tomorrowsworld.org The big headline in the Financial Times on Wednesday, October 17, 2007, was Investors flee US securities. It seems that [f]oreign investors slashed their holdings of US securities by a record amount as the credit squeeze intensified. Apparently, faith in America as a good investment is diminishing. The article quotes Alan Ruskin, chief investment strategist for RBS Greenwich Capital, as saying, The bad news is that [the data] plainly show how vulnerable the dollar is to a continuation of the credit crunch-risk adverse environment. The US has been playing a dangerous game with the dollar for quite some time. While constantly giving lip service to a belief in the benefit of a strong dollar, the US has been allowing the dollar to slide further and further in value for its own benefit: making our goods cheaper for other countries to buy and making the debts we owe less painful to our balance sheets. We have been assuming for some time that the confidence of other nations in America as a good investment will keep our gamble on the safe side of disaster, allowing us to fiddle with the dollar as well. As a nation, the United States has been counting on the utter desperation of other nations who want to see their heavy investment in America succeed to motivate them to continually prop us up in a vicious circle. Other nations do not want to see their enormous investment in the US fail, so they continue to prop it up with what else? additional investments. As ...
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