Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Tuesday, November 28, 2006

Can the Global Economy Switch Engines?

This story from Reuters raises some interesting points on the question: Can the global economy keep humming along if the US economy really slows down?

PARIS (Reuters) - The U.S. economy is running out of steam but Europe's resurgence and Asia's awakening will prevent the world's economy from derailing as it did after the stock market crash of 2000, the OECD said in a report on Tuesday.
"Rather than a major slowdown, what the world economy may be facing is a rebalancing of growth across OECD regions," said Jean-Philippe Cotis, chief economist at the Organization for Economic Cooperation and Development.
In a twice-yearly Economic Outlook, the OECD forecast growth decelerating next year to 2.5 percent across its 30 mainly rich, industrialized member countries from 3.2 percent this year, and regaining some speed in 2008.

Read the rest of the story by CLICKING HERE.

The OECD takes the view that while the US economy is important, the growing economies of Asia could keep pushing the global gravy train even if America gets sidelined. If true, that would be a major realignment of the world order.

Now here's an interesting question: What would happen to the US dollar if our economy is in the dumps and Europe and Asia are growing faster than we are? I'd say the flow of funds would leave our shores and seek better investments elsewhere -- and that could send the US dollar much lower.

Naturally, that would be a huge boost for precious metals prices.

Labels: , , ,

Check out my new gold and energy blog at