Friday Nov 30 Business Today section
Friday Nov 30 Business Today section





it goes much farther than just the UAE ...
(snip)""If Ben Bernanke starts running those printing presses even faster than he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems," he said.
The Federal Reserve, however, clearly calculates the risk of a sudden downturn is now so great that the it outweighs dangers of a dollar slide.
Former Fed chief Alan Greenspan said this week that house prices may fall by "double digits" as the subprime crisis bites harder, prompting households to cut back sharply on spending.
For Saudi Arabia, the dollar peg has clearly become a liability. Inflation has risen to 4pc and the M3 broad money supply is surging at 22pc.
The pressures are even worse in other parts of the Gulf. The United Arab Emirates now faces inflation of 9.3pc, a 20-year high. In Qatar it has reached 13pc.
Kuwait became the first of the oil sheikhdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth."(snip)
also the 'tin foil hat' crowd will tell you that the recent change in UAE policy, i.e. the UAE / Abu Dhabi spending 7.5 billion dollars to buy a piece of Citibank, tends to indicate that the UAE (and other OPEC) members are beginning to spend their US dollar reserves to buy up pieces of America rather than continuing to hold them ... a pretty good indicator that they think the US dollar will devalue even further and that they are not going to sit idly by and watch their mountains of trade surplus US dollars lose value before their eyes.
Last edited by Melonie; 11-30-2007 at 07:39 AM.
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