You know the outlook for the US dollar is bad when two personalities as varied as Sarah Palin and Robert Zoellick are sounding the same bleak prognosis.
On Wednesday, Ms Palin, the head mistress of America's intellectually inbred, implied that US President Barack Obama's record budget deficits were undermining the dollar's credibility as the world's reserve currency. "We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar," she wrote on her Facebook site. "All of this is a result of our out-of-control debt."
Her remarks followed comments by Mr Zoellick, the head of the World Bank and arguably the most supple mind in Washington, that "the United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency".
Set aside the fact, which Ms Palin withheld from her adoring web lemmings, that the dollar's descent last week only intensified a trend that began eight years ago with the arrival of a Republican president and his own contempt for fiscal restraint.
The dollar's fortunes are darker now than almost a year ago and considerably grimmer than they were when George W Bush, the former president, squandered a budget surplus on import duties, price supports and an unnecessary war. All told, the dollar has shed 30 per cent of its value over the past seven years, a third of which has been lost under Mr Obama's watch.
Last week's attack on the dollar was triggered in part by a report in the UK press about a conspiracy among oil producers and their client states to discard the dollar as the standard currency for global energy markets. The account was apparently bogus, the dollar soon stabilised and there remains a surplus of countries willing to purchase US sovereign debt.
But while reports of the dollar's demise as the world's reserve currency remain premature, they have accelerated in frequency along with the exponential increase in America's indebtedness and its stubborn reliance on foreign creditors to bankroll what is still the world's largest economy.
Less than a year ago, for example, only the wonkiest of financial gnomes knew what the IMF's special drawing rights (SDR) were. That changed in March when Zhou Xiaochuan, the governor of China's central bank, suggested SDRs, a synthetic currency used to settle transactions among central banks, might replace the tanking dollar as the world's reserve currency.
Mr Xiaochuan, who helps manage Beijing's estimated US$800 billion (Dh2.93bn) in dollar-denominated reserves, has a clear interest in reserve-currency diversification. Since then, however, other governments have indulged in various forms of dollar bashing.
The Russian prime minister Vladimir Putin criticised the Federal Reserve chairman Ben Bernanke for an "uncontrolled issue of dollars"; the government of Kazakhstan has called for the dollar's demotion; and Iran has announced it was switching its reserve currency from dollars to the euro.
Lest such protests be dismissed as political theatre, note that just last month the respected Peterson Institute for International Economics published a paper that suggested SDRs should be expanded in circulation and that they could represent a viable alternative to the dollar.
Last week's dollar sell-off was significant for several reasons. For some months now, investors have been unwinding their flight-to-quality dollar positions, taken a year ago with the fall of Lehman Brothers, for higher-risk opportunities elsewhere.
When the Australian central bank last week announced its surprise decision to raise interest rates, it accelerated dollar-selling for such high-yield, commodity-linked currencies as the Norwegian krone and the Canadian and New Zealand dollars.
The Financial Times reported last week that anticipated demand for commodities is so great that some large investors, concerned about the limits of paper futures contracts, are inquiring about the feasibility of warehousing everything from precious metals to livestock.
While it is unclear whether other central banks will respond in kind to Australia's credit tightening - the Fed will probably be among the last to do so - its pre-emptive strike illustrates how uneven the contours of recovery are and just how challenging efforts by the Group of 20 (G20) leading and developing nations co-ordinate deleveraging might prove to be.
Scattershot rate increases are bound to place increasing pressure on the dollar, raising the spectre of sustained inflation, while diminishing faith in Washington's ability to reverse its decaying fiscal condition will most certainly raise the price of servicing its debt.
As late as last summer, economists were uncertain whether a recovering global economy would have bullish or bearish implications for the dollar. The events of last week pointed emphatically towards the latter.
The US economy is fundamentally frail and its political system is teetering toward the sclerotic. While the dollar will no doubt drift along as the reserve currency for some time, responsible central governments are most certainly preparing for the day when its authority can no longer bear the weight of its liabilities.
That alone augurs for an inflationary spiral, which in the words of Theodore H White, the late American journalist and historian, happens "when a government has made too many promises it cannot keep and papers over the shortfall with currency which, ultimately, becomes confetti - and faith is lost".
@Email:business@thenational.ae
Killing of Qassem Suleimani
500 People from Gaza enter France
115 Special programme for artists
25 Evacuation of injured and sick
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
The%C2%A0specs%20
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GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
Griselda
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How to donate
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
COMPANY%20PROFILE
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The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
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More from Neighbourhood Watch:
UAE currency: the story behind the money in your pockets
DIVINE%20INTERVENTOIN
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Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
Killing of Qassem Suleimani
MATCH INFO
Manchester United 1 (Greenwood 77')
Everton 1 (Lindelof 36' og)
Stage 5 results
1 Tadej Pogacar (SLO) UAE Team Emirates 3:48:53
2 Alexey Lutsenko (KAZ) Astana Pro Team -
3 Adam Yates (GBR) Mitchelton-Scott -
4 David Gaudu (FRA) Groupama-FDJ 0:00:04
5 Ilnur Zakarin (RUS) CCC Team 0:00:07
General Classification:
1 Adam Yates (GBR) Mitchelton-Scott 20:35:04
2 Tadej Pogacar (SlO) UAE Team Emirates 0:01:01
3 Alexey Lutsenko (KAZ) Astana Pro Team 0:01:33
4 David Gaudu (FRA) Groupama-FDJ 0:01:48
5 Rafał Majka (POL) Bora-Hansgrohe 0:02:11
Wenger's Arsenal reign in numbers
1,228 - games at the helm, ahead of Sunday's Premier League fixture against West Ham United.
704 - wins to date as Arsenal manager.
3 - Premier League title wins, the last during an unbeaten Invincibles campaign of 2003/04.
1,549 - goals scored in Premier League matches by Wenger's teams.
10 - major trophies won.
473 - Premier League victories.
7 - FA Cup triumphs, with three of those having come the last four seasons.
151 - Premier League losses.
21 - full seasons in charge.
49 - games unbeaten in the Premier League from May 2003 to October 2004.
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
