Weak dollar has silver lining

THE day Australia showed 3.5 billion TV viewers worldwide what it was capable of as a mass entertainer with Sydney’s spectacular Olympics opening ceremony, the Aussie dollar hit an all-time low against the Greenback.

News from New York showed the Aussie was in free fall – down to 54.40 USc.

Finance writers promptly began making predictions.

“The Reserve Bank will be under greater pressure to intervene in the currency market after another blow for the Australian dollar,” one wrote.

But the Reserve’s Governor, Ian Macfarlane, resisted. Like other assiduous money market watchers, he knew the Reserve’s pockets were not deep enough to prop up the Aussie.

The Greenback is king so it’s best to stand aside and look for a silver lining that surely exists.

Less than a week after the opening ceremony the Aussie tumbled to below 53.7 USc.

Its dramatic fall means the best advice to give those wanting to see the Statue of Liberty is, “Go look at Sydney’s Opera House instead”. Now is not the time for Disney World or the Grand Canyon – try the Gold Coast or Ayres Rock instead.

Oh, how times have changed, and in so short a time.

I recall when an Aussie bought you around US$1.20 or so – and not so long ago.

Ironically that was when Australia’s economy was far smaller, and highly and tightly protected, and when growth was below current healthy levels.

A lot has happened since.

America has won the costly Cold War, so has drastically slashed its armed forces, a key reason why its economy is flying so high.

But there are other reasons.

America’s seemingly endless cohorts of physics PhDs, mathematicians and whiz kid billionaires like Bill Gates have paved the way for introduction of personal computers and new-fangled communications hard and software into the average American, European, and Australian home.

Nor has Asia and the Middle East missed out on these dazzling innovations.

The US-driven Internet and telecommunications revolution and all it implies is the New America. It’s a re-run of earlier booms that saw introduction of mass ownership of the T-Model Ford in the 1920s; refrigerators and the wireless in the 1930s and 40s; and air conditioning and TVs in the1950s.

Up to 160 million Americans, in an economy of more than 250 million, are expected to have home Internet access by 2003.

An entire new American securities trading arm, the National Association of Securities Dealers Automated Quotations (Nasdaq), has blossomed on the back of the new space age technologies.

Although Nasdaq emerged in 1971 it was not until the 1990s that it really boomed due in part to the new Dick Tracy communications and software sectors.

And it hasn’t looked back.

No wonder Republicans George W Bush and impressive running mate Dick Cheney cannot loosen Al Gore’s tight grip on the White House’s front door keys.

Hi-tech is king and the Greenback is wallowing in the glory.

America’s multi-billion dollar communications and software revolutions that began in the 1990s have been and will continue revolutionising its and the World’s economies in much the same way that introduction of the Boeing 747 boosted the international travel and tourism industries after 1970.

Strangely one outcome of this new brave new world is that big food and mineral-producing economies like Australia’s are somewhat looked down upon in big money dealing circles.

This partly explains the present low value being placed on the Aussie. The same applies to the Kiwi dollar.

Interestingly, and probably not coincidentally, some within the Anzac economies are talking of merging both dollars to create a single currency.

This is far from fanciful talk for such a process has been adopted by some Latin American states vis-a-vis the Greenback.

That old adage of business being the business of the US once again has poignant meaning.

But as much as Australian national pride may have been hurt and those with travel plans being forced to put them aside, there is an up side to all this.

The countries of East Asia – the “Dragon Economies” – between the 1950s and 1990s reached their envied high-flying levels not only because of their once-cheap but skilled workforces but also because of their cheap currencies during those crucial decades.

Japan, Taiwan, and South Korea modernised by vigorously marketing output into Europe and US over those years, moves that were markedly aided by having a cheap currency, a ploy South-East Asia’s “Tiger Economies” we’re sure to emulate.

That’s why names like Sony, Sharp, National, and Samsung are household words worldwide.

One reason Australian manufacturers of those years couldn’t match them was because our pound, and later dollar, was – unlike the Yen, Won, and New Taiwan dollar – so highly valued against the Greenback.

Now that Australia, at long last, has a cheap dollar against the Greenback it can do likewise, as long as it is not just a passing phase.

Something export-oriented economies like WA’s do not need for a long time is an overvalued Aussie.

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