Transition Culture

7 Nov 2007

How to Tell When The Dollar is Really in Trouble.

These are not good times for the dollar. The embattled currency, once seen as the global currency, is slipping, and is slipping fast. Around the world, nations and companies are withdrawing their support for the dollar. 85% of Iran’s oil deals are now conducted in currencies other than the dollar, as part of a programme of lessening the nation’s ‘dollar dependence’. At the same time, OPEC is considering creating a ‘basket of currencies for oil pricing’. This isn’t news really, OPEC nations have been moving away from the dollar for some time. The UAE bank is doing so, Syria and Kuwait are unpegging their currency peg to the dollar, and Venezuela is planning to sell oil in Euros. Yet none of this has really made the headlines. A recent development however, threatens to rock the dollar and really bring the issue to media attention.

Squillionaire supermodel Gisele Bündchen has reportedly refused to be paid in dollars any more. Bündchen is the ex-girlfriend of actor and director Leonardo di Caprio (offering hope for short, tubby, not-very-good looking blokes everywhere). One would imagine that when you earn $30 million in 6 months, losing a few quid on the exchange rate wouldn’t really be here nor there, but according to the Brazilian magazine Veja, when she signed a new deal to represent Pantene hair products, she demanded that the brand owner, Procter & Gamble (P&G), paid her in euros (her ‘people’ have denied this).

As it is, it could be that Bündchen, were she to trigger a rush of celebs asking to be paid in euros or riminbi, could have more impact, and would certainly attract more media attention than the slew of national governments and banks withdrawing their support for the dollar. Quite how close to collapse the dollar is is unclear, and also how many celebrities it would take asking to be paid only in Euros to cause real problems is similarly unclear, but I’m sure someone out there could do the maths. Would it take Posh Spice, Will Smith AND Cameron Diaz, or would just Posh Spice do it? Where might the celeb/dollar ‘Tipping Point’ be?