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E.U. Soon the World's Biggest Economy?
Emily Gertz, 13 Nov 04

The International Monetary Fund might have to move some time in the next four years, according to Clyde Prestowitz, on the November 12, 2004 evening edition of public radio's Marketplace.

The development agency's charter dictates that it be located in the member country with the largest economy, and the IMF HQ has been in Washington, DC for nearly 60 years.

But the current U.S. federal deficit, as well as trade imbalances that have Americans consuming $600 billion more than they save or produce, may cause some international banks to reconsider their investments in the U.S., which could drop us down to second - or maybe further. Says Prestowitz:

We consider ourselves the unchallenged leader, the best ever, but the ground is really shifting beneath our feet...if one of the central banks of China, or Japan, or Korea, Taiwan or Singapore, decides that we're not such a hot investment anymore, the dollar will fall like a rock. In fact, some time in the next four years, the dollar is almost certain to drop by as much as 50% or even more against some key currencies...the E.U. is only a 10% drop away in the dollar's value from being the world's biggest economy, and Asia is on the march.

The U.S. will soon no longer have the highest per capita income or be the biggest market in the world for most products. It will no longer set all the standards. Our technological leadership will diminish.

Think about it. If we don't get our act together, it really won't take much to get those moving trucks rolling.

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Comments

Politics must become responsible and consistent with the new expectations and wishes of global society, new priorities, new habits, new responsibilities.
Excessive military expenditure has sunk more than one economy and nation in history.
Waste and unindispensable consumption of resources, ANY RESOURCES, and neglect for the natural environment, is a criminal conduct against global society and future generations.
The species has to evolve into a different kind of shared tolerant, understanding and responsible GLOBAL leadership.
Insisting in camouflaging fiscal misconduct through political discourse, and manipulation of the under or misinformed, is self defeating more sooner than later. We will all play, no nation is an island anymore.
It goes for all countries, but more so for the more powerful and influential ones.
I just hope that individuals throughout the world become more community conscious, and aware of the wealth of cultural diversity, while there’s still time. Let’s all wake up.
Yours sincerely
Fernando Marty


Posted by: FERNANDO MARTY on 15 Nov 04

Oil is currently traded and purchased in dollars. When oil-producing nations demand to be paid in Euros then it's an entirely new calculus for geopolitical power. In fact, Iraq and Iran floated this policy several years ago. There are some who think this explains why the U.S. invaded Iraq.


Posted by: David Foley on 18 Nov 04

It does not appear that the IMF would move. It is located as follows: "The principal office of the Fund shall be located in the territory of the member having the largest quota . . ." (Art. XIII of the Articles of Agreement). The European Union is not a "member" of the IMF (http://www.imf.org/external/np/sec/memdir/members.htm). The individual European countries are, but the EU is not. Upshot, the IMF ain't packing up to go over the Atlantic so quick.


Posted by: RP on 19 Nov 04



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