CALL TO RELINK DOLLAR WITH GOLD - As well as a volatile week for the world's stock markets, currencies have seen a roller coaster ride recently. The US has been in the news just as much as Europe - with its ratings downgrade over the weekend and the Fed not doing what it was expected to do later in the week. At another level, there is now talk by the publisher and former Republican Presidential candidate, Steve Forbes, that the dollar could be relinked to gold. This has not happened to the world reserve currency since the 1970s.
Toronto-based analyst Theo Caldwell says that while he is sympathetic to such a move it really limits the options a country has as it reduces its flexibility. He says it would take away some power from the US Federal Reserve, which can decide all on its own which way to take the dollar by printing new money and other such methods. He says that, rather than linking the dollar to gold, the Fed should pursue more reasonable policies and open up its books for scrutiny.
Mr Caldwell says that China, which owns lots of dollars and US debt, does not want to see any changes in dollar policy. But he adds that China can not be giving advice on currency issues as it keeps its own currency artificially low for its own benefits. The analyst says that there is no doubt that being in the euro has exacerbated some euro zone states' problems. He says that people look to the euro as a cautionary tale for North America and questions how long Germany will continue to subsidise struggling euro zone countries.
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MORNING BRIEFS - Four countries - France, Italy, Spain and Belgium - have banned the short-selling of financial stocks for 15 days. Short-selling happens when traders profit from bets on the fall in a share price. They usually borrow shares, sell them and buy them back when the price falls - keeping the difference. The ban is in response to the sharp share price falls this week.
*** Global equity markets moved higher before the short-selling announcement as word spread that regulators might act. Shares in London, Paris and Frankfurt all closed up about 3%. In the US the S&P 500 closed up 4.6% after the lowest level of US jobless claims since April gave some comfort that the economy may not be heading for a double-dip recession.
*** Japan's government has cut its economic growth forecast for this fiscal year to 0.5% from 1.5%, citing the impact of the March 11 earthquake, tsunami and nuclear disasters. For the next fiscal year, which starts in April 2012, the government expects growth to recover to between 2.7-2.9% in the world's third biggest economy, due to a post-disaster reconstruction drive.
*** On the currency markets the euro is trading at $1.4191 cents and 87.61 pence sterling.
