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Conv Dollar Panic
by Anonymous User on Dec 18, 2007 - 09:33 AM read 555 times
Source: http://yourflatworld.wordpress.com/2007/12/18/dollar-panic/ 		External

I have referenced the sliding dollar a couple of times in this blog, but until a recent The Economist cover story, I did not realize people were in a panic about it! I am no economist, so there may be many complexities that are over my head here, but the one thing I know for sure about it is that a falling dollar will not change the United States’ position as the largest and most successful modern economy. Sure, a precipitated fall would wreak havoc on worldwide financial markets and that’s no fun. But what we are seeing is a slow, meandering decline in the value of the dollar over several years.

Here are some of the real consequences, good and bad, I see every day:

  • If you opened up shop in India in 2002 and achieved, say 25% savings, those savings have been wiped out by the change in currency exchange rate.
  • The trade imbalance that so incenses some politicians is moving, for the first time in decades, in the opposite direction.
  • With another 10-20% decline, we have to start looking seriously at the US as the newest (and probably best) low-cost location!
  • Experts in currency hedging are making a fortune.
  • Europe sure has gotten expensive!
  • The volatility in the currency, and the dependency on its stability that exists in China and other large economies that hold their reserves in dollars and buy American debt, has sent a not-so subtle message to those other economies to clean up their currency act.

I am not panicked. Can someone out there substantiate panic?


currency, Esteban, Falling dollar, Global Economy, Global Operations, Globalization, Herrera, India, international, offshoring, trade
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