This article from SPIEGEL ONLINE says a lot about the dollar’s state. I won’t even elaborate anymore.
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SPIEGEL ONLINE – November 13, 2007, 02:18 PM
URL: http://www.spiegel.de/international/world/0,1518,517060,00.html
WEST WING
A Pearl Harbor without War
By Gabor Steingart in Washington, D.C.
The dollar crisis has politicians alarmed worldwide. The US currency has lost 24 percent of its value since the introduction of the euro, and now there is even a chance that China could abandon its policy of pegging its currency to the dollar — a problem the United States should take very seriously.
DPA
Translated into Texan, what the Chinese politely told the Americans last week simply means: Unless something happens, all hell will break loose.
What do Brazilian supermodel Gisele Bündchen and the People’s Republic of China have in common? The answer, as of last week, is that both distrust the dollar.Patricia Bündchen, the twin sister and manager of the world’s top model, announced that Gisele now prefers to be paid in euros rather than dollars. Almost simultaneously, the Chinese central bank predicted that the dollar is likely to lose its status as the world’s leading currency.
One could easily overlook a supermodel’s currency preferences, but China is a different story. It’s the beast breathing down America’s neck.
The most important country in the world for the United States isn’t Great Britain, Germany, Saudi Arabia, Russia or Iraq. China holds that dubious distinction, because it is also the country the US can least do without. Without its willingness to buy an almost unlimited supply of US treasury bonds, there would be no American spending miracle. Without a spending miracle there would be no economic growth. In other words, without China the US superpower would lose a significant share of its economic clout.
