Friday, October 19, 2007

The ailing U.S. economy

With today being the 20th anniversary of “Black Monday,'' when the Dow fell 23 percent in one day, it seems a good time to post an overview on the latest on the economy.

- U.S. stocks tumbled the most in two months after earnings reports from banks, manufacturers and industrial companies heightened concern about the health of the financial markets and the economy.

- Oil prices have soared to another record high above $90 per barrel on Friday amid global supply jitters and tensions between Turkey and crude producer Iraq.

- It is on record that Japan and China led a record withdrawal of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields.

- China now exerts enormous influence over the economies of virtually every country in the world, so that a slight change in its domestic economic policy has the potential to send shockwaves rippling throughout the world. Nowhere is this more apparent than with the United States, which is very much at the mercy of China when it comes to prices, wages, interest rates, most importantly, the value of the Dollar.

- Meanwhile, currency traders were given a green light to continue selling the US dollar, as the International Monetary Fund said the greenback "remains overvalued" and rejected claims the euro, which continues to increase in value, had risen too far.

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