- the dollar is still accepted (Duh, it's money, after all)
- a lot of of inventory is denominated in dollars (So what?)
- the U.S. economy is huge (Again, so what?)
The blame for this potential disaster lies squarely on the Bush Administration, which has financed the GWOT on borrowed money through the sale of debt in the form of U.S. Treasury notes. Aside from that, the Bush Administration has allowed the mortgage crisis to spin out of control. For years now, Bush has crowed about the bright spot in the economy as the real estate market. The consumer support of Bush's disatrous economic doctrine has been financed by the equity in consumers' homes, which they are now losing. Not that Bush cares, since the real crisis is in the financial sector itself, guilty of fraud and the serial cover-up of that fraud.
In essence, Bush has maxed out America's credit card and the rest of the world is sending collection notices. Bush, in his supreme arrogance, is merely saying "we're good for it" and " you all owe us for saving you from Saddam and the Taliban". The planet appears unimpressed.
This is why we see Bush so fiercely adamant in his vetoes of "pork". His wars are sacrosanct, so the "family" will have to go without new clothes or shoes this year, the infrastructure clunker of a car will have to "make do", we'll all to have to eat more macaroni and cheese, and we can't go the doctor anymore.
Bush's plan of giving tax cuts to the wealthy in the hope that they will invest the money in our economy has failed. Just as Reagan's cuts were squandered on forced leveraged buyouts that left companies under huge pressure to produce quick profits, Bush's cuts have been used to send production overseas and show short-term dividends for shareholders while the long-term viability is sacrificed. These corporate profits have sustained the revenue, along with the consumer spending. The consumer, meanwhile, has not benefitted with wage growth below even Bush's mythical inflation figures.
Ideally, of course, this house of cards was supposed to collapse, after Bush left office. I guess the whole world is infected with BDS, which is the neocon term for anyone who has failed to drink the neo-con Kool-Aid. Thus, pointing out things like "wars cost money" and "borrowing has consequences" is merely a sign of Bush-hatred. The world is ungrateful and foolishly fails to recognise that they owe us for our efforts in the wars that resulted in our dominance in the world. Now they actually want us to pay back the money we borrowed from them to free the world from Islam, and they actually expect us to honour our treaties on top of it all. Well, I'm sorry to inform our neocon kiddies out there, but if the dollar stops being the reserve currency and we have to pay as we go for our wars like our allies do, the gravy train is over. The dollar will become the new ruble, only without the oil and natural gas revenues to back it up.
Anyway, the story below shows the real-world consequences on the small scale of the dollars' decline.
story from IHT
Paid in dollars, expats struggle to make a living
PARIS: Erica Nevins's faith in the dollar was shaken the moment she pressed a crumpled $1 bill into the hand of a little girl begging for money on the streets of Marrakesh, Morocco.
"I don't want this. This is nothing," Nevins recalled as the scornful reaction of the child, who demanded more.
Since then Nevins, an American fashion executive, has replayed that moment over and over in her head as she confronted the harsh reality of living on a dollar income in Paris and then moving to pricey London. "The absurdity of this is that it's so true," she said. "A dollar really means nothing. It's scary."
With plunging exchange rates, American expatriates whose pensions or incomes are paid in dollars are scrimping. No more dinners out when a bottle of Perrier for €3.50 translates to $5 and no more Christmas shopping binges when a shiny iPod for €159 is the equal of $230.
And ultimately some are moving to greener pastures that match the color of their money.
"Those that can hold out are holding their breath and we're hoping for a return of the dollar, but those that can't are going," said Susie Bondi, an American who has lived in Paris for 12 years, but is moving to Vienna in January with her husband, Fred, to stretch their pension dollars in a city with a lower cost of living.
The past six months have been anxious for expatriates, with the dollar sinking against the euro, the pound and currencies from the Czech koruna to the Costa Rican colón. Those declines are accelerating the flight of expatriates in Europe, according to tax attorneys who listen to the woes of clients who are giving up because they see no relief in sight.
The zeitgeist is best summed up by the rapper Jay-Z who last month released a music video of himself cruising the streets of New York in a shiny Bentley with a flash wad of €500 notes.
Even U.S. government employees are feeling the pinch in countries with strong currencies like the Czech Republic, where the koruna has gained 17 percent this year against the dollar.
Radio Free Europe, the U.S.-backed international broadcaster headquartered in Prague, is suddenly facing a housing crisis for many of its 500 employees. And the news organization's new chief executive, Jeffrey Gedmin, ranks the weak dollar with attacks on journalists around the world who have been kidnapped in Baghdad and jailed in Azerbaijan as one of the critical issue that it is facing.
"For me it's become an ethical issue," said Gedmin, who was in Washington this month lobbying U.S. legislators for relief and trying to raise funds privately to aid hard-hit employees. "I have a genuine ethical issue to take care of people who are trying hard to take care of their own countries."
Employees who have long been paid in dollars pumped the money into the local economy and to landlords who in the past gratefully accepted dollars when the currency was strong.
Now most of the organization's employees living in Prague are being pressured to convert rental contracts from dollars to korunas and have received notices about imminent rent increases. One landlord raised an employee's monthly charge from $1,000 to $1,500 and took away his basement storage space to rent it out.
The impact of the sagging dollar has been particularly acute for expatriates who live on fixed pensions paid in dollars or self-employed workers whose clients are largely based in the United States.
Josh Soski moved from San Francisco to Barcelona in September to start a freelance video production company that supplies clients like Current TV in the United States with short video features on European stories.
These days, he said, he finds himself sitting on his bed, with his head in his hands, obsessively checking currency rates on his laptop. "They pay us $2,500 for a piece, and you cash it in and it's €1,400 or less. That's shocking," said Soskin, who finds himself debating whether to splurge on a €3.50 bottle of water at the airport or indulge in a can of his favorite Mexican black beans at €4.
To survive and hedge currencies, Soskin is now scouting for European clients who will pay him in euros. Other self-employed workers - from medical translators to online entrepreneurs - are simply cutting off their American clients because it is no longer worth working for them.
Vincent Gagliostro is a graphic designer and freelance video filmmaker who left the New York advertising industry two years ago to settle in the Marais neighborhood in Paris with its promise of cheaper living that reduced his monthly housing costs from a $6,000 mortgage to an 18th-century apartment rental for €1,700. When he first moved to Paris, he said, he worked for a base of clients from the United States, but he is trying to diversify to earn euros.
"The dollar still heavily weighs on the quality of my life. As long as I continue to rely on at least 50 percent of my income with American clients, it's going to do that," Gagliostro said while dining on a simple €10 brasserie lunch of pasta and chicken. "My goal would be to lose the American clients altogether."
Gagliostro's partner, Richard Nahem, a Brooklyn native, has also sought to supplement their income by offering customized tours of the Marais, but his new business, Eye Prefer Paris Tours, is dominated by Americans and Canadians who pay him in a mix of euros and dollars. To economize, he has cut back on his own indulgences, such as clothing purchases. But he cannot resist his favorite high-end patisserie, Gérard Mulot, where a chocolate éclair costs €2.80.
"When it comes to pastries," Nahem explained, "there's no price resistance for me."
Many companies with American executives posted abroad are starting to seek advice on how to deal with currency depreciation, according to Achim Mossman, managing director for international executive services for KPMG, a tax advisory firm. In the future, he expects more American companies to pay their employees abroad with local currency, and he is also advising companies to follow calculated formulas to measure the cost of living standards to make salary adjustments.
Some employees have successfully pressed their companies to shift from dollars to local currencies. Nevins, who was paid in dollars while living in Paris, changed her income to pounds when she moved to London earlier this year.
"I wouldn't be working for this company if I was paid in dollars," she said. But Nevins still cannot resist making constant mental calculations to measure the price of everyday purchases in London. "Everything from a cup of coffee to going to the movies is so much higher," she said. "An adult movie ticket can range up to $26 and in terms of the holiday season, my boyfriend and I are doing all our shopping online in the United States. We're not thinking of shopping here."
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