Foreign Policy: Don’t Bet Against the Dollar
Countries hold dollar assets because they want trade surpluses with the United States. According to this theory, many countries can’t generate enough domestic consumption to spur growth and full employment, forcing them to rely on exports. As the United States is the world’s largest consumer market, countries therefore have an incentive to make their goods cheaper and more competitive by undervaluing their currencies against the dollar. This obliges them to buy and hold dollars to maintain their undervalued exchange rates. The economic history of the past decade bears this theory out. Since the late 1990s, American consumers have powered a global boom, compensating for weak domestic demand in much of the world. But their massive spending on goods imported from abroad has also caused the U.S. trade deficit to balloon to $759 billion dollars in 2006, equal to 5.8 percent of U.S. GDP.
But being preoccupied with the dollar’s dominance is the wrong goal in the first place. Indeed, the policy of a “strong dollar” contributed to creating the overvalued dollar, and has always been misguided. Instead, the target should be sustainable prosperity, one requirement for which is exchange rates that prevent excessive trade deficits. This will automatically deliver a “sound dollar,” which is a better basis for a dollar standard that works. From this perspective, far from being a strike against the dollar, the appreciation of the euro is a welcome development. The Chinese yuan and Japanese yen should be allowed to appreciate as well. The next step is for U.S. policymakers to set up international arrangements to prevent future damaging exchange rate misalignments—such as the ones now being corrected.
That our computers have seduced us has long been a truism. Now, thanks to the ever-inventive internet mafia, it is becoming a literal truth. Russian cyber-crooks have reportedly unleashed a software robot, or bot, that poses as a would-be paramour in sex chatrooms. It entices randy gentlemen to reveal personal information, such as their address or birthday, or even to submit photographs of themselves. The information can then be used to break into bank accounts or carry out other forms of fraud.
An ancient limestone statue of a regal lioness just 3 inches tall sold today for $57.2 million including commission at Sotheby’s in New York, almost doubling the previous auction record for sculpture.
The windows of the 15-story Winecoff Hotel were backlit by orange flames. Guests–jumping out of panic or falling from makeshift ropes of bedsheets as they tried to escape the terrible smoke–were landing and dying on Peachtree Street. Amid the pandemonium and a cacophony of sirens, Hardy went to work. He took a shot that spanned the front of the building and the faces of the doomed in the windows–the mutely pleading, hopeless faces. When he was down to his final flashbulb–one had exploded in the cold night air–Hardy decided to try for a picture of a falling or jumping guest. When his viewfinder found a dark-haired woman falling midair at the third floor, her skirt billowing, he snapped the shutter open for 1/400th of a second.