US debt could trigger dollar collapse, UN warns

Submitted by Desha Priya on Thu, 2007-05-31

The United States dollar is facing imminent collapse in the face of an unsustainable debt, the United Nations warned today.

United States debt, which had now deepened to well over $ 3 trillion, might turn out to be unsustainable in the rest of 2007 or next, putting further downward pressure on the United States dollar, Rob Vos, the Director of the Development Policy and Analysis Division of the Department of Economic and Social Affairs (DESA), told correspondents at a Headquarters press conference.

He pointed out that since its peak in 2002, the dollar had depreciated vis-?-vis the major currencies by some 35 per cent and by 25 per cent against a broader range of other currencies.

Vos made these comments at the launch of the 2007 World Economic Situation and Prospects report midyear update.

With that increased debt the risk of a sharp depreciation of the dollar continued, he warned. If countries willing to invest in United States dollar assets expected further depreciation, they might be less willing to hold dollar assets, triggering a much sharper fall in the United States dollar. The risk of disorderly adjustment and the steep fall of the dollar existed. The policy challenge was how to prevent a hard landing of the United States dollar and forge a benign adjustment of the global imbalance.

In terms of the United States housing sector, he noted that a recession in the housing sector had continued in 2007, with a slowdown in activity and a large number of unsold homes. While house prices had not fallen, that might happen in the months and years to come if the recession continued as expected. A decline in prices would affect the domestic market, particularly household consumption in the United States, resulting in the risk of a serious recession in its economy, slowing growth from 2.1 per cent to 0.5 per cent in 2007 and 2008. That would then significantly slow the world economy and transmit the recession into the rest of the world.

The United States deficit had increased to $ 860 billion at the end of 2006, and was expected to fall to $ 800 billion in 2007. That deficit was basically being financed by surpluses in the developing and oil exporting countries, as well as some major developed countries, in particular Japan and Germany. The European Union,at large, was projected to continue to have a slight deficit on its current account.

Continuing, he said the current tendency in macroeconomic policy was not all in the right direction, particularly in the surplus countries where there had been a tightening of monetary and fiscal policies, particularly in Germany and Japan, making it more difficult for the United States to lower its external deficits by export growth. The United States would also need to adopt some contractionary policies to slow down its deficit, he recommended.





Dollar collapse... thats the end of US Empire, enjoy the crap you fools are causing it in the first place.

Then blame it on the world .typical American.

Reason to start a war and terrorising other human's life somewhere..

American terrorists?.!

Canada's going just the opposite way; economy's booming big here, unemployment is at it lowest in history! Our dollar is above 90 cents u.s. now and predicted to be on par/dollar for dollar by years end; high oil and coal prices giving us stellar windfalls, as well as extensive timber exports, despite a row with our main buyer, the u.s awhile back. As a matter of fact, Canada now sits atop the biggest petroleum deposit outside the Arabian peninsula - as many as 300 billion recoverable barrels and another trillion-plus barrels that could one day be within reach and tapped using new retrieval methods! (By contrast, the entire Middle East holds an estimated 685 billion barrels that are recoverable.) It all adds up to some promising times ahead. So hey, maybe the United States will become our 11th province or 4th territory... 'buckle-up! 😉

Although, if the US dollar does collapse, i do hope my country can stay autonomous and independant, and not have U.S.'s troubles become ours; we are stronger then we have ever been..*so crossing fingers! 🙂

"There has always been a strong alliance. Now more than ever we need a united front."

i couldn't agree more quo vadis; i was merely being tongue'n cheek, lol* ..i Love the U.S, as i always have, we are brother and sister forever.. ..and no, you don't have to be our 11th province either, joking! 😉 ..sometimes you need a lil humour in your politics to lighten things up. i'm only so very proud of our current economy, after many hardships of the past; we deserve to toot our horn a lil bit..'the u.s. canada and u.k. will ALWAYS be a untied front..

ahhhhhh thankyou, quo vadis, i like to inspire! 😉

I'm wishing your country all the best, solitas, and hoping your country is able to get over this economical bump in the road..! 🙂

btw, electricity through wind-turbines is beginning to take off here in Canada, already.

Here's some renewable facts:

"You continue to draw your electricity from the grid, meaning that your power supply is just as reliable as it always was. The difference is that you are now supporting renewable power with your electricity dollars, rather than coal, nuclear, oil and gas."

"How does it work? Wind turbines produce electricity by capturing kinetic energy from surface winds, and converting that energy to electricity. Wind power produces no smog-inducing emissions."

"A single large-scale wind turbine produces enough energy to power 350 to 500 homes. Clustered together in a wind farm, turbines can produce enough energy to power thousands of homes."

"Does Canada have good wind power resources? With its long coastlines, generous land, and ample high winds, Canada offers an ideal environment for wind power production."

"What are the health impacts of air pollution? According to the Ontario Medical Association, air pollution will result in almost 60,000 emergency visits, 17,000 hospital admissions and almost 5,800 premature deaths this year alone, and cost the province almost a billion dollars."

There's a long way to go, of course; but all in all, it's a start and a step in the right direction, seems very promising..! 🙂

"When the USA finally gets serious about renewable energy and we can finally have cheap, clean, renewable energy, there will be no breaks on our economy and countries that rely on their natural resources to sustain or subsidize them economically are going to definately miss our dollars and our vast wealth going into their coffers."

Our foreign oil dependance is the only real thing that bugs me about our energy situation right now. We could start tapping holes in the continental u.s. and Alaska and in doing so be the largest oil producing nation in the world. That much oil has been discovered since we stopped drilling on our own soil and now.

Renewable energy is awesome but it just isn't efficient enough....yet. A massive wind and solar spree would only give us a hand by less than ten percent of our national energy usage. Ten percent is a lot, but at the current increase in oil costs it would actully superceed our savings in a couple of years anyway. It is amazing, it jus isn't enough.

Biodeisel rocks my socks but the sad fact exists and will exist for a lot of time that it costs as much energy that it provides to produce and refine it.

I say start tapping holes for crude, start converting coal to synthetic crude (coal can be converted to synthetic crude oil for about a third of the cost less as todays crude barrel prices) and lets get back in the nuclear energy market. It is actuallt he cleanest and statistically safest form of energy production. The only blatent draw back is storing waste but we have come a long way in greately reducing waste and storing it in a safe manner. These three things alone would make us a self sustainable nation energy wise. If we weren't gouged it would not be out of line to predict approximately .5x the current gas prices. We need to start stripping the taxes in gas away. If gas is three dollars a gallon in most states and local manicupalities the tax in gas would amount to one third to one half the cost per gallon. Rediculous.