World Economy

  morddwyd 07:54 23 Sep 11
Locked

Does the continuing downbeat news from the financial markets illustrate the dangers of one or two major currencies becoming dominant in world trade? It works as long as that currency is stable, but can quickly destabilise.

My own recollection of the current recession is that it first arose, publicly at least, though I suspect that financiers were aware, when Freddie Mac and Fannie Mae went pear shaped precipitating a dollar crisis which quickly went world wide (not the fault of the “previous administration” which the Lib Dems were still trotting out this week!).

Similarly, the crisis in Europe is made worse by the fact that Greece is a member of the Eurozone.

To give a simple example close to home, any change in the value of the dollar has a tremendous impact on the UK economy, without any other input at all, simply because oil is always traded in US dollars.

I know I’m over simplifying, and I could not begin to suggest an alternative, since world trade depends on a world price, it's just a thought as I see it.

  morddwyd 08:44 23 Sep 11

I'd forgotten "the gold standard".

I seem to recall it was fairly stable and went up more than it went down!

  Strawballs 10:07 23 Sep 11

Countries like Germany that seem to be riding it out better than most still has an Industrial base to help finance it's country rather than relying on it's equivalent of the square mile as we did in the 80's and 90's so much so that we don't have enough left now to even try to rebuild.

  Cymro. 11:04 23 Sep 11

Like it or not we live in a largely capitalist world so such ups and downs are inevitable and all part of the survival of the fittest.

  johndrew 11:07 23 Sep 11

"I'd forgotten "the gold standard"."

So had GB when he flogged it off cheaply!!!

  johndrew 11:13 23 Sep 11

I think the major problem in the UK now is that our manufacturing base has been eroded to almost nothing whereas our reliance on finance has increased hugely. Germany has maintained its manufacturing base and moved to be the type of trading nation we once were.

The problem now is that the last major world recession in the 1930s was only fully resolved as a result of WW2; such a resolution, if the current situation declines further, is not one I would relish.

  Autoschediastic 12:03 23 Sep 11

I thought it all started with the lehman brothers going under.? over risky investing as is told here: Story Here

  Snec 12:29 23 Sep 11

A world full of borrowers, that is what's caused this problem and no-one but no-one has the solution. Not now.

Personal debt was always something to be avoided in my book but it has been actively encouraged over the years - buy now pay later became the norm. Domestic personal debt was bad enough but that moved up to business debt, then corporate debt, then national debt, now international debt. Now that the whole world is in debt and there is nowhere else to go.

Anyone here got the answer? You could be the next Prime Minister.

  Autoschediastic 12:45 23 Sep 11

Well here is where we are with Greece right now, work it out for yourself...Ahum

Look Here

  morddwyd 20:52 23 Sep 11

"So had GB when he flogged it off cheaply!!!"

I doubt GB had even left school when we went off the gold standard. let alone become a Labour luminary.

  Aitchbee 22:19 23 Sep 11

When I hear 'BBCRadio4 politcal expert, Jonty Bloom, say he 'wakes up with nightmares' trying to resolve the world economical problems, I get scared.

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