US Economy isn't so appealing outside U.S. - by Dean Calbreath
"Helicopter" Ben Bernanke lived up to his nickname last week when he slashed the Federal Reserve's key federal funds rate, pumping cheap money into the economy in the same way that a firefighting helicopter drops water onto a forest fire.From the Persian Gulf to Beijing to Zurich, there is increasing skittishness about the health of the U.S. economy and the wisdom of our economic policies. Bernanke's kowtowing to the powers-that-be on Wall Street did nothing to allay those fears.
It is probably no coincidence that on the day after Bernanke's decision, rumors stirred that Saudi Arabia was considering changing the peg for its currency from the dollar to the euro, which ultimately could make gas a lot more expensive for Americans. Already this summer, foreigners have been pulling back from U.S. investments. In July, foreigners sold a net $9.4 billion in U.S. Treasury bonds, one of the largest sell-offs on record. Foreign sales of dollars have pushed the value of the U.S. currency to its lowest point ever against the euro. The Canadian dollar, which used to trade for less than 70 U.S. cents, is now equal to the U.S. dollar and will probably soon surpass it.
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