The Financial Landscape: Dollar Losing Favor, Economy Losing Steam

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A roundup of news from around the world of finance:

Reservations About the Dollar:
In potentially ominous long-term news for the U.S. economy, the Financial Times reports that a survey of central bank managers predicts that "dollar will lose its status as the global reserve currency over the next 25 years." Having its currency serve in the role of global reserve allows the U.S. to borrow money at a better rate, since there is always greater demand for U.S. dollars than for other currencies.

This is the first year that the survey conducted by Swiss investment bank UBS (UBS) has indicated that more than half of central bank reserve managers expect the dollar to lose its privileged status. UBS chief economist Larry Hatheway attributes the change to "great concern... around the financial trajectory that the U.S. is on" (unrestrained spending, the Federal Reserve's enormous bond-buying programs). The FT notes that the dollar "has slid 5 percent so far this year, and is trading close to its lowest ever level against a basket of the world's major currencies."

Such a basket is just what the managers polled by UBS expect to replace the dollar. World Bank President Robert Zoellick suggested such a system last year, proposing a portfolio that would include the dollar, euro, yen, pound and renminbi, as well as gold. In fact, the use of a single national currency as an international reserve currency has been recognized as problematic since before the dollar's elevation to that status: Prior to the Bretton Woods conference of 1944, which established the postwar monetary order, economic luminary John Maynard Keynes proposed a supranational currency, called the bancor, for use in world trade. In a March 2009 speech on the root cause of the financial crisis, the governor of the People's Bank of China expressed admiration for Keynes' idea, which the U.S. blocked at Bretton Woods.

Housing Market Troubles:
In a further sign that housing woes are impeding the U.S. economic recovery, the S&P/Case-Shiller 20-City Index fell 4% in the 12 months that ended April 2011 -- the biggest decline in property values since November 2009, according to Bloomberg. On a minor positive note, the drop from March to April -- 0.1% on a seasonally adjusted basis -- represents the smallest dip since July 2010.

A Worried World:
Finally, U.S. consumer confidence fell to a seven-month low in June. Global investor confidence declined as well during the same period, including among North American institutional investors.

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rjoh959287

We the People do need a better Representation in Government.We need people with Integrety and Political Knowledge.We dont need Representation of the Millionairs or Special Intrest Groops.Stop all of our Jobs going overseas.Tax imports of said companies to the max untill they produce in the USA.

July 01 2011 at 11:39 AM Report abuse rate up rate down Reply
ThinkUp70

The only way to get American corporations to keep employment here is to tax the he** out of their imports. They could also be offered $10,000 for each American employee (as a tax deferment), that they hire, to get all of America off the unemployment rolls.

July 01 2011 at 10:02 AM Report abuse rate up rate down Reply
hartdoug23

tired of them all! no one worth to vote for. need to clean house and find some non greedy people to do the job and fix this country.

June 29 2011 at 11:49 PM Report abuse +1 rate up rate down Reply
wcnlsco

Global monetary intergration is inevitable. All willing countries should collectively pool, protect, and parcel all precious metals and minerals into the new global currency. A global Fort Knox, represented by all nations who wish to participate in the global economy, could serve to back and structure a global currency upon tangible commodities. Currency notes could be inlaid with precious metals, etc. to establish a base value with a capacity to appreciate over time. In a capitalistic economy, the currency MUST have the capacity to appreciate to offest the persistent inflationary pressures. Those countries that did not seek to adopt this new currency (Iran, N. Korea, etc.) would be left to negotiate or be left to twist in the wind. think about it...

June 29 2011 at 11:45 PM Report abuse rate up rate down Reply
Kevin

Everyone talks about the economey slowing down, the recovery slowing down, my question is when did it pick back up? Here in Ohio (the rust belt of America" I have not seen the up swing. I have been with out a job for 2 1/2 years and nothing in site. No industry left at all. We lost GM and NCR. Our idiot governor cut the rail system that we were going to get. There is 1/2 Billion dollars gone. We voted in cassinos, but he is bogging down the building of them with red tape. Here is an interesting fact. The richest 1% of americans make 60% of all the money. Wrap uour head around that next time someone tells you we are recovering. Chances are, it will be part of that 1%!

June 29 2011 at 11:22 PM Report abuse +1 rate up rate down Reply
luqe110

Have you all had enough of the Obama economics 101 plan yet. We are not yet completely in the toilet but the water is getting extremely close to our lower lip. Financial landscape,dollar falling with nothing left of the most robust economy in the world. I hope you all decide on having another change come nov. 2012. I really do not believe the country or the world for that matter can take much more of this incompetant ego-maniac and his politics.

June 29 2011 at 11:10 PM Report abuse rate up rate down Reply
gbelter777

The economy needs CPR.

June 29 2011 at 11:02 PM Report abuse +2 rate up rate down Reply
jbjap

GO Obama!!!!!!! Were'nt there plenty of critics when all was not going well for Bush. I can't tell you how many times I heard during his presidency that if the strategy isn't working, change it!!!! Well Mr. Obama, your strategy isn't working and all that I hear is that you want to do more of the same! Wake up!

June 29 2011 at 11:00 PM Report abuse -3 rate up rate down Reply
kenrcpilot

25 years my a$$, it will be alot less than that the way things are headed.

June 29 2011 at 10:47 PM Report abuse +3 rate up rate down Reply
Aviator

This is George Soros' plan. He's betting on the devaluation of the dollar. That's why he is financing liberal politicians.

June 29 2011 at 10:33 PM Report abuse +1 rate up rate down Reply
1 reply to Aviator's comment
luqe110

George Soros is a hard core communist and a great bud of Mr Obama. Niether man will be hqappy until they have completely distroyed these United States of America.
Only we can stop them, and it has to be done sooner rather than later. We are at vthe brink of complete collapse.

June 29 2011 at 11:15 PM Report abuse rate up rate down Reply