Analysis: Blame the dollar - by Massoud Hedeshi
According to the US Federal Reserve, the dollar has dropped by around 65 per cent against the Euro, 31 per cent against the British Sterling, 45 per cent against the Canadian Dollar, and by 59 per cent against the Australian Dollar over the eight-year period since June 2000. As America struggles to avoid recession, the world economic order appears to be heading for a drastic overhaul. Despite a trend by some economists and politicians to blame the current food and energy commodity price hikes on Opec or overpopulation, there is a clear picture emerging of deep structural problems in the world economy.
Ironically, the inevitable dumping of the US Dollar is not such good news for the EU in the long run, as the continuing rise of the Euro is detrimental for the continent's exports, and will weaken European manufacturing almost as rapidly as the Euro's rise. Furthermore, reliance on the services sector is no solution either, as rising global prices coupled with the rise of the Euro reduce demand for luxuries-oriented European goods and services - such as designer goods and tourism - even harder.
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