China, Greenspan Rub Salt in Dollar Wound

[chlamor]

Mar 12, 2005

China, Greenspan rub salt
in dollar wound

The US dollar was struggling near a two-month low against the euro on Friday as the market braced for fresh trade data that were likely to show a further widening of the trade gap. As if this weren't trouble enough for the besieged greenback, US Federal Reserve chairman Alan Greenspan stirred up the market Thursday night saying foreign investors would reduce their US asset holdings at some point, while new findings came to light that China is indeed doing so.

Saying he is not "overly" concerned about the record US trade gap or heavy consumer debt, Greenspan said the budget deficit gives him the shivers. The US current account deficit widened to a record US$164.7 billion from July through September, the most recent figures available, equivalent to 5.6% of gross domestic product (GDP). "Our current account deficit and household debt burdens do not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit," Greenspan told the Council on Foreign Relations in New York. "Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability, because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances."

<snip>

According to the high priest of finance, international investors have only modestly shifted their portfolios away from dollar assets so far. But he warned that they might at some point decide their portfolios are too dollar-centric, ominously adding that if the dollar keeps dropping, foreign exporters may start looking elsewhere.

Greenspan's comments came close on the heels of Japanese Prime Minister Junichiro Koizumi's startling remark on Thursday that Japan needs to diversify its foreign-exchange reserves, reviving fears of Asian central banks cutting their giant dollar reserves. Any move by Japan, which has the largest foreign-exchange reserve in the world ($840 billion), to reduce its dollar holdings could be disastrous for the greenback. The dollar has already been dropping against the yen for four straight weeks now. Koizumi's statement, though later qualified by his finance minister, will only prolong the agony.

http://www.atimes.com/atimes/Global_Economy/GC12Dj01.html

[Jacobin]

1. Gee, Mr. PoliticalHack

I remember you supporting the massive tax cuts for the wealthy. Why don't your publicly apologize for your costly incompetence and encourage congress to roll back the tax cuts so that the deficit will narrow?

[ze_dscherman]

2. Foreign exporters are already looking elsewhere

The German company I work for had its biggest market in the U.S. The fall of the Dollar hurt us quite a bit, but at the same time we were already expanding in Asia. With many big companies outsourcing work from the U.S. to the cheap labour countries, there's a growing demand even for the advanced instruments our company is building.

Of course, our Asian price lists have been switched to Euro last year.

[LeftHander]

3. Heads in the sand...

How many warnings does the Bush admin need?

the world IS going to turn on the U.S. and the best weapon they have to stop U.S. imperialism and "freedom" spreading to to take us out at our financial knees...

they are waving that big stick made up of dollars and we are so arrogant to think that the world can't cope with a collapsed US dollar and wouldn't dare.

Currency values have a way shifting around. Once the sell off begins other currencies will take up the slack and the U.S economy will collapse.

So for you lurking freepers that means...

No gas for you SUV's, no cheap WalMart products, no jobs as buinsess flee the U.S to save themselves.

No big weapons of mass destruction systems for Bush and his cronies to spend the worthless money on.

Deflation is only delaying the fall. Cheap products form WalMart and inflation in check only lulls us into sence of false security. The consumer confidence is an illusion. And when that the people finally realize we have a "dollar store" McOnomy...it will be too late.

No wonder they want the Middle East oil. it is the only hope to keep the giant gas sucking war machine moving....steal the oil. Destroy nations. Kill millions to do so.

This is a viable option for those fucks in the WHite House....

[NYC]

4. Dollar Catches Asian Flu. (related article)

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x1653954