Monday, December 04, 2006

A Pound for 2 Dollars

There is a maxim that when America sneezes the whole world catches a cold. If there is any truth in that statement then it seems we all better get ready for a flu pandenmic. The US dollar is at an alarming low against the pound sterling and this has immensely serious implications for the British economy in particular and the whole world in general.

Why did the dollar lose so much weight against the pound? The basic answer is the state or the direction of the US economy.Its sypmtomatic of an economy in decline at worst or at best at the initial stages of decline.Any stable,bouyant and well-balanced economy should and would withstand any onslaught that could result in such a drastic negative swing.So how does that impact us here.Well,it means for instance that it costs Americans more to buy from our exporters so they look for cheaper exports elsewhere,costs them more to holiday here so they vacation somewhere else and on and on ad infinitum.All with negative resultant effects on commerce and the economy as a whole.

The pertinent question now is what steps Bush and his financial advisers are going to take to rectify the situation.Do they take fiscal measures or wait and see if market forces will set in and bring the dollar to its ertswhile position? The world awaits.Meanwhile you might start stockpiling your dosage of Lemsip.Just in case!

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