Your CFO

Hiring Key Employees

Podcast! Hiring Key Employees

by Don Olson of D.G. Olson & Associates

Is America On Sale?

The ongoing decline in the value of the U.S. dollar will encourage foreign investors to “Buy American” since American products and assets will be cheaper in absolute value compared to foreign goods and assets. This could be a significant political issue in 2008.

The huge increase in the national debt over the last few years has forced the dollar to new lows and the media continuously remind investors on this fact. We need to remember that in the late 1990’s and early 2000’s, the dollar was strong, as the government was making progress in reducing the national debt (or at least reducing the increase in the debt), but that has changed dramatically in the last few years. With tax reductions and increased spending, the debt has increased to unimaginable levels since 2001. Eventually this debt will come due.

Of course the weaker dollar can help improve our huge trade deficit with some countries, but we haven’t seen an improvement in the trade imbalance with China or OPEC and we probably won’t. China and OPEC have enormous supplies of American dollars and, as such, they have enormous influence on America’s economy – now and into the foreseeable future.

Although both national parties have tried to ignore the issue of our national debt for fear of being labeled the “tax and spend” party or the “borrow and spend” party, Americans have traditionally not wanted America to be owned by foreigners. Once the effects of the declining dollar become evident to the general public, there could be serious repercussions in the political arena.

U.S. property and businesses are now “on sale” to strong foreign buyers. We could see foreign investors flooding the market to buy up real estate and companies in the United States. Especially attractive are high profile properties – banks, buildings, U.S. ports, and even a U.S. stock exchange. These types of purchases are quite likely to increase and become a major political concern to voters. History has shown that Americans dislike the idea of America being owned by foreigners. Unfortunately, with the declining value of the dollar, America is now “On Sale” to foreign investors.

The Economic Impact of the Declining U.S. Dollar

Podcast! The Economic Impact of the Declining U.S. Dollar

by Susan Saleem, CFP of A.G. Edwards, Financial Advisors