UN Joins Broader US Smackdown With Talk of Dollar "Collapse"
This past week, the Development Policy and Analysis Division of the United Nations released its mid-year world economic review — an update to the “World Economic Situation and Prospects 2011” — and unveiled a dramatic, but altogether unsurprising, finding. Confidence in the US dollar continues to diminish, and its deteriorating stature threatens the stability of the entire global financial system. These days… pretty standard, really.
A major concern of the UN economic division is a full blown “collapse” of the US dollar, which it deems possible should its value continue declining relative to other important currencies and, as it discusses to some extent, to commodities.
According to Reuters:
“The 17-page report referred at another point to the ‘still looming risk of a collapse of the United States dollar.’
“Rob Vos, a senior UN economist involved with the report, said if emerging markets ‘massively start selling off dollars, then you can have this risk of a slide in the dollar. We’re not saying the collapse is imminent, but the factors are further building up that we could quickly come to that stage if other things are not improving quickly on other fronts — like the risk of the U.S. not being able to service its obligations,’ he told Reuters.
“UN economists have for some time queried whether the dollar should continue to be the world’s sole reserve currency. Others have also expressed concerns about U.S. finances. Standard & Poor’s threatened on April 18 to downgrade the United States’ prized AAA credit rating unless the Obama administration and Congress found a way to slash the yawning federal budget deficit within two years.
“A downgrade would erode the status of the United States as the world’s most powerful economy and the dollar’s role as the dominant global currency.”
Of course, Tim Geithner has publicly stated that the US government would “never default on its obligations,” so that’s got to count for something… riiight. You can read more details in Reuters coverage of how the United Nations has expressed concern regarding a possible US dollar collapse.