Former Malaysian PM Warns Of Dollar Catastrophe

Former Malaysian PM Warns Of Dollar Catastrophe

UK Inquirer | April 1 2005

THE FORMER prime minister of Malaysia, Mahathir Mohamad, has launched into a swingeing attack on US president George W. Bush and warned that the global economy was heading for a catastrophe with the dollar in danger of imminent collapse.

Mahathir claimed that the only reason the US dollar was keeping its value was because of a widespread fear of global meltdown it it collapsed.

According to a report in today's Taipei Times, the only way to avert such a meltdown in the value of the US dollar was if the Americans replaced George W. Bush with a "more responsible president". Replacing US presidents isn't that simple, we suspect.

The former prime minister suggested one answer to the impending doom was to switch from dollars to a gold standard for international trade. Companies should start demanding that payments be made in Euros, or that US dollar payments should be at the Euro rate.

A dollar catastrophe was inevitable because the USA was unable to repay loans which Mahathir estimated amounted to $7 trillion. One US dollar is currently worth .77 of a Euro, and .53 UK pounds. Which is fine and dandy if you're a Brit that goes shopping for iPods in New York, but is crippling when you're an IT company that gets paid in US dollars.

In his company newsletter March 18, Morgan Stanley economist Stephen Roach warned strongly about a new, severe phase of the financial crisis. "It is only with the great luxury of hindsight that we can look back and know that the proverbial bell has rung. In my view, March 16, 2005 could end up in the running as a possible tipping point for America. Suddenly, the U.S. has taken on a very different aura in an increasingly unbalanced world: The confluence of a record current account deficit, a disaster from General Motors, and yet another new high for oil prices all speak of an increasingly precarious role for the global hegemony. World financial markets have barely begun to sniff that out."

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