4 - The Michigan Daily - Tuesday, March 29, 2005
OPINION
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JASON Z. PESICK
Editor in Chief
SUHAEL MOMIN
SAM SINGER
Editorial Page Editors
ALISON GO
Managing Editor
EDITED AND MANAGED BY STUDENTS AT
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tothedaily@michigandaily.com
NOTABLE
QUOTABLE
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In defense of the dollar
SAM SINGER SAM'S CLUB
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conomic downturns
sell. That's certainly
no secret to the
financial media, the better
part of which has been fore-
casting a scenario for the
demise of the U.S. dollar for
more than two years now.
It's a chronicle that's been
told and retold, recycled
through headlines and polished for cover pieces.
The conventional template, (give or take some data
and a stale metaphor or two), reads something like
this: The U.S. economy, thanks to record-low pri-
vate saving rates and a spendthrift federal govern-
ment, has dug its deepest financial hole since the
Great Depression. There's no arguing with that.
The United States, far and away the world's most
prominent debtor, is now in the heat of a decade-
long borrowing binge. The current account deficit
- the difference between what U.S. residents earn
and spend abroad in a given year - at 6 percent of
GDP, has drifted into uncharted territory.
From there, the story gets bleaker. Your typical
dollar disbeliever will go on to question the sus-
tainability of the U.S. debt burden; in particular,
the willingness of our oversees creditors to bank-
roll it. Asian monetary officials are losing patience,
the argument follows, and pressures to diversify
their currency reserves are intensifying. Pop in a
paragraph about the mounting strength of the Euro,
sprinkle on a few colorful catch lines - "currency
crisis," "economic catastrophe" - and out comes
a front-page attention-grabber.
Anyone who's anyone in the financial media has
published it. The Wall Street Journal, The Finan-
cial Times, Barrons - pick your paper - the dol-
lar doomsday scare has seen its time above the fold.
I swallowed the pill myself. Just last November, in
between these very margins, I too was clamoring
about the growing likelihood of a capital flight
from Asia. In hindsight, it's not difficult to under-
stand how the dollar has managed to carry its own
weight. Caught up in a media frenzy, it's easy to
forget why Asian central banks line up to finance
our debt in the first place.
Ever since their devastating experiment with
overpriced currencies in the late 90's, Asia's emerg-
ing market economies have found solace in the full
faith and credit of the U.S. Treasury note. It's simple
give-and-take: By padding their pockets with tril-
lions in dollar-denominated debt, Asian govern-
ments can keep their currencies competitively
priced below the greenback. This keeps exports
cheap and ensures the dollar stays healthy enough
to purchase them. Central banks stomach the IOUs
while manufacturers, blessed with a marked-down
currency, continue to turn out their sports cars,
VCRs and whatever else it is they produce down
there. As for us, well, we get to keep spending. With
the unforgiving nature of Asia's export markets,
developing economies in the region have no choice
but to feed the dollar's appetite - currency appre-
ciation is simply not an option.
Before Asia's late bloomers can even dream of
abandoning the dollar-debt cycle, capital markets
will have to mature, and income disparities will
have to be met head on. Consider China. With
almost a quarter of its billion-plus population con-
fined to rural peasantry, any serious de-emphasis
on export-led growth would rob countless citizens
of a primary source of income. If the Chinese gov-
ernment (or any of its up-and-coming Asian cous-
ins) were to chance a premature experiment with a
steeper currency, I assure you, the price of the dollar
would be the least of our worries.
Even if Asian banks wanted out, where could
they go? Europe, the all-to-predictable response,
seems reasonable from a foreign exchange stand-
point. For its expensive asking price, the Euro offers
relatively steady growth in a deep trading market.
But if I'm a central bank in Asia, responsible for
finding a safe home for the bulk of my currency
reserves, shacking up with the Euro simply won't
get me very far.
The pace of European Union expansion has
shaken the international investment community.
Spanning from Sweden to Slovakia, the E.U.'s trad-
ing zone may have grown too stocky for its own
good. Capital markets have yet to be coherently
integrated, and the absorption of sinking economic
ships like Latvia and Lithuania has deflated growth
projections. Even with the expansion of the Euro-
zone, the International Institute of Economics still
projects that by 2020, the U.S. economy will be 20
percent larger than the European Union's.
Any way you look at it, the United States remains
the 21st century's most promising engine of eco-
nomic growth. Annual productivity gains have
complemented a healthy labor force and a vigorous
entrepreneurial spirit to make the U.S. economy the
world's perennial leader in the innovation and appli-
cation of new technology. A transparent legal sys-
tem, general political stability and the planet's most
elaborate financial sector haven't hurt either. But
don't take my word for it - look at the numbers.
The U.S. still sits atop the money list of foreign
direct investment - long-term capital flows that
grant foreign holders partial control over their
assets - funds that are not factored in to our cur-
rent account balance. U.S. enterprises saw $43 bil-
lion in FDI in the first half of 2004 alone - that's
more than 2003's total inflow. What's it signify?
Confidence. More than anywhere else in the world,
foreign investors want their cash in the U.S. busi-
ness sector, be it a music studio in Manhattan or an
oil refinery in Houston. It's an unambiguous sym-
bol of staying power - both for the United States'
businesses and its currency*- a dagger to the heart
of any dollar doubter.
0
0
Singer can be reached at
singers@umich.edu.
LETTERS TO THE EDITOR
*I
Schiavo story shamelessly
politicized by the media
TO THE DAILY:
I am writing to express my disgust at the
way the mainstream media has turned the
Terri Schiavo case into a political circus with
conservatives, liberals, pro-lifers and pro-
choicers at center stage, all screaming about
Terri to further their half-baked agendas while
the world watches her murder-by-starvation
unfold in grisly detail. What the media, the
administration, the judiciary and a majority
of the American public have failed to notice is
that this is not a right-wing, left-wing, federal
or state issue. It is a civil rights issue, a human
rights issue, and, perhaps most fundamentally,
a disability rights issue.
To paraphrase a recent statement from Dis-
abled Queers in Action, if Terri were black,
female, a suspected criminal, a single parent
or gay, would her "difference" be legitimate
grounds to withhold nutrition? Certainly not.
Why then should her status as a perfectly
healthy disabled person (apart from the fact
that she is starving) merit such a radically
opposite conclusion?
The sad reality is that for Terri Schiavo, court
after court has decided that disability is a "dif-
ferent enough" difference, bought the lie that
a feeding tube constitutes life support, agreed
with the sketchy and controversial assertion
that Terri is a subhuman vegetable and suc-
cumbed to the ablest notion that even a slow,
painful death is preferable to a life "marred"
by disability. As a disabled person myself, I
am disturbed and horrified by the belief that
killing Terri is a merciful act that intends to
relieve her of the "suffering" of living with a
disability. The only suffering Terri needs to be
relieved from is that of systematic starvation,
and for her sake and the sakes of millions of
other disabled Americans, we cannot afford to
play politics for one second longer.
Sarah Watkins
RC sophomore
Israel-Palestine deserves
is the quickness with which some people are
willing to dismiss some issues. At the heart
of the Palestinian-Israeli conflict is an issue
of fairness; and Rawls's veil of ignorance pro-
vides a useful approach for thinking about
the conflict. The approach involves removing
one's sense of self entirely and imagining that
a flip of a coin could determine their position
in society. The idea is to create an ideal society
where true fairness prevails. No matter what
end of the societal spectrum one lands upon,
the results should be equally desirable. I urge
the 25 members of MSA who voted against the
creation of the committee, to use the veil of
ignorance on themselves. If the flip of a coin
were to place them in the shoes of a Palestin-
ian living under occupation, would they be so
quick to make a vote stifling the possibility for
debate on the matter? This letter is not writ-
ten in contempt of the decision or of those who
made it. I am writing this simply in hope of
opening up a new level of discussion on the
issue, void of the raised voices and heated tem-
pers that plagued the meeting.
Whether it be the Israeli/ Palestinian con-
flict, or any other issue, from gay marriage to
reproductive rights, we can not let logic get
lost in a sea of emotion. It is crucial to keep
an open mind and remember that any one of
us could have been born into a number of situ-
ations and it is important to re-evaluate our
worldview accordingly. Peace can never occur
without fairness.
Alyssa Fetini
LSA sophomore.
Professor distorted facts
about the Israeli military
TO THE DAILY:
Rama Salhi accuses Or Shotan of show-
ing "clear disregard for academic honesty" in
her previous letter (Professor right to scrutinize
questionable IDF policies, 03/25/2005). The
only person that has disregarded her academ-
ic honesty is American Culture and Women
Studies Prof. Nadine Naber, who claimed that
the "Israeli military has systematically killed
Palestinian children, demolished Palestinian
ian teenager was caught at a checkpoint with
explosives strapped to his chest. A week earlier
an 11-year-old Palestinian child was caught
with explosives in his bag. Naber claims that
the Israeli Defense Force targets Palestinian
children but neglects to mention that these
same children have been used to kill innocent
Israeli civilians. This was all covered by Greg
Myre in The New York Times; go read the
article yourself, don't take my word for it.
On Nov. 4, 2002 a 26-year-old Palestinian
woman, Shafa Alkadsi, was arrested and con-
fessed that she was going to wear an explosive
belt under the cover of a maternity dress the
next day and explode herself in a populated
place in Israel. Naber's earlier claim that the
IDF targets pregnant women depicts the Israeli
military as antagonistic when it is just trying
to protect its citizens by taking certain precau-
tions at checkpoints.
Type the woman's name into any search
engine and you can read about the story your-
self. I am honestly worried that some students
at this university actually believe some of
the things they read in these letters without
researching themselves. If this is the case, then
Salhi and Naber should keep making ignorant
statements such as "the Israeli Military has
systematically killed Palestinian children..."
However, I have faith that students will not
blindly believe these statements and research
for themselves - and then decide who the
credible source is.
Orrin Pail
LSA sophomore.
LETTERS POLICY
The Michigan Daily welcomes
letters from all of its readers. Letters from
University students, faculty, staff and
administrators will be given priority over
others. Letters should include the writer's
name, college and school year or other Uni-
versity affiliation. The Daily will not print
any letter containing statements that can-
not be verified.
Letters should be kept to approxi-
mately 300 words. The Michigan Daily
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