On Oct 13, 2008, at 2:00 PM, Marvin Gandall wrote:
> John Gulick writes:
>
> But anyway, returning to big picture issues, what do you make of the
> following items? 1) The dollar gained internationally
> when it looked like financial meltdown on Wall Street would
> precipitate
> solvency disasters and liquidity crunches across
> the world, and there was -- ironically to be sure -- a "flight to
> quality"
> in US T-bills. 2) Now that the Paulson Plan 2.0
> has given way to full-blown equity stakes in US super-banks -- the
> sort of
> initiative you mistakenly assume to be uniquely
> European -- the dollar is easing back down vis a vis other
> currencies. To me
> this signals the durability of dollar hegemony
> rather than its death knell, but what do I know?
> ==========================================
> The diollar gain is reportedly due to the repatriation of foreign
> assets by
> US financial institutions needing to shore up their balance sheets,
> and the
> hoarding of USD's by European banks unwilling to lend to each other
> or to
> their corporations needing access to the currency. The dollar easing
> back
> down is, as you suggest, a measure of relief that the total collapse
> of
> global capitalism may have been averted. But I'd bet against the
> dollar
> reverting to it's hegemonic position. There has been a slow but steady
> diversification out of the depreciating USD for the past several
> years which
> has been due to fundamental shifts in the world economy. The US
> originated
> crisis can ony lend impetus to that movement. Gordon Brown's call for
> another Bretton Woods conference today can be read as another straw
> in the
> wind.
The U.S. and its dollar may not be what they once were, but as for a loss of hegemony, well compared to what?