In The News

Don’t Bet Against the Dollar

Thomas Palley December 18, 2007
The global economy depends on the US dollar, and talk about its demise is premature. The US does confront real problems of persistent trade deficits and a high debt load, writes Thomas Palley for Foreign Policy, with increased borrowing merely creating jobs offshore. Two thirds of reserves held by world’s central banks are in dollars, and decline in the dollar’s value would hurt many around the...

Common Currency Caveat

Eckart Woertz December 12, 2007
The Gulf Cooperation Council (GCC) was established in 1981 by Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE, with all agreeing to some common objectives based on their Islamic beliefs in trade, security, agriculture and investment. Plans include uniting around a common market in 2008, which will “move beyond the free movement of goods and services that has been agreed upon in the GCC customs...

The US Economy: Trying to Guess What Happens Next

Peter S. Goodman November 30, 2007
The US economy relied heavily on its consumers’ willingness to borrow heavily to meet their wants, even as debt mounts. But the recent economic slowdown has dampened the spending spree. Hints of renewed thriftiness in the US contribute to global unease, and pessimists warn of a severe recession, with a plummeting stock market, escalating unemployment and declining value in the dollar. On the...

Who Gains When the Dollar Sinks?

Scott B. MacDonald November 27, 2007
The US currency has sharply declined in value in recent years, which inevitably diminishes the nation’s economic health and influence abroad. So far, the US economy has been spared the full consequences of its struggling currency because the dollar’s historic strength has put it at the center of the world economy since World War II. Many nations' currencies are pegged to the dollar, and the...

The Dollar in Danger

Sebastian Mallaby November 14, 2007
Overseas investors are skittish about investing in the US, in light of the recent sub-prime mortgage defaults. The US government functions by taking on debt. But as foreign investors resist investing in low-yield government notes and similar instruments described as low risk, the dollar sinks in value. The value of many currencies and commodities, including oil, are linked to the dollar. So many...

Why FAS 157 Strikes Dread Into Bankers

William Rees-Mogg November 14, 2007
Accounting rules organize how money is classified and valued – and investors expect transparency. New accounting standards, designed with that goal in mind, go into effect on November 15, 2007, and could exacerbate already volatile financial markets. By classifying a company's assets according to marketability, the new rules highlight those that are most risky, like sub-prime mortgages, and...

The Sovereign Wealth Explosion

Stuart E. Eizenstat November 8, 2007
A rise in state-owned funds and companies investing internationally has triggered national security concerns in a variety of countries and even some protectionist measures. These worries can sometimes be valid – observers of Russia's state-owned natural gas giant Gazprom, for instance, understand how government-controlled businesses may be used as tools of policy. However, former US...