The Economic Crash and The Future of Dollar

The death of a currency is essentially a political thing. It may be decided in the cold, as in the old currencies of the euro area. It can also - and often does - disappear because the company no longer operates legally. While it may be pessimistic about the future of the United States, but only Cassandra argue that this country is on the verge of collapse. So the dollar will survive even as the U.S. economy recovers, the federal government has ever borrowed so cheap and instead of inflation, deflation is more threatening, thereby increasing Americans even more attractive for their money. Certainly, the greenback could get by in his corner, but losing its prerogatives international. However not forget that more than a store of value is the motto franca of global trade, one in which most prices are rank, and transactions are settled. Neither the renminbi still inconvertible nor faltering euro area can play this role today and even tomorrow. This will be a fortiori not the case of a basket type SDR, an instrument that can be used for transactions, no one ever knowing which component of the basket used. As proof, the ECU was not only becoming euro currency. All proposals to reform the international monetary system based on such a cart so that saliva are lost. Unless of course, like the European Monetary Union, we created a world central bank issuing, say, bancors, as Keynes had proposed at Bretton Woods in 1944, an idea that nobody is going to seriously defend after disappointments that one size fits all policy of the ECB has brought.

The Economic Trend and Prospects of Dollar

In terms of profitability, companies in Europe have seen their profits grow by an average of 13% from 1998 to 2008, as against nearly half (7%) to their American rivals. And if the U.S. financial sector is much more comprehensive and profitable than that of Europe, the crisis of 2008 showed that he can destroy in a few months the entire stock market value created in a decade. In the end, and above all, the huge weakness of U.S. growth model is that it is based on debt. Europe obviously has its own debt problems, but its two engines, Germany and France, keep public finances healthier than the U.S. by 2014, the IMF provides. The trade balance in Europe has remained strong, primarily because it is facing competition from Asia in manufacturing and service sectors, the Europeans were able to focus on products with high added value, such as luxury goods and precision tools. The Americans, losing their competitiveness in the manufacturing sector, have carried on consumer credit.

In the U.S., we like the easy is being printed and devalued. And markets are applauding. The fact that it has a high cost for the future goes out the window. This policy operates in the markets' perception that the idea to use credit produces wealth. But this "truth" is leveled at around a beautiful fable only be enriched when producing goods and services and a debt that has accumulated leave mine GDP growth and competitiveness.

And if the return to growth post-2001 has been sharpest in the United States, because Europe has calculated its growth more restrictive than the United States, Underestimating the reality, while United States, conversely, inflated their numbers. And again, U.S. growth has come at a future cost much higher than Europe, which has boosted its economy without stimulus. The United States has instead introduced a fiscal stimulus and monetary policy extremely lax, who only prepare the huge destruction of value in 2008. And since 2009, the same fiscal and monetary doping was replaced in even larger proportions ... The headlong rush is obvious.

Great Recession - 1930

The Great Depression of the 1930s is probably the most studied topic in American economic history. Contrary to some persistent myths conveyed by the opponents of the market economy, there is not yet consensus on its causes and its exceptional duration. So today begins our collaborator in the first two columns, to present another vision of the crisis as it was developed by Friedrich Hayek, Murray Rothbard, Milton Friedman, Robert Higgs and other liberal authors.

The Depression of the 1930s is invariably presented as the logical outcome of capitalism. Victim of its own contradictions that led to a crisis of overproduction and concentration of wealth in the hands of some exploiters, the market economy would have been saved by judicious intervention of the New Deal of Franklin Delano Roosevelt. This scenario, however, one big problem: it is supported by no historical data. We will therefore examine in this column a different view of the Great Depression, arguing that its severity can be explained largely by the policies of the U.S. Federal Reserve Board and the subsequent actions of Republican President Herbert Hoover, a man who is usually presents as an uncompromising liberal.

The Origin of Great Recession Part.II

While exports of European companies were able to maintain their share of 17% of the global market since 2000, from their American rivals fell 17% to 11% over the same period. The element that is reflected in the very healthy trade balance of Europe. Of the 100 largest multinationals in the world, the EU has raised its share from 57 to 61 between 1991 and 2009. Conversely, of 26, the U.S. does boast more than 19. The key to this success: the European companies were the most highly globalized, their share of sales outside the EU up 39% against 30% for the United States.


In terms of production, American superiority is another myth. Between 1995 and 2005, if the data are attuned to replicate differences in economic cycles, trend efficiency growth in the euro area is slightly more than the U.S., said Kevin Daly, an economist at Goldman Sachs N, 2010.Concernant in undersized and intermediate enterprises, as their productivity is comparable to those of the New Continent. And their rate of globalization is very high, as the share of their sales abroad often reaches 80%. Especially, their degree of innovation is actually much higher: most industrial innovations of the last decade has occurred in Europe, while they have virtually disappeared from the U.S., where the focus is almost exclusively on technological innovation (Apple, Google, Facebook).

In addition, countless industrial producers of niche and major automakers and high-speed trains (Renault, Fiat, Volkswagen, Alstom) are European, and now dominate the trade with the emerging giants (Brazil, Russia, India, China).

The Origin of Great Recession Part.I

The origin of the "Great Recession" World 2008 - 2009, there is a drift of American finance practices resulting from the dismantling in the 1980s, dozens of laws protecting savings, followed an unprecedented collapse of ethical standards and minimum care in the world of banks and businesses. These developments have led to a culture of excessive leverage and the institutionalized cheating accountant who has infected the global financial system public and private, only too happy to expose himself, but too ill-prepared to extricate them. Despite this, the United States remains more than ever seen as the yardstick of economic success and financial Europe is declared the loser in all competitions. That of the currency and interest rate policy, that of economic growth, the hourly productivity, wage levels and labor market reforms, the fiscal discipline. And when the U.S. subprime crisis erupted, is actually Europe that has suffered most, because it undertakes to settle all problems with printing money.

This obvious bias was reflected in the outperformance of the Dow Jones U.S. index relative to the European index Euro Stoxx 50 between 2003 and today, the market penalizes the more conservative policies that emphasize the long term. But again, the myth trumps reality. The commonplace on U.S. growth is inhibited by greater numbers. On the one hand, GDP per capita grew slightly more European than the United States since 2000. On the other hand, European companies are more competitive in many ways, than their American counterparts. Recall that according to the World Economic Forum on the 20 most competitive economies in the world, 12 are européennes12 (7 of which use the euro).