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USA Dollar Collapse? - Geithner’s biggest problem is dollar, not China - by William Pesek
"The economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra-loose monetary and fiscal policies. And it will." Geithner’s climb-down from the manipulator charge is about pragmatism. He is aware of the fragility of international support for the dollar. “I do not look for an immediate collapse,” says Hans Goetti, chief investment officer at LGT Bank in Liechtenstein (Singapore) Ltd. “I am bearish longer term as the Fed will continue with their demolition job on their balance sheet.” The key distinction may be motive. China micromanages its currency on purpose to help exporters. The United States’ manipulation may be inadvertent. The end result will be the same.
China is far from a perfect locomotive, but it is among the very few we have today. The United States, the traditional engine, is stuck in reverse. So, it is hard to keep a straight face when politicians such as Senate Finance Committee Chairman Max Baucus, a Montana Democrat, say China must “continue reforms.” Bulls argue that if you don’t like the dollar, what else are you going to buy? It’s a fair question. The yen? The Swiss franc? The euro? All of these options have their own problems. Yet it’s worth noting that the United States, with its fast-growing debt burden, couldn’t join the euro area even if it wanted to. The United States is actively paving the way for a falling currency. Just because China does it on purpose doesn’t mean the United States won’t be more successful at it in the long run."
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