The Inevitable Collapse Of The Dollar

It’s Time to Adopt the Euro
Staying out of the Eurozone is costing the average Brit dear. The value of the pound sterling continues to decline and decline. The pundits are now already talking of parity with the euro. This is happening because of mismanagement of our economy and mismanagement of our currency.

Gordon Brown is guilty of the mismanagement of both the economy and the currency; but he is not alone. Successive governments since World War II have allowed the value of the pound sterling to halve approximately every ten years. That means to say that what one could buy for ten shillings in 1940, one would have had to pay a pound for in 1950, two pounds in 1960, four pounds in 1970, eight pounds in 1980, sixteen pounds in 1990, thirty-two pounds in 2000, and in 2010, it will cost one a staggering sixty-four pounds.

This rule holds for so many goods and services. If you don’t believe me, ask your grandmother what she paid for goods and services back in ‘the old days’, and compare prices today. Do some research on prices inbetween. You’ll find that the rule works a treat. I should be surprised if your conclusion will not be the same as mine: namely, that the value of our beloved pound sterling has halved approximately every ten years. Interestingly, in 1961/62, there were eight US dollars to the pound, and twelve Swiss francs. How many are there now? As of writing this, the pound is worth 1.62650 US dollars, and 1.68912 CHF, or Swiss francs. (Verify these figures here.) So if this is allowed to go on, we shall all be using the currency of a banana republic in just a few years. The pound sterling is becoming worthless!

I, for one, would prefer the euro, for the euro is proving itself to be a strong currency. I would like to handle such a currency on a day-to-day basis. I would have more faith in it than I have in the pound. The British authorities cannot be trusted to manage our currency; otherwise, they would not have allowed it to go to the wall as they have.

To all the sentimental people, I say this: We can’t afford to be sentimental; there is no room for sentiment in business. And to all those naysayers who worry about our sovereignty, I say this: We lost our sovereignty when we entered the European Union. That happened long ago. That train has already left the station. It’s time to catch the next train. The one that leads to the Eurozone!

Bring on the euro, I say. I can’t wait! – © Mark Alexander

All Rights Reserved

China’s Yuan: The Next Reserve Currency?
SPIEGELONLINE INTERNATIONAL: Skeptics have dismissed Beijing's talk of de-emphasizing the US dollar, but China is making moves that could soon lead to a convertible yuan.

Are the Chinese finally getting serious about loosening their ties to the dollar -- and even replacing the greenback with the yuan as the global economy's reserve currency? The evidence is mounting that they are.

For the last two months, China's leadership has been complaining about the country's dangerous dependence on the dollar.. Beijing holds $2 trillion (€1.43 trillion) in dollar assets, accumulated through years of exports to America and massive purchases of Treasuries by the Chinese government. If Washington can't rein in its mounting budget deficit, both Treasuries and the greenback could weaken considerably -- and the Chinese could be big losers as a result.

The Chinese began generating attention on the issue in March, when Chinese Premier Wen Jiabao said he was worried that the country's dollar assets could slide. Ten days later Chinese central bank chief Zhou Xiaochuan suggested replacing the dollar as the international reserve currency. One idea, Zhou said, was to replace the dollar with a basket of currencies supervised by the International Monetary Fund. >>> © SPIEGEL ONLINE 2009 | Tuesday, May 26, 2009

LeVine is a correspondent in BusinessWeek's Washington bureau.

Angriff auf Dollar: China verlangt neue Weltwährung
DIE PRESSE: Die Forderung des chinesischen Zentralbank-Chefs nach einer weltweiten Leitwährung beflügelt ökonomische Theorien des "Weltgeldes". Aber auch die Verschwörungstheorien rund um die Weltwährungen Amero und Globo.

Bild dank der Presse
China hat eine neue globale Leitwährung unter Aufsicht des Internationalen Währungsfonds (IWF) gefordert. Der Chef der chinesischen Zentralbank, Zhou Xiaochuan, schrieb in einem Aufsatz, dass die gegenwärtige Krise erneut nach einer kreativen Reform des internationalen Währungssystems hin zu einer internationalen Leitwährung rufe.

Dollar zu unverlässlich

Zhou erwähnte den Dollar zwar nicht direkt, schrieb allerdings, die Krise habe gezeigt, wie gefährlich es sei, sich bei internationalen Finanzgeschäften auf die Währung eines einzigen Landes zu verlassen. "Eine überhoheitliche Leitwährung, die von einer globalen Institution gemanagt wird, könnte sowohl dazu genutzt werden, die globale Geldflüsse zu schaffen, wie auch sie zu kontrollieren", schrieb Zhou. Dies würde die Gefahr künftiger Krisen reduzieren und zugleich die Möglichkeiten zum Krisenmanagement erweitern. >>> ebl/ag | Dienstag, 24. März 2009

Ahmadinejad: The Dollar “Is a Worthless Piece of Paper”
BBC: Iranian President Mahmoud Ahmadinejad has suggested an end to the trading of oil in US dollars, calling the currency "a worthless piece of paper".

The call came at the end of a rare Opec summit, and was opposed by US ally Saudi Arabia.

The Iranian president had wanted to include the attack on the dollar in the summit's closing statement.

The communique made little mention of the dollar, however, focusing instead on energy security and the environment. Iran leader dismisses US currency (more)

BBC:
Dollar continues near record lows

Mark Alexander

Ahmadinedschad macht sich über den Dollar lustig
SPIEGELONLINE: Der Dollar schwächelt. Die Opec-Staaten Iran und Venezuela, nicht gerade Freunde der USA, würden Erdöl daher künftig lieber in anderen Währungen als dem Dollar abrechnen. Irans Präsident Ahmadinedschad sagte, man würde für wertvolles Öl nur noch "wertloses Papier" von den USA bekommen.

Hamburg - "Sie kriegen unser Öl und sie geben uns dafür ein wertloses Stück Papier", sagte Irans Präsident Mahmud Ahmadinedschad am Rande der Opec-Konferenz im saudi-arabischen Riad, wie die "Financial Times" berichtet. Iran und Venezuela drängen die Opec-Staaten, die Abrechnung von Öl in der US-Währung zu beenden und eine andere Währung zu nutzen. Gastgeber Saudi-Arabien weist diese Forderung zurück und will die Währungsfrage nicht zum Thema der Konferenz machen. Ahmadinedschad macht sich über den Dollar lustig (mehr)

Mark Alexander

Weak Dollar Cuts US Trade Deficit
BBC: The US trade deficit has narrowed to its lowest level in more than two years, driven by record exports boosted by the weaker dollar.

The difference between what the US exports and imports shrank to $56.5bn (£27bn) in September, down 0.6% from August's revised $56.8bn.

Exports of goods and services rose 1.1% in September to a record $140.1bn, said the Commerce Department.

As the dollar has hit record lows, it has made US exports more competitive. Weak dollar cuts US trade deficit (more)

Mark Alexander

Dollar Woes Continue
BBC: The US dollar tumbled to yet another new low against the euro, as speculation mounted that US interest rates would be cut again next week.

The euro traded as high as $1.4375, breaking the record set last Friday, when one euro bought $1.4319.

The dollar did recover slightly to $1.4369 against the euro bloc currency.

A slew of weak data - including a drop-off in durable goods sales and plummeting demand for new homes - has underlined woes in the US economy. US dollar touches a new euro low (more)

Mark Alexander

Another New Low for the Dollar Against the Euro
BBC: The US dollar has fallen to new record lows against the euro as investors fret about a world credit crunch.

In European trading, the greenback dropped as low as $1.3927 against the euro, deepening Wednesday's losses.

The dollar has fallen in the past week, amid hopes that Federal Reserve will cut interest rates in a bid to reassure markets over current credit fears.

Analysts expect rates to fall by between a quarter and half a percentage point when the Fed meets next week.

However, as the dollar has weakened, the euro has gained momentum after recent comments from the European Central Bank (ECB) hinting at the possibility of future interest rate rises. Dollar hits new low versus euro (more)

Mark Alexander

Dollar Woes
BBC: The US dollar has fallen to a record low against the euro as investors bet that the Federal Reserve will cut interest rates to help the economy.

The US dollar dropped to $1.388 per euro, passing the previous record of $1.3852 that was set on 24 July.

Many analysts are predicting that the Fed will cut interest rates next week as it looks to reassure markets and consumers amid a global credit crunch.

The dollar has weakened against the euro for six sessions in a row. Dollar at record low against euro (more)

THE FINANCIAL TIMES:
Dollar hits record low against euro By Peter Garnham

THE TELEGRAPH:
Interest rates rise as credit crisis hits British borrowers By Yvette Essen and Richard Tyler

Mark Alexander

The Weak Dollar
NEW YORK TIMES – Editorial: Despite the Federal Reserve’s stay-the-course message yesterday, investors are betting on at least one interest-rate cut by January, intended to quell turmoil in the markets and to juice the slow economy. But with the dollar also weak — recently hitting its lowest point in 15 years against an index of other major currencies — the Fed may be reluctant to oblige.

A declining dollar is a source of inflationary pressure because it can boost the cost of imports. So if the Fed tried to rev up the economy with a rate cut at the same time the dollar is falling, it could end up provoking even more inflation. That would be a drag on economic growth rather than a boost. In an extreme case, it could result in a toxic combination of weak growth and high prices that is a central banker’s nightmare.

How did the Fed lose room to maneuver? The answer is rooted in the Bush administration’s misguided economic policies.
Over the last several years, America’s imbalances in trade and other global transactions have worsened dramatically, requiring the United States to borrow billions of dollars a day from abroad just to balance its books. A Weak Dollar and the Fed (more)

Mark Alexander

Euro noch nie so wertvoll wie heute

Bildnis dank der Franfurter Allgemeinen Zeitung

FRANKFURTER ALLGEMEINE ZEITUNG: Der Euro hat im Vergleich zum Dollar ein neues Allzeithoch erreicht. Die europäische Gemeinschaftswährung erreichte am Dienstag zwischenzeitlich einen Stand von 1,3697 Dollar und notierte damit so hoch wie noch nie. Damit übertraf der Euro seinen bisherigen Höchststand von1,3682 Dollar vom April. Euro mit Allzeithoch gegen den Dollar (mehr)

Mark Alexander

US Dollar Strengthens
REUTERS: LONDON (Reuters) - The dollar hit a 4-1/2 year high against the yen and 11-week peak versus the euro on Wednesday after a rally in U.S. Treasury yields boosted its appeal.

Investors were braced for U.S. retail sales data, the Federal Reserve Beige Book and speeches from Fed officials as markets have dropped expectations of lower U.S. interest rates later this year. Dollar at 4-1/2 year peak vs yen as U.S. yields rise (more) By Natsuko Waki

Mark Alexander

5% Fall in Value of US Dollar Against the Euro and Pound Sterling So Far This Year; Equivalent to a 20% Decline
CHRISTIAN SCIENCE MONITOR: NEW YORK - It's like a summer movie: the incredible shrinking dollar.

Since the beginning of the year, the buck has shrunk 5 percent – the equivalent of a 20 percent annual decline – compared with the pound and the euro.

But the shriveling value of the dollar may eventually help solve one of the most intractable US economic problems: the enormous trade deficit, which hit $63.9 billion in March, the highest level since September of last year.

Already, giant European companies are taking advantage of their strong currency by announcing huge investments in the United States. And US exporters such as Boeing and Caterpillar are getting an order boost as the lower-valued dollar allows them to undercut their competition.

"The forces are in place now to slowly over time cause the trade deficit to shrink," says Jay Bryson, a senior international economist for Wachovia Securities Research in Charlotte, N.C.

The change in the dollar's value also comes with ramifications for US consumers. It's now more expensive for Americans to travel abroad. Italian leather, Belgian chocolates, and English cheddar will cost more. In addition, many Americans may find they have a new boss – one who is based overseas or relocating to the States. Dollar buying ever less of the world’s goods (more) By Ron Scherer

Mark Alexander

Kuwaiti Dinar No Longer Pegged to the Sliding US Dollar
FINANCIAL TIMES: Kuwait on Sunday removed its currency peg to the US dollar, throwing plans for a Gulf currency union by 2010 into doubt and raising the prospect that other oil-producing states might abandon long-held dollar pegs.
Sheikh Salem Abdelaziz Al Sabah, governor of the Central Bank of Kuwait, told the official Kuwait news agency that the decision had been made owing to the “detrimental effects of the pegging system to the national economy”.

Since late last year, Kuwaiti officials have hinted that the country would revert to a basket of currencies to prevent the sliding dollar increasing the cost of imports, which has stoked inflation to more than 4 per cent, double the historic average. This has encouraged speculators to plough billions of dollars into the dinar over the past few months, betting that the central bank would allow the dinar to appreciate. Kuwait abandons US dollar peg (more) By Simeon Kerr

KUWAIT TIMES:
Kuwait drops dollar peg

Mark Alexander