Where Is the American Economy Leading the World?

The American economy is facing a large crisis and is pushing the whole world toward an even bigger crisis. After the credit rating agency Standard and Poor’s reduced the United States’ credit abilities for the first time in its history, the world was hit by a wave of economic disorder. It began here in the Kingdom of Saudi Arabia with the decline witnessed by the stock market in light of rising gold prices, which indicates the great fear that has gripped international economic markets.

The downgrade of the United States’ credit rating has serious and dangerous implications in light of the widening global economic crisis that intrudes especially in Europe, where the eurozone suffers from continuing problems, the latest of which are the recessions in Italy and Spain. These are two large economies, which also means a crisis for the euro, which was seen by some as a safe haven in contrast to the dollar, which is declining and weakening.

American bonds are not guaranteed; this means a crisis for its investors, including the economies of China, Japan and the Gulf countries. Thus, the whole world is tightly bound to the American crisis, which looks to be a structural crisis and not just a passing one. Here emerge several questions about the position of the Gulf states — especially Saudi Arabia — in what is happening in the global economy as well as how its is affected by the crisis’ size.

The coupling of our currency to the dollar is a matter that causes anxiety in many people, as well as the question of the exchange rate and the question of investment in European treasury bonds. With what happened in the stock market, we have an indicator of great vulnerability. Accordingly, the matter now requires more statements and clarifications and assurances by His Excellency the Minister of Finance and His Excellency the Governor of the Saudi Monetary Agency (SAMA) to show the truth of the situation and the plan for the future to avoid the damage caused by what is happening in the American economy. There is no doubt that officials have plans and ideas, but communication in the media today is important, given the sensitivity of the markets and their vulnerability to the smallest rumors that result from a global crisis as deep as this.