Looks like it to me.
Bubble, bubble double trouble, Mike B)
Sun Oct 12, Reuters to My Yahoo!
By Andrea Hopkins
WASHINGTON (Reuters) - After years of campaigning against Washington's "strong dollar" policy, U.S. manufacturers are cheering the fall of the greenback, convinced a weaker currency will help them compete overseas and save U.S. jobs.
David Huether, chief economist at the National Association of Manufacturers -- the most vocal lobbying group on currency issues -- said the factory sector will feel the benefits of a weaker dollar in the next year or so as exports climb and manufacturers finally regain the power to raise prices.
"A continued orderly correction in the value of the dollar is in the interest of U.S. manufacturers and the country overall," said Huether. "It makes our products more competitive on the world market."
The loss of 2.5 million factory jobs since January 2001 has weighed heavily on the U.S. economy and on President Bush (news - web sites), for whom victory in several rust-belt states with rampant layoffs will be vital in the 2004 election.
While the administration still says it backs a strong dollar, Bush and Treasury Secretary John Snow have seemed to encourage the greenback's slide by pressing China and Japan to stop manipulating their currencies so the yuan and the yen can rise in value against the dollar.
"If you're a policy-maker in Washington and the economy is sluggish, manufacturing is weak and inflation is low, a weak dollar isn't a bad thing from any way you look at it," said Cary Leahey, senior U.S. economist at Deutsche Banc Alex. Brown in New York.
Benefits from the dollar's fall to three-year lows against the yen are already trickling in and manufacturers are more hopeful than they've been in six years that their battered sector is about to pick up, according to a survey released on Thursday by the Manufacturing Alliance.
FUEL TO THE FIRE
Tim O'Neill, chief economist at Bank of Montreal/Harris Bank in Toronto, said the dollar's depreciation adds fuel to an economy already juiced up by tax cuts and low interest rates.
"You add a third leg, what I call the 'trifecta of stimulus,' which is the exchange rate movement," said O'Neill. "This will be good news for the U.S. economy."
Already, import prices are beginning to rise -- making it easier for U.S. producers to compete with foreign goods in the domestic market. Data released last week showed non-petroleum import prices rose 0.9 percent in the year to September, compared with a 0.9 percent drop the year before.
While the manufacturing sector has begun to show signs of life after years of decline, analysts believe the real boost from the dollar's decline will come in 2004, once export contracts roll over and new, lower prices are set for U.S. goods overseas.
"You can argue that you've already had a little improvement that we've seen in the manufacturing surveys such as the ISM (Institute for Supply Management index), but I would think it is more of a 2004 event," said Leahey.
While the slumping dollar will boost the factory sector in the short-term by making U.S. products cheaper, few believe manufacturing will ever regain the luster -- or the jobs -- of just three years ago.
Huether, of the manufacturers' group, said it will take years for the sector to recoup some of the 2.8 million jobs lost since manufacturing last peaked in July 2000. He concedes that many jobs are gone for good.
"I think for the rest of this year we'll see employment start to stabilize in manufacturing, but ... the recovery is going to be very slow. It's going to take 5, 6, 7 years," Huether said. "Will it get back to its level in 2000? I would say probably not."
===== ***************************************************************** Man is most nearly himself when he achieves the seriousness of a child at play.
Heraclitus, Greek philosopher (500 B.C.)
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