Newspapers around the world are warning that the dollar's sharp fall poses a threat to global financial security.

The dramatic decline in the value of the dollar has met with a chorus of disapproval from America's major trading partners who argue that Americans are relying on the rest of the world to finance a U.S. consumer binge.

"The United States has been living beyond its means for some time," commented David Crane in the Toronto Star (Dec 3). "But its credit card is now approaching its upper limit. Canadians, like others around the world, cannot help but be affected as Americans are forced to finally put their economic house in order."

"Washington...is relying on a soft landing for the dollar," wrote Larry Elliot in the UK Guardian (Nov 21). "History shows, however, that there is a better than even chance of this process ending in a full-scale crisis, as it did in the mid 1980s, when the weakness of the dollar culminated in the stock market crash of 1987."

According to Martin Wolf of the Financial Times Deutschland (Dec 8), "The growing deficit in the U.S. balance of payments is turning into a real danger for the global economy...Europeans may moan but Americans are happy about the financial assistance from other countries. The Asians seem to be happy about subsidizing their exports to the United States. The result is, to quote former Treasury Secretary Lawrence Summers, a 'balance of financial terror'...The world needs a credible plan to get out of this U.S. debt trap."

However, France's Le Monde (Dec 1) saw little hope of a multilateral solution: "The U.S...refuses to acknowledge that the U.S. is living beyond its means, with excessive consumption and too little savings, while it accuses the rest of the world of too little growth."

It is a case of not sharing "Greenspan's optimism," explained Claus Tigges in the Frankfurter Allgemeine (Nov 25). He argued "Europeans are right with their appeal to Washington to push harder for a consolidation of [Federal] finances, since the high U.S. budget deficit harbors a real danger for global economic development. It is not only tying up private capital that could be used better elsewhere. The comprehensive borrowing of the state is also threatening to push up interest rates, not only in America but also in the rest of the world."

Taiwan's Taipei Times (Dec 6) complained that the dollar problem — and its potential to end "in a world of pain" — is not being acknowledged in the country's current election campaign: "The US is on a spending spree, buying China's goods with money it has borrowed from China....[T]his whole merry-go-round has to be seen in the context of China's bankrupt banking system, which is little more than a system whereby the state robs the people of their savings. How long can this go on?"

Will the dollar's decline result in a change of its status as a global reserve currency? The South China Morning Post (Dec 6) seemed to think so: "If many of the holders of some U.S.$11 trillion in U.S.-dollar-denominated assets decide they would rather not be holding assets that are declining in value, the U.S. could be in trouble...In such a scenario, the greenback's luster as a preferred reserve currency might fade..."

Pana Janviroj suggested in Bangkok's English-language The Nation (Dec 1) that another currency could take the dollar's place in Asia: "The idea that the [Chinese] yuan could become another preferred international currency is not far-fetched. There has been talk about Asia becoming a yuan — not a dollar — zone. The foundations for such a change could already be found in the regional currency-stabilization pacts that some Asian countries have in place already, as well as the main idea behind Asia bonds — that Asian countries should keep their savings here and not in U.S. treasury bonds."

Japan's Asahi Weekly (Nov 24) reminded its readers that the value of a currency is a reflection of the fiscal credibility of the government that issues it. "Bush has won a new mandate, a vote of trust from the American people, but he faces a vote of no-confidence in the currency market."