EconomicCrisis.US

The president of the World Bank cautioned U.S. authorities on Monday against assuming the dollar would maintain its role as the world’s reserve currency.

Robert Zoellick said other currencies such as the euro and the Chinese yuan could win increasing acceptance in international currency markets.

He said the United States “would be mistaken to take for granted the dollar’s place as the world’s predominant currency. Looking forward there will increasingly be other options to the dollar.”

China, Russia and India have indicated they want to see long-term changes in the international monetary system in the wake of the financial crisis that has pushed the world economy into its first synchronized downturn since World War II.
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The Wall Street Journal is reporting today that the Obama administration is on the verge of committing as much as $35 billion in financing and subsidies to provide mortgages to low- to moderate-income families. Hmm… this sounds vaguely familiar. The government subsidizing the mortgage market making credit artificially easy — oh yeah! That was one of the reasons why the mortgage market overheated, and we fell into a deep financial crisis. Have we learned nothing?
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The U.S. needs to adopt a policy for a “strong and stable dollar” to ensure sustained economic growth and attract investment, said Steve Forbes, chief executive officer of Forbes Inc.

The U.S. recovery will be disappointing because small businesses are still having financing difficulties and will hold off on hiring, Forbes said in an interview in Kuala Lumpur today. The economy may face another “falloff” after an initial rebound resembling that of the 1930s and the 1970s, he said.

The trade-weighted Dollar Index has fallen 11 percent since President Barack Obama’s inauguration in January, in part because of a budget deficit projected to rise to $1.6 trillion this year as the government increases spending to boost the economy. A strong dollar is “very important” in the U.S., Treasury Secretary Timothy Geithner said this month.
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The U.S. economy took a small step backwards in August on its road to recovery, according to a national index released Monday by the Chicago Federal Reserve Bank.

The Chicago Fed’s National Activity Index dropped back to negative 0.90 in August from an upwardly revised negative 0.54 in July.

Only one of the four broad categories of indicators made a positive contribution in August. The production and income component was positive for the second straight month. Employment, consumption and housing, and sales made negative contributions.

Thirty-one of the 85 indicators made positive contributions. Forty-seven of the 85 indicators improved relative to July.
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