more boring economics stuff

[ajva]

I know people must think by now that I'm some kind of nutter Jeremiah-esque permabear muttering away in the corner and stinking of whisky, but in case you were wondering, it's things like this graph that make me wonder if we could be facing a total global meltdown economically, originating in the fundamental insolvency of the world's banking system.

Just saying. *swigs from bottle in brown bag*

Mind you, I remember my Dad saying something similar back in 1986 or thereabouts, so I expect everything will turn out OK.

Comments

[adjectivegail]

In the past the dollar was the default currency for international commerce
Yes. I heard a big warning bell clanging in my ear a few months ago, when I realised that this year's International AIDS Conference is being held in Mexico City, but the organisers are asking for fees in Euros.

[valkyriekaren.livejournal.com]

It's when oil companies want to be paid in Euros instead of dollars that you have to worry. The Iraqis and the Iranians started doing it a few years ago, and it hit the US currency exchanges pretty hard.

[ajva.livejournal.com]

Well, it's an interesting thought, but I think the significance of this has been a bit overdone. Certainly any shift to an alternative currency as the world reserve currency bodes ill for the dollar in the long term, but all fiat currencies (and indeed other assets) are just engaged in an ongoing beauty contest to a certain extent. The refusal of an oil supplier to take dollars won't kill the dollar; it's more of a symptom of a loss of confidence that has its roots in more structural economic factors. You could also argue that there is an element of political PR in such decisions, of course, but that's another discussion.

Anyway, Euroland can't be complacent; as countess_sophia points out below, the global banking fraternity is an internationally incestuous bed these days. The US isn't an island, entire of itself.