Fears of Dollar Collapse? 7 comments
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Saudi Arabia, which usually mimics every FOMC move, has refused to cut interest rates in lockstep with the US Federal Reserve for the first time. According to an article in the UK Telegraph by Ambrose Evans-Pritchard (Fears of dollar collapse as Saudis take fright, September 2007), Saudi Arabia is signaling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg.
This could potentially cause a cascading chain reaction across the Middle East -- setting off a stampede out of the dollar and towards either a basket of currency, or more likely the Euro.
Last month, Mr Evans-Pritchard was expressing concern that the "Chinese
government has begun a concerted campaign of economic threats against
the United States, hinting that it may liquidate its vast holding of US
treasuries if Washington imposes trade sanctions to force a yuan
revaluation."
Described as China's "nuclear option" in the
state media, such action could trigger a dollar crash at a time when
the US currency is already breaking down through historic support
levels. It would also cause a spike in US bond yields, hammering the US
housing market and perhaps tipping the economy into recession. It is
estimated that China holds over $900bn in a mix of US bonds. (August
2007)
Before you dismiss Mr Evans-Pritchard as a Dollar Bear, recognize what he has said in the past about the Greenback:
"Disregard all hysteria. The ailing Greenback will not collapse this year, not in ten years, not in twenty years, not in half a century. There is no credible currency against which it can collapse. (Unless you count gold). None of the world's rival power blocs have the economic and demographic depth to challenge American dominance." (July 2007)
That this is the same author suggests that something significant has changed recently . . .
Sources:
Fears of
dollar collapse as Saudis take fright
Ambrose Evans-Pritchard
UK Telegraph, 8:39am BST 20/09/2007
http://tinyurl.com/yp7q5u
China threatens 'nuclear option' of dollar sales
Ambrose Evans-Pritchard
UK Telegraph, 8:39pm BST 10/08/2007
http://tinyurl.com/ysxlok
Dollar to collapse?
Ambrose Evans-Pritchard
UK Telegraph, 12 Jul 2007 at 16:48
http://tinyurl.com/2vjbj8
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Unfortunately, no one in Washington is worried about anything except getting reelected !
If you were the ruler of a Mid-east country, wouldn't you think about pegging the price of oil to the Euro ? And the Chinese are holding so much American dollars, if they are not worried, it is only because of stupidity !
No one has wrecked an economy more than the present administration in my lifetime ! (That's quite a while ! )
The only reason to hang around these web sites is that I can't wait to see what the next bunch of Yo yo's in D.C. do ! LC
In politics, a democrat is a republican that calls himself/herself a democrat instead of a republican.
The $ has not collapsed..it is being whitled away. The only other credible reserve that would be universally recognized would be gold..and the countries that could cause the most reserve angst..China, Saudi Arabia, Russia, Japan...all have populations that value precious metals greatly. Wait for the first large commodity exchange to occur valued in gold bullion..the worm will have turned.