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7 Nov 2007

How to Tell When The Dollar is Really in Trouble.

dollarsThese are not good times for the dollar. The embattled currency, once seen as the global currency, is slipping, and is slipping fast. Around the world, nations and companies are withdrawing their support for the dollar. 85% of Iran’s oil deals are now conducted in currencies other than the dollar, as part of a programme of lessening the nation’s ‘dollar dependence’. At the same time, OPEC is considering creating a ‘basket of currencies for oil pricing’. This isn’t news really, OPEC nations have been moving away from the dollar for some time. The UAE bank is doing so, Syria and Kuwait are unpegging their currency peg to the dollar, and Venezuela is planning to sell oil in Euros. Yet none of this has really made the headlines. A recent development however, threatens to rock the dollar and really bring the issue to media attention.

giseleSquillionaire supermodel Gisele Bündchen has reportedly refused to be paid in dollars any more. Bündchen is the ex-girlfriend of actor and director Leonardo di Caprio (offering hope for short, tubby, not-very-good looking blokes everywhere). One would imagine that when you earn $30 million in 6 months, losing a few quid on the exchange rate wouldn’t really be here nor there, but according to the Brazilian magazine Veja, when she signed a new deal to represent Pantene hair products, she demanded that the brand owner, Procter & Gamble (P&G), paid her in euros (her ‘people’ have denied this).

As it is, it could be that Bündchen, were she to trigger a rush of celebs asking to be paid in euros or riminbi, could have more impact, and would certainly attract more media attention than the slew of national governments and banks withdrawing their support for the dollar. Quite how close to collapse the dollar is is unclear, and also how many celebrities it would take asking to be paid only in Euros to cause real problems is similarly unclear, but I’m sure someone out there could do the maths. Would it take Posh Spice, Will Smith AND Cameron Diaz, or would just Posh Spice do it? Where might the celeb/dollar ‘Tipping Point’ be?

Categories: Economics

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Ben Brangwyn
7 Nov 12:59pm

Let’s put her on the next issue of the Totnes Pound!

Leanne Veitch
8 Nov 6:28am

Oil has just topped US$100 a barrel. The writing is on the wall – both for oil and for the US dollar.

I read a lot of US blogs, and a lot of US citizens are very worried about the state of their economy, and the twin shadows of Peak Oil and Climate Change. Personally, I’m wondering about US foreign policy and Iran, and what will happen if the US does invade, as Iran supplies China and Japan (among other countries) with a lot of their oil. The world could get very nasty very quickly.

In the meanwhile, I just wish I had the bank balance of that supermodel!

11 Nov 8:33am

You have to consider that, being German and doing quite a lot of work back home, she must find a significant convenience/cost-saving advantage in living with no exchange-rate exposure. Now that the Euro is up to it, this is a very natural move. She doesn’t have to muck around with any currency basket like the OPEC, after all…

20 Nov 6:24pm

Oy!!! Ex-girlfriend also means hope for us Leonardo DiCaprio fans (unless he’s got another girlfriend already).