Fears of dollar collapse as Saudis take fright

[Ikutiera]

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.
"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.
"Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.

Fears of dollar collapse as Saudis take fright - Telegraph
Dollar respite as Saudis stick to peg, for now - Telegraph

[Menydh]

Current rates of the euro to US dollar are at 1.41787 US$ to the euro. A steeper fall of the dollar would help Europe to further cut ties with America, but on the downside European exports will suffer. And I wonder if, with a stronger euro, there would not be a stronger trend of industry delocalisation to reduce production costs.

With an external debt of well over US$3 trillion, a weaker dollar would make the debt unsustainable (which it already is, under normal circumstances). China too sent signs a few months back that they could reduce their reserves of US$ bonds.

It would be a good moment in Europe to practice an economic bargaining policy of increased duties on import goods from the US.

Americans living at large on money borrowing, they could face severe hardships and, who knows? We might even get to see newly formed NGOs to help the White Trash Americans along the existing ones to help the Third World.

[Menydh]

US-EU Balance of Trade
US-Europe Balance of Trade

source: FTD - Statistics - Country Data - U.S. Trade Balance with All The Countries of the World

U.S. National Debt Clock
Intelligentguess - Analysis of Market Economics » USA - Relationship between Total Debt ( data from 1929) and External debt as a % of the GDP (data from 1995)

[Ikutiera]

In a report published Thursday by a German magazine, former U.S. Federal Reserve Bank Chairman Alan Greenspan warns the dollar’s days as the world’s reserve currency may be numbered, and that a trend to replace the dollar has already begun.

theTrumpet.com