulting in extremely high internal interest rates attracts holders of these dollar reserves to invest in short-term Brazilian debt.

However, not all is rosy in Brazil.

Buybacks rule

Corporate Execs throw caution to the wind

Is there a Madame DeFarge knitting the names of culprits?

According to Federal Reserve flow of funds accounts, a large portion of today’s stock buybacks are financed by borrowing heavily and dipping into depreciation reserves. Even the slowest of minds should be able to grasp the fact that borrowing to finance buybacks results in interest costs that will reduce, not improve future profits.

Corporate executives have thrown caution to the wind, touting buybacks as ‘good for investors’ without regard for the truth or laws against securities fraud.

Featured articles on inside pages

Stock buybacks

Warren Buffett attacks buyback schemes

In the 2005 Berkshire-Hathaway annual report, Warren Buffet points to the unethical aspects of the buyback-option schemes so common in the US stock market. He noted that "Too often ... the deck is stacked against investors when it comes to the CEO’s pay. ... every dime paid out in dividends reduces the value of all outstanding options"
More ...

Securities Analysis

Mark-to-market nonsense

Banks, by their nature, are insolvent, requiring government guarantees of their liabilities to protect against bank runs. Over the last fifty years, the percentage of bank liabilities guaranteed by the government has fallen considerably, while banks, free from the shackles of the Glass-Steagall Act, have become increasingly complex.
More ...

US Politics

America grows with legal immigration

Legal immigration has resulted in solid growth of the US population, despite declining birth rates and an increasing number of old people. This is good news for investors in stocks and real estate. Illegal immigration appears to be less than 5% of legal immigration, and legal immigration is at an all time high.
More ...

US equities

GAO pooh-poohs a Boomer bust

In 2006, the GAO issued a report saying that the retirement of the Baby Boomers should not have a negative effect on stock prices. This article reviews the GAO reasoning and concludes that the conclusion is not credible. More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

Working off the US trade deficit

Foreigners hold $16.8 trillion in US financial assets as a result of selling more goods to Americans than they buy from them. Since the 'deficit' is in dollars, the US has no problem in 'paying it off'. More ...

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Capital Flow Watch has hundreds of articles on economics and investments.

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Stock Quotes

DJIA12453.54  chart +1.52%
NASDAQ2802.51  chart +2.10%
S&P 5001330.36  chart +1.33%

Ftse 1006022.26  chart +2.08%
Dax7249.19  chart +2.90%
Cac 404004.62  chart +2.40%

Nikkei 2259662.08  chart +0.58%
Hang Seng Index24099.13  chart +0.85%
Straits Times Ind3197.30  chart +1.00%

Eur To Usd1.46  chartN/A
Usd To Jpy82.28  chartN/A
Gbp To Usd1.64  chartN/A

2011-04-20 16:04