Communicator (communicator) wrote,
Communicator
communicator

Touching the Void

How far will the dollar plummet now, and what will the effect be on people in various parts of the world? The Chief Economist of Morgan Stanley thinks the US has only a one in ten chance of avoiding 'economic armageddon'. It didn't take long for that to happen did it?

hardrada was advocating a boycott of US goods after the recent US election. My feeling is that such a boycott is a big use-once-only weapon that the world needs to keep for a big once-only occasion. The Iraq occasion has passed, it's too late now, and we need to hang fire in case some even worse thing goes down that literally threatens us all.

My guess is that it would be possible for a well-organised global boycott, on non-partisan non-nationalistic lines, to depress the turnover of a few major American corporations (for instance, a boycott of MacDonalds, Pepsi and Coca Cola - the flagship US products) by, say 20%. I think if that happened those companies would flex muscle within the US system to tone down whatever policy decisions had led to the boycott. Particularly if the policy also threatened the lives of people in the US themselves (let's say, if the US were preparing for a nuclear engagement). Such boycott measures would be difficult and desperate, but I do think they may work in an extremity.

But what about a dollar freefall? That is potentially a worse economic sanction than a 20% loss of turnover for Macdonalds. But it may not harm the big economic players as much as a loss of sales would. In a sense a fall in the dollar is the equivalent of moving your factories to a third world country - the workers' salaries become cheaper, and your goods become more competitive. Bad for the ordinary American, but good for the big corporations.

My conclusion, then, is that the corporations will allow the dollar to fall a long, long way. Some people think this will be bad for Europe and Australasia. I don't think it has to be. Like in 'Touching the Void' we may need to cut the rope that ties us to our partner.
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