The dollar's decline: from symbol of hegemony to shunned currency

The dollar's decline: from symbol of hegemony to shunned currency
By Andy McSmith
Published: 17 November 2007

The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible.

After months of huge and sustained turmoil on the money markets, lack of confidence in the world's totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar.

"An American businessman over here who is given the choice would take anything but the dollar," David Buik of Cantor Index said yesterday. "I would want to be paid in yen, and if not yen then the euro or sterling."

Matthew Osborne, of Armstrong International, added: "The majority would say sterling. There are a few dealers in the City who may take the view that they'll take dollars now, while they're cheap, and hold on to them for 12 months.

"But the problem is so serious that there are people who in July or August might have been thinking, 'I'm paid in dollars, how annoying' for whom it's now a question of, 'Do you have a job; do you have a bonus?' "

The collapse of the sub-prime mortgage market in the US, which is fuelling the dollar unrest, has already brought down one British bank, Northern Rock, and has forced others to declare vast losses. Yesterday, just as it appeared that the dollar might have finally reached its floor, there was another warning that the sub-prime crisis is going to get worse. The US Treasury Secretary Henry Paulson, warned an international business summit in South Africa: "The sub-prime market, parts of it will get worse before it gets better." Huge numbers of US homeowners are still cushioned by introductory interest rates set when they took out loans in 2005 or 2006, he said. When these introductory offers run out, their interest payments will increase, setting off another wave of defaulting and repossessions. And the dollar is enduring its rockiest spell in recent memory.

Kenneth Froot, a Harvard university professor and former consultant to the US Federal Reserve, warned yesterday: "Part of the depreciation [of the dollar] is permanent. There is no doubt that the dollar must sink against periphery currencies to reflect their increase in competitiveness and productivity."

Professor Riordan Roett, of Johns Hopkins University in Baltimore, told Bloomberg News: "There is a loss of confidence in the dollar and the US. It may only reflect the widespread dismay with the Bush administration, but it is obvious that the next administration, of either party, will have a steep uphill struggle." As well as reaching its lowest level against the euro, which has been trading at more than $1.47, the dollar has also fallen to its lowest level against the Canadian dollar since 1950, sterling since 1981, and the Swiss franc since 1995.

Its plight was made still worse by a jarring signal from China that it was switching to other currencies. Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, told a conference in Beijing: "We will favour stronger currencies over weaker ones, and will readjust accordingly."

The warning was reinforced by a Chinese central bank vice-director, Xu Jian, who said the dollar was "losing its status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has only to decide to slow its accumulation of dollars to weaken the currency further. Last month, in a humiliating turn of events, the central bank in Iraq, four years after the United States invaded, stated that it wished to diversify reserves from a reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in the local currency and take precautions against the weakened dollar, and three of the world's big oil exporters, Iran, Venezuela, and Russia, are demanding payment in euros rather than dollars. Iran insisted that Japan should make all its payments for oil in yen, rather than dollars.

Warren Buffet, who is reputedly the richest man in the world, was asked on the US network CNBC last month what he thought was the best currency in the world to own now. He answered: "Not the US dollar."

The Wall Street Journal ran an online poll asking people which currency, they would prefer to be paid in. The euro came top, ahead of sterling, with others such as the Canadian dollar, yen and Swiss franc trailing far behind. One respondent wrote: "Being an expat in Europe with a European employment contract, I am paid in euros, and happy to get paid in euros, and shop in the US, just as long as the cycle lasts through my retirement, so I can pick up pension in Europe and retire in the US."

The Federal Reserve has cut interest rates twice since September to revive the US economy, but the cuts – combined with the possibility that more were on the way – made the dollar less attractive to investors. Yesterday, it recovered slightly when one Federal Reserve banker, Randall Kroszner, dampened speculation about further interest rate cuts, saying that rates were low enough to get the economy through a "rough patch".

Problems with the greenback, combined with cheap air fares, have encouraged more Britons to go shopping across the Atlantic. British tourists spent £785m in New York last year, the city's marketing and tourism organisation said yesterday. There were 1,169,000 visitors to New York from the UK in 2006, with 54 per cent going for four to seven nights and 31 per cent staying for two to three nights. They spent an average of £112 a day. The average age of the UK visitor is 40.

Christopher Heywood, director of tourism PR for NYC & Company, said he expected the dollar crisis to attract yet more British shoppers. "The savvy traveller who's coming here for the shopping can really get a bargain. They're coming with one suitcase and leaving with two or three," he said.

"We have people coming over here even for weekend trips to shop for the famous brand names. People are coming for the department stores that everyone around the world knows, but also for the boutique stores out of the centre of Manhattan, anything from Madison Avenue and Fifth Avenue to Bleecker Street in the West Village and SoHo."

http://news.independent.co.uk/world/americas/article3169638.ece

위키에서 만난 귀여운 친구

위키미디어 '오늘의 사진'이다. 명칭은 'A wild shortbeak echidna(Tachyglossus aculeatus)'란다. 고슴도치인줄 알았는데 고슴도치는 hedgehog이란다. echidna는 바늘두더지라나. 얼마나 다른 놈들인지 모르겠다.



위키에 대한 글을 읽고 있다. 나름대로 많이 사용한다고 생각했는데 위키를 검색으로만 활용하고 실제로 참가하지는 않고 있었다. 조금 반성하게 된다.

Another beginning

이전 구글 블로그가 말썽이다. 그래서 새로 만들어봤다. 보통 쓰는 아이디가 아닌 나를 대표하는 단어를 새로 찾는 일은 쉽지 않다. 짜라투스트라는 이렇게 말했다를 뒤적여보다가 아무 말이나 넣고 말았다.

10월과 함께 시작했던 이전 블로그가 불구가 된 것은 하나의 상징적인 사건이다. 지난 한 달의 내 생활의 부침을 반영하듯이... 오늘 작은 결론을 내릴 수 있었다. 쉽지는 않지만 앞으로 또 새로운 생활들 속에서 부대끼며 살아가야 할 것이다.

내가 여기 있는 이유를 끝없이 생각해야 한다. 여기가 내 자리가 아니라면 과감히 버리고 다른 곳으로 갈 수도 있어야 한다. 별거 있나.

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'리버풀이 부진하다'고 한다. 걱정된다는 아우성이 장난이 아니다. 초반에 너무 잘 나갔더니 우승은 따논 당상이라고 봤던 모양이다. 아스날, 만유, 첼시가 갑자기 상승세를 탔기 때문에 리버풀의 무승부 행진은 상대적으로 '너무' 부진한 것 같아 보인다. 실제로 골도 별로 없고, 아게르가 빠진 중앙 수비는 부상의 여파가 있는 캐러거와 느릿한 히피아가 책임지기에 버거운 면이 있다. 리그는 패가 없다고 해도 챔피언스 리그는 개판이다. 앞으로 전승을 해도 토너먼트 진출 여부가 불투명하다. 많은 자칭 리버풀 팬들의 머리 속엔 '나는 왜 이런 팀을 응원하는가'라는 의문이 자연스럽게 제기된다. 첼시가 돈지랄을 해도 맨유의 모모 선수들이 xx파티를 해도 성적이 잘 나오면 그냥 잊어버리고 자랑스럽게 응원한다. 라파가 로테이션을 졸라 돌리는데 성적이 안 좋으니 이젠 경질설도 제법 나온다. 무링요가 대신 온다나. 최근 경질된 따끈따근한 마틴 욜이나 허칭스는 어때? 아님 예전 선수였던 수네스나 폴 쥬얼은? 기실 라파에 대해 내가 의심을 품은 것도 꽤나 오래된 것 같은데 마땅한 대체자는 잘 보이지 않는다. 부상 문제가 팀의 경기력에 걸림돌이 되고 있기도 하고. 어느 순간이 오면 만유의 로날도, 루니, 테베스가 부상을 당할 지도 모르고, 첼시나 아스날도 부상 문제로 곤란을 겪을 수도 있다. 감독이 변수들을 가능한 감안하면서 지도를 해야 하는 것이 당연하지만 모든 일을 통제할 수도 없는 노릇이다. 올해 우승 못한다고 큰 일이 나는 것도 아니다. 17년의 기다림이 27년이 되더라도 무엇이 문제인가. 빚내서 리버풀을 산 구단주가 오케이라고 말한다면 아무 문제 없는 거다. 최악의 경우를 상상해서 리버풀이 리즈와 같은 꼴이 나더라도 응원을 하거나 말거나 선택하면 된다. 적어도 한국의 팬들은 그럴 수 있다. 단기간의 성적을 두고 너무 열내지 말았으면 좋겠다.