The chances that the decline of the U.S. dollar will turn into a rout that triggers a worldwide financial crisis are “one in four and rising,” a U.S. economist said Wednesday.
“I think there is a reasonable risk that there is some kind of brief global financial crisis,” Mark Zandi, chief economist and co-founder of Economy.com Inc. of West Chester, Pa., said in an interview in Toronto, after a presentation on the U.S. and world economic outlook. “How brief and how severe will depend on how global policy makers respond to it.”
The U.S. dollar has fallen about 15 per cent on a broad trade-weighted basis since peaking three years ago, driven by growing concern about the United States' massive and growing current account and trade deficits, and helping to push up the Canadian dollar, the euro and the yen in the process. If the decline remains orderly, Mr. Zandi expects the greenback to fall another 10 per cent or so over the next three years.
However, the stresses that could trigger a disorderly plunge are “evident and they're growing,” he said.
The key issue is the “increasingly unhealthy” ...More
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The chances that the decline of the U.S. dollar will turn into a rout that triggers a worldwide financial crisis are “one in four and rising,” a U.S. economist said Wednesday.
“I think there is a reasonable risk that there is some kind of brief global financial crisis,” Mark Zandi, chief economist and co-founder of Economy.com Inc. of West Chester, Pa., said in an interview in Toronto, after a presentation on the U.S. and world economic outlook. “How brief and how severe will depend on how global policy makers respond to it.”
The U.S. dollar has fallen about 15 per cent on a broad trade-weighted basis since peaking three years ago, driven by growing concern about the United States' massive and growing current account and trade deficits, and helping to push up the Canadian dollar, the euro and the yen in the process. If the decline remains orderly, Mr. Zandi expects the greenback to fall another 10 per cent or so over the next three years.
However, the stresses that could trigger a disorderly plunge are “evident and they're growing,” he said.
The key issue is the “increasingly unhealthy” ...More
