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NYT Sobs: Stronger Dollar Hurts The World

From the arbiters of blame at the New York Times:

A Rising Dollar Lifts the U.S. but Adds to the Crisis Abroad

By PETER S. GOODMAN

March 9, 2009

As the world is seized with anxiety in the face of a spreading financial crisis, the one place having a considerably easier time attracting money is, perversely enough, the same place that started much of the trouble: the United States.

American investors are ditching foreign ventures and bringing their dollars home, entrusting them to the supposed bedrock safety of United States government bonds. And China continues to buy staggering quantities of American debt.

These actions are lifting the value of the dollar and providing the Obama administration with a crucial infusion of financing as it directs trillions of dollars toward rescuing banks and stimulating the economy, enabling the government to pay for these efforts without lifting interest rates.

And yet in a global economy crippled by a lack of confidence and capital, with lending and investment mechanisms dysfunctional from Milan to Manila, the tilt of money toward the United States appears to be exacerbating the crisis elsewhere.

The pursuit of capital suddenly seems like a zero sum game. A dollar invested by foreign central banks and investors in American government bonds is a dollar that is not available to Eastern European countries desperately seeking to refinance debt. It is a dollar that cannot reach Africa, where many countries are struggling with the loss of aid and foreign investment.

“Virtually all of the low-income countries are in very serious trouble,” said Eswar Prasad, a former official at the International Monetary Fund and a senior fellow at the Brookings Institution, the liberal-leaning research organization in Washington

Private money invested in so-called emerging countries plunged from $928 billion in 2007 to $466 billion last year and is likely to fall to $165 billion this year, according to the Institute of International Finance…

Gosh, everything the United States seems to hurt the rest of the world.

But The Times seems to be unaware that this was Mr. Obama’s plan all along.

Of course the real shock of this New York Times article is that they called the Brookings Institution [sic] a “liberal-leaning research organization.”

This article was posted by Steve on Monday, March 9th, 2009. Comments are currently closed.

6 Responses to “NYT Sobs: Stronger Dollar Hurts The World”

  1. Gila Monster says:

    Of course the real shock of this New York Times article is that they called the Brookings Institution [sic] a “liberal-leaning research organization.”

    Surely that has to be a typo, right? The Slimes calling a spade a spade?
    I think I just fouled my monitor with a favorite beverage.

  2. crosspatch says:

    While they seemed to get the numbers right, I think they got the mechanism wrong. It isn’t so much a flight to the US as it is a massive evacuation of capital from Europe by everyone on the planet.

    “American investors are ditching foreign ventures and bringing their dollars home” isn’t what is happening. What is happening is that everyone globally is ditching Europe and moving their money to the US. The problem is the worst in Eastern Europe. Here is an example of what is going on in Hungary. And it is being repeated in other Eastern European countries. Europe is organizing (or trying to organize) ways to fight capital flight. The citizens of Europe are ditching European ventures and buying dollars too.

  3. crosspatch says:

    Oh, and does this sound somewhat familiar?

    Hungarian Prime Minister Ferenc Gyurcsany’s inconsistent policies have made the problem worse.

    Regardless of the IMF’s warning made late last year, the Hungarian government used the financial bailout it received from abroad to make up for losses in its railroad operations and to raise pension and salaries for public servants.

  4. canary says:

    I think Oboombo should take his family over to Kenyan while they still can. So, they can see and learn about their roots, and how great it is to live in America.

  5. 12 Gauge Rage says:

    Europeans are losing confidence in the Euro and now buying dollars. I’m firmly convinced that Europe is teetering on the financial precipice of doom more than our country. But they have no one to blame but themselves. Their cradle to grave welfare society is being shouldered by the heavily taxed few to sustain the more numerous non-productive population. As the working tax paying few begin to age and die, there will be less to contribute to an out of control welfare society.

    • proreason says:

      The collapse of Europe could throw the world into a new Great Depression.

      But hey, there’s no better time than now to raise taxes, implement cap and trade, and nationalize Health Care!

      Call it the Obamahoma Communist Land Rush.


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