Posted tagged ‘USD’

A New Scenario starts to unfold

July 7, 2009

There is a good chance for a completely new scenario about world economic development. It’s not about BRIC-countries, but more about the USA and its impact onto others.

Let’s start with the good old greenback. The whole US economy will heal the most when the external value of USD is drastically lower than today – imports getting more expensive and exports lukrative. BRIC countires want to get rid off USD as a reserve and trade currency anyhow. So, on the long run others want to reduce their USD risk position (and sell their USD reserves) and the USA itself needs a lower USD value. I bet this will happen when now all parties want it – but steadily. USD will drop down to 1,7 or even to 2 against one Euro.

Now let’s think about countries having high reserves on USD: they hate to loose the value, but will accept it in small steady portions – China, Japan, India, Russia, Brazil, OPEC countries and the EU will all agree when the value of USD drops in small steps over a course of time. And they will write off assets or at least revaluate them down. That will burst some banks, financial institutions, even countries, and companies around the globe, but not the US ones – they will be dancing out of the trouble. This will be the phase one. Continues…