Back to Gideon RachmanI recently wrote a column on the political consequences of $100 oil, which drew quite successfully (I thought) on an earlier discusssion on this blog. So I would like to repeat the experiment.
There is no shortage of analysis of the global economic consequences of the falling dollar. But what about the global strategic consequences? Over the long term, a feeble currency is usually both a symbol and a cause of national decline. I’m not sure you can yet read anything too profound into the current movements in the currency markets, although Hugo Chavez is doing his best.
Still, even in the here-and-now, I think there could be political ramifications to the falling dollar. Off the top-of-my-head, here are four possibilities:
1) Americans feel humiliated and anxious - It cannot be nice for New Yorkers to have lots of chavvy Brits and Europeans, staggering around their shops, chortling about how cheap everything is. And those Americans who travel are experiencing severe sticker shock in Europe. People feel all macho about their currencies. The Germans used to love the strong D-mark. The Brits felt that the slide in sterling reflected their decline as a nation. Will similar concerns spread in the US?
2) Foreign companies buy up the US - One thing that could spread national anxiety in America would be a few foreign bids for high-profile American assets: the Rockefeller centre, Universal Studios etc…Particularly if those bids were from the Chinese or the Gulf Arabs.
3) It is more expensive to project American power - All those American military bases overseas need supporting. And a lot of those costs cannot be borne in dollars. American aid budgets will be relatively smaller this year. The American economy will be a smaller share of the world economy, and the American market will feel a little less important.
4) American debt will become less attractive to hold - This is the big one. What happens if the Chinese or other Asians or the Arabs buy less American debt? Theoretically, they have the Americans by the balls. (I think one can say that on a blog?) But, they also have themselves by the balls. Too rapid a withdrawal from the dollar will cause a further fall in the currency, forcing down the value of their own foreign reserves, which are largely held in dollars.
Those are my four points. What other political consequences of a falling dollar should we be thinking about? And what should I be reading?
This blog covers a variety of topics from US foreign policy to European politics and the Middle East - and whatever else happens to be in the news or catch my attention. I joined the FT as chief foreign affairs commentator in 2006, after a 15-year career at The Economist which included stints as a correspondent in Brussels, Bangkok and Washington. I write a weekly column on foreign affairs, which appears in the paper on Tuesdays. Occasionally my FT colleagues contribute posts to this blog.
Geoff Dyer is the FT's China bureau chief. He has been a correspondent in Shanghai and in Brazil and has also covered the pharmaceuticals and biotechnology industries from London.
Roula Khalaf is the FT's Middle East editor. She has worked for the FT since 1995, first as North Africa correspondent, then Middle East correspondent and most recently as Middle East editor. Before joining the FT, she was a staff writer for Forbes magazine in New York. 
James Blitz is the FT's defence and diplomatic editor. He has been the FT's political editor, based in London, and Rome bureau chief. James is a former Moscow bureau chief for the Sunday Times.
Alan Beattie is the FT's world trade editor. He has previously been economics leader writer and spent two years in Washington DC as chief US economics correspondent. Before joining the FT, Alan was an economist at the Bank of England. 
Victor Mallet is the FT's Madrid correspondent. He is a former Asia editor of the FT, and, in more than 20 years at the organisation, has also worked in Africa, Europe and the Middle East. In 1990 he escaped from Kuwait after being one of the few foreign correspondents there when Iraq invaded. 
Stefan Wagstyl is the FT's eastern Europe editor, co-ordinating coverage of the region. He has also been the FT's bureau chief in Tokyo and New Delhi.
