Gold ? the Dinar ? maybe... or ?
The Euro... I doubt it...
I guess you did not notice that Central Banks' EUR reserves have increased over the past year as USD reserves have decreased.
Besides when I referred to Central Banks possibly finding "better things to do with their reserve money", I was referring to the example I gave immediately afterwards - China bailing out two of its banks with USD 45 bn of reserve money (USD t-bills which will inevitably be changed to local currency now for liquidity reasons).
A lower dollar may help many US corp to weather this re-adjusting period while the US figures out in which way they can "fit productively" under the current transformation of wealth (from West to East). After all, there is a lot of technology in which the US is leader.
The problem is not technology but wages. The difference between US wages and those in some Asian countries is so very much that a 30% devaluation in USD does not help much to close the gap, I am afraid.
The Europeans are not helping their own case by not lowering rates
They might. Again, they don't really have to. Eurozone is officially out of recession, and there does not seem to be a need to put the pedal to the floor. ECB might be content to just watch the economy move back to health slowly.
Such interventions are serious jolts that need to be administered in small and careful doses, IN ADVANCE of anticipated problems. Think of the economy not as a bike you can turn, accelerate, and skid to a halt in seconds, but as a boat in a marina - you give it a bit of gas and then wait for it to turn, then you give a bit more of gas steering it in the desired direction, wait a bit more for the turn to take place... |
