it's beginning...

A number of posts ago, I mentioned that the dollar was starting to lose its shine as the currency of choice in the world economy. With the Euro so far ahead of the dollar it was inevitable.

Today in the Financial Times UK there is an article entitled Chinese exporters shun flagging US dollar in favour of stronger rivals.

Rising numbers of Chinese exporters are shunning the US dollar or devising ways to offset the impact of the falling currency as they confront rising labour and raw material costs at home.

According to Alibaba.com, the online company that matches Chinese suppliers with international buyers, the vast majority of their almost 700,000 Chinese suppliers no longer use dollars to settle non-US transactions in order to minimise foreign exchange risk.

Though it may be a backdoor move using it only for non-US sales, it's a big deal. The confidence in the dollar is waining vastly and quickly.

Today, the Euro is worth $1.5759. That means that if something in Europe costs €1 we actually have to pay $1.58 or almost 50% more. What company wants to spend that much more for anything? Considering that, using a non-specific rule-of-thumb, the typical margin on merchandise is usually around 33% in order make a profit, everyone starts in the hole. Of course, someone has to pay for it. Guess who?

You got it. You and me...

So, is there blame in this. How about a hint? At the end of 2000 the United States budget had a a surplus of $230 Billion. Today, as of 2:25:13 AM GMT, the US deficit was $9,414,329,649,218.93 according to the US National Debt Clock!

Three guesses as to who gets the blame.

oh, the first two guesses don't count...