America: Wake Up And smell Your Coffee.
The American economy, overindebted and underproductive, has exported worldwide finacial panic and crisis. For years they have been living on borrowed time and money.
The response to the credit crisis has exacerbated these issues. The American service sector economy will shrink next year by an unprecedented amount. As the sector makes up over 70% of the economy it will be a rocky ride for many.
During the last year and increasingly in the last three months foreign banks and institutions have been propping up the dollar. As the worlds reserve currency they felt a need to. Now they are starting to realise the damage this is inflicting on their own citizens.
The UK Government has put every person in the country £20,000 in debt when they are telling us to be frugal. People are waking up to what is going on. The dollar soon may not be worth the paper it’s printed on. The strength of the dollar recently has all been based on the idea that it is the worlds reserve currency. It isn’t any more. Oil is. Watch the dollar head back to 2$/£. I give it six months maximum to get there.
That will help American exporters in the short term. Except the weakened economy America has exported everywhere means few will be buying.
After writing this article I discovered this story which describes the potential moves in the Middle East to de-peg currencies from the dollar. This is exactly how the US dollar will be replaced by oil as the worlds reserve currency.