You aren't in a third world unless you drive a Mexican manufactured
VW or an Opel. You can always be a 3rd world wannabe and
next time you are abroad, rent one of these fine vehicles.
Car rental agencies in all of the Americas and Caribean take
US greenbacks; all the former soviet republics say they take
Eurodollars but all their prices are in Rubles and greenbacks too.
BTW, on the new US $20, it bothered some poor artist so much that
on all the currencies, the flag flying over the government buildings
alwas was hanging left to right. On the current bill they reversed
it to show which way they thought the political winds were blowing.
So now they've even politicized the currency.
So, to be part of the Eurodollar club, you need to have a certain
debt-liquidity-interest rate ratio that makes it extremely difficult
for some countries to adhere to. If you fix the currency, you'll see
fluctuations in other unfixables which show up in manufacturing costs
and hidden taxes. Given the state of the Ruble, it's very unlikely
that Russia will ever convert. Further, I think that the Euro, while
good in concept, is not strong enough to integrate all the economies,
much less the political priorities and realities across European
cultures. I can easily see the ED going the was of Esperanto.
One of the other problems with Russia is that all their debt was turned
into short term financing and they have gotten to the stage where they
can't access it. This has two effects 1) no matter how many times they
recall their ambassador, they will never really be mad at us as they
are co-dependent housewives that are addicted to the promise of $2 Billion
of liquid US greenbacks, the cornerstone of any IMF initiative to
line the pockets of their oligarchy, 2) there are no foreign investors
that would lend them any money.
Some of you may remember the 1992, 1993, and 1994 budgets? They basically
took all of the US's long term, 30 year debt and put it into short term
debt in order to reduce 40% of the deficit spent each year. History has
basically showed that the inverted interest rates are not sustainable
for more than 2-4 years. This meant that if the bond market and subsequently
the stock market every did turn bearish, the US would be tinkering on
the brink of bankruptcy similar to where Russia is now. It's still not
quite settled if the risk was worth the reward, I'll tell you in another
couple of years. In order to prevent capital flight, several laws have
been put on the books ranging everywhere from suspending computer trading
after just 100 point drop in the Dow (an artificially minute percentage compared
to
previous years) to restricting through registration and notification of the
government of any movement of capital out of the US to curbing encryption
to prevent the electronic wire transfer of funds without the government
being able to determine is any was actually sent.
So, yes, we are soaking in it.
Greg