Former Federal Reserve Board chairman Alan Greenspan, who held the post for 18 years, answered questions put to him by Likud chairman and former Minister of Finance Benjamin Netanyahu at the closing session of the “Globes” Israel Business Conference. Greenspan still commands wide respect among the international business community and his comments often influence global markets.
Netanyahu: How far will the dollar fall?
Greenspan: “That’s what everyone is asking. We have a situation in the US where the markets are so deep and sophisticated, it’s difficult to predict the dollar’s movements. We spent a lot of time trying to predict what the dollar-euro exchange rate would be and then we realized that there is so much sophistication in the market, predicting the dollar rate would be just as helpful as trying to flip a coin and predict which side it will land on.
“It’s not that the interest on the dollar isn’t good enough. The problem lies in the balance of payments. I expect that the dollar will continue to head downward until there is change in the US’s balance of payments. Some of the members of the OPEC oil group have begun to convert their dollar currency reserves into euros and yen.”
How can the developed world compete with the manufacturing, services and products of the giants that are entering their territory?
“The US has lost a considerable number of jobs in recent years, mainly to China. But standards of living have continued to rise. Where does this come from? It comes from education. People are continually looking for sources that will create cash flow.”
Published by Globes [online], Israel business news - www.globes.co.il - on December 12, 2006
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