Working for the Yankee dollar
I have absolutely no idea how low the dollar can go. But I can’t help thinking that when supermodels start predicting it will fall further, we must be near base.
With the skids well and truly under the greenback, it is inevitable that people are starting to wonder if it’s worth working for the dollar. As it fell to fresh lows against the euro this week – in old USD/DEM terms, it even dropped below the March 1995 low (see chart) – Brazilian supermodel Gisele Bundchen also apparently abandoned it. Apparently, she has refused to accept dollars for strutting her stuff and wants euros instead.
It reminds me a bit of the situation back in 2000. Even a bout of concerted central bank action had little impact – it seemed almost nobody wanted euros. One of the few people who did was Saddam Hussein and, if you believe the conspiracy theorists, the result was the second Gulf War (see: http://www.petrodollarwarfare.com), waged partly because the US was fearful that the dollar would lose its petro-currency status if other oil producers followed suit. I have absolutely no idea how low the dollar can go. But I can’t help thinking that when supermodels start predicting it will fall further, we must be near base.