Impact of General Motors News on Forex Market

GM did it, they went bankrupt and left the US taxpayers with a 60% stake in a car company. If you consider the money they put into it before – ergo 20 Billion Dollars, they actually own more than 70%, but no matter, the deed was done and the affect on the mood and currency of the US is set. The dollar fell hard yesterday to new long time lows against a bunch of currencies – and in my opinion the pressure will be on it for some time.

You see while the street revels in the stock market gains from the past three months, up over 30%, many attribute that success to the light at the end of the tunnel. There is no real recovery yet, just glimpses of hope that there will be one soon and as an established investor would know, that is all the market needs.

The markets tend to exaggerate their movements, when things might be bleak they panic and sell and when the situation appears to have an end – even though it is not close – they buy. But the Forex Online Market is different; Forex markets cannot hide behind estimates and soft numbers, the market deals with reality mixed in with a little bit of fear. The truth about the US is that they are spending money like crazy, money their president admitted they don’t have, money that the entire world does not own – and as a result the interest rates on their debt instruments are raising. Inflation will hit the US – and most probably England for the same reason. How bad it gets depends upon how both governments handle crises like the GM bankruptcy in the future.

I am a capitalist. Company’s come and company’s go. If the US let them go before they interfered and committed so much money into it, the vacuum that is created will be filled by someone else. The land of opportunity is now stifling that, and it is the change from that value which might come back to bite them in the long run.