"The decline of the dollar...may be so entrenched that some experts now fear it is irreversible."

from the Independent UK:



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 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." ......(more)

The complete piece is at: http://news.independent.co.uk/world/americas/article3169638.ece

If I had any money,I'd be investing in stable currencies as well.

Do people think the dollar will slide even further, to the point where our money
isn't worth the paper it's printed?

Then what happens?

Should we be investing in foreign stocks? Buying gold?

I'd love to hear any opinions.

Beats looking for a chair when the music stops IMHO.

I bought 7K worth in 05, it will not get me through anything except a border, if it comes to that.

Numismatic.

... for border crossing that is. Another alternative is to invest in a couple of useful grad degrees. ;)

please allow me to find a more appropriate response, my apologies to all.

Been working since 17, no time for a formal education.

I hope to provide one for my kids if possible.

When a currency becomes worthless, there is little else of immediate value.

for the people to shoulder their plundering.

I seriously doubt that.

Let's not be forgetting that economists are also the ones who gave us "supply-side economics." They're hardly infallible.

And it's been pretty much steadily downhill since.

Everybody's started paying attention of late, but this is not exactly "news".

I smell South American style hyperinflation in our future.

but we'll never know, will we?

and pretend they are independent and important. They will fold like a cheap suit.

next.

... 1984 the Dollar reach pa rarity with Sterling. Kind of appropriate really