consider the fact US is the largest producer of grain crops. (source http://www.reuters.com/article/inDepthNews/idUSPAT50124520080805) and within the top three ranking for other food and fruit crops. This constitutes majority of US Exports. Prices of these commodities are tracked in US Dollar all over the World.
When US Dollar becomes more expensive, it does NOT reduce the price of the commodity in International market. It increases the price in local markets in other countries.
Another factor, as I said before, is that US Dollar is the settlement currency for all International Trade. There are plenty of buyers for US Dollar in the market at any given time. Therefore it's value is supported by more then the state of US economy.
So from investment perspective, if you view US Dollar as the base, and value of all other currencies as moveable, then being in US Dollar keeps buying power of your capital intact to some extent.
Therefore, any currency linked to US dollar is going to ride out the credit storm. There may be momentary liquidity problems in middle east but in short to mid term, GCC countries will be alright barring major economic blunders by panicky governments.
I think small investors and third world countries will suffer the most. The cost of borrowing (interest rates) will go up significanly and so will the cost of living. This will impact growth of business and investment particularly in developing World from mid to long term.
In US, the credit crunch will be over soon. They are pumping money into the system and will devise a new Interbank Guarantee's mechanism to limit small investor and depositor exposure. Nothing has been said yet but it's the logical thinkg to do.
The prudent people will have moved their savings out of harms way, i.e. out of North American Banks, and will hitch a ride on the biggest piece of floatable mass around; US Dollar.
consider the fact US is the largest producer of grain crops. (source http://www.reuters.com/article/inDepthNews/idUSPAT50124520080805) and within the top three ranking for other food and fruit crops. This constitutes majority of US Exports. Prices of these commodities are tracked in US Dollar all over the World.
When US Dollar becomes more expensive, it does NOT reduce the price of the commodity in International market. It increases the price in local markets in other countries.
Another factor, as I said before, is that US Dollar is the settlement currency for all International Trade. There are plenty of buyers for US Dollar in the market at any given time. Therefore it's value is supported by more then the state of US economy.
So from investment perspective, if you view US Dollar as the base, and value of all other currencies as moveable, then being in US Dollar keeps buying power of your capital intact to some extent.
Therefore, any currency linked to US dollar is going to ride out the credit storm. There may be momentary liquidity problems in middle east but in short to mid term, GCC countries will be alright barring major economic blunders by panicky governments.
I think small investors and third world countries will suffer the most. The cost of borrowing (interest rates) will go up significanly and so will the cost of living. This will impact growth of business and investment particularly in developing World from mid to long term.
In US, the credit crunch will be over soon. They are pumping money into the system and will devise a new Interbank Guarantee's mechanism to limit small investor and depositor exposure. Nothing has been said yet but it's the logical thinkg to do.
The prudent people will have moved their savings out of harms way, i.e. out of North American Banks, and will hitch a ride on the biggest piece of floatable mass around; US Dollar.
I am no economist and am open to be proved wrong.