The end of the dollar spells the rise of a new order

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Als dit plan zo wordt uitgewerkt, lijkt het mij onmogelijk dat de
USA-economie op de oude voet door kan gaan. Dit was al onwaarschijnlijk
door de bankencrisis, maar dit zal dan 'de laatste druppel' zijn.

Krijgt Reagan achteraf toch ongelijk.
Niet omdat het niet kon werken, zoals hij dacht, maar omdat de financiele
industrie veel te gulzig is geweest.

Zo'n 90% van de bevolking heeft het heel moeilijk, en moeten toch 30%
rente betalen op hun credit-cards. Dit is niet vol te houden.

De beurshandelaren bestelen hun klanten d.m.v. high frequency trading voor
vele miljarden per jaar, en deze zullen dat onderhand ook wel in de gaten
hebben.
Mocht dit nog niet het geval zijn, dan zullen _hun_ klanten
(pensioenfondsen e.d.) wel aan de bel trekken.
En anders de pensioengerechtigden wel. Die horen immers van hun regering
dat de pensioenen niet toereikend zijn, door de teleurstellende of
negatieve opbrengsten.

De pensioengerechtigden zullen binnenkort wel een eigen spreekbuis vinden,
omdat de vakbonden boter op het hoofd hebben.

Groet / Cees


http://www.independent.co.uk/opinion/leading-articles/leading-article-the-end-of-the-dollar-spells-the-rise-of-a-new-order-1798200.html
Leading article: The end of the dollar spells the rise of a new order

This radical proposal is a reflection of a changing economic world

Tuesday, 6 October 2009

Last autumn's global financial crisis set off an economic earthquake. And
we are still feeling the tremors. The latest sign of the ground shifting
beneath our feet is our report today of plans by Gulf states, China,
Russia, France and Japan to end their practice of conducting oil deals in
US dollars, switching instead to a diverse basket of currencies.

It is not hard to see the motivation for oil exporters to move away from
the dollar. The value of the US currency has fallen sharply since last
year's meltdown. And fears are growing, in the light of a spiralling US
government deficit, that a further depreciation is likely. They do not
want to sell their wares in return for a currency with an uncertain
future.

It is also easy to see why China would like a world trading system that is
underpinned by other currencies as well as the dollar. For the past decade
Beijing has been recycling the proceeds of its giant national trade
surplus into purchases of US government bonds and other dollar-denominated
assets. China too stands to make a significant loss if the value of the
dollar falls. For China, however, the timing is much more sensitive.
Beijing needs to reduce its dollar holdings, but if it does so too quickly
it will bring about the very devaluation it fears. This explains why
Chinese officials appear to want this transition to take place gradually
over the next decade.

But the significance of this development goes much further. Since the end
of the Second World War the dollar has been the bedrock of world trade.
The pre-eminence of the American currency flowed naturally from the
economic dominance of the US. Virtually everyone traded with America so it
made sense to use their currency.

But the US is not the dominant power that it once was. The financial
crisis has left it hobbled with significant government and household debts
and sharply reduced prospects for growth. Developing nations such as
China, Brazil and India, on the other hand, have weathered the economic
storm significantly better. So while this latest proposal is born of
financial calculation, it is also a reflection of a new economic world
order.

We should not be sentimental for the dollar. It makes economic sense for
world trade to be conducted in a variety of currencies. Relying on one
only has the advantage of clarity, but it also creates instability if the
economy that underpins it faces uncertain prospects.

Yet we need to understand that exchange rate volatility is a symptom,
rather than a cause, of what truly ails the world economy. The biggest
driver of global economic instability in recent years has been the
determination of China to boost its export sector at all costs. Beijing's
persistently large trade surpluses and manipulation to prevent its own
currency from appreciating have effectively forced Western nations into
running persistently large trade deficits. It was this pressure that blew
up various asset bubbles that burst with such disastrous effect last year.

A gradual move away from the dollar makes sense. But without a commitment
from world governments – both in the rich and developing world – to reduce
these destabilising global trade imbalances we will enter an uncertain new
era; and one that could yet make us pine for the days of the dominant
greenback.

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