April 28, 2010

Greek Junk and U.S. Influence

Yesterday the markets took a tumble on the Standard and Poors downgrading of Greece's credit rating to that of junk.  It was a three tier drop and that's a big deal.  Lost in the panic of the possible spread of the credit crisis to other Euro nations like Portugal and Spain were two very important points about the United States.
The panic itself caused major currencies to slide against the U.S. dollar.  That tells us a lot.  Recall that during the initial collapse there was talk amongst China, Russia and even some administration officials that the U.S. dollar should no longer be regarded as the global currency.  Clearly reactions such as yesterday's currency fluctuations disabuses us of that notion.  More important than the relative strength of the dollar, is the relative safety of the dollar.  Clearly, the U.S. dollar is not going anywhere and the notion of using the Euro as the world currency is an even more distant plausibility than the idea of a basket of currencies.

What else that says to us is that the administration's notion that the world has many centers of  equal power is fantasy.  Either they are merely trying to talk the talk of a multi-polar world of equals, or else they truly believe the United States does not represent a special place in the global economic framework.  The former option represents a dishonesty and/or diplomatic front that is to be often expected from politicians and diplomats.  However, the latter case being true, again illustrates the disconnect between the administrations rhetoric and beliefs with the facts on the ground.

No comments:

Post a Comment

Disagreement is always welcome. Please remain civil. Vulgar or disrespectful comments towards anyone will be removed.

Related Posts Plugin for WordPress, Blogger...

Share This