Greenspan sees more declines in dollar

"OPEC nations are switching their assets out of the dollar into the euro and the yen."

alan greenspan 88 298 (photo credit: Bloomberg)
alan greenspan 88 298
(photo credit: Bloomberg)
Former Federal Reserve chairman Alan Greenspan said the dollar will continue to drift downwards on growing signs that OPEC nations are shifting their assets out of the US dollar towards the euro and yen. "OPEC nations are switching their assets out of the dollar into the euro and the yen," Greenspan said Monday in a video conference interview with Likud Leader Binyamin Netanyahu at the Globes Israel Business Conference. "I suspect those pressures will continue and the dollar will be moving lower until there is a change in the US current account balance." However, Greenspan added that giving an answer to Netanyahu's question of how low the dollar will go was like the "probability of tossing a coin." Netanyahu pointed out that Israel had certain technology advantages, representing a niche competitor on the global market and raised the question whether the country should implement government subsidies to identify this competitive advantage or let the free market function. "This is the dilemma of central planning or free market," said Greenspan. "Government interference has failed again and again in history and thus Israel should resist pressures to subsidize industry and let the free market do the work." Greenspan added that Israel had a chance of making fairly significant advances in the future if it sticks to and expands its private markets. Discussing how the US and other countries like Israel can compete in a world of low labor costs with countries like China and India posing dramatic competition to the Western world, Greenspan said the US had already lost many jobs in the past years mainly to China. "But at the same time the standard of living is continuing to grow. Why? It comes from education and the fact that people continue to seek financial sources to raise their cash liquidity and the US is a large provider of financial services," he said.