now gates, too, is betting against the us$

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    Bill Gates, World's Richest Man, Bets Against Dollar
    Jan. 29 (Bloomberg) -- Bill Gates, the world's richest person with a net worth of $46.6 billion, is betting against the U.S. dollar.

    ``I'm short the dollar,'' Gates, chairman of Microsoft Corp., told Charlie Rose in an interview late yesterday at the World Economic Forum in Davos, Switzerland. ``The ol' dollar, it's gonna go down.''

    Gates's concern that widening U.S. budget and trade deficits are undermining the dollar was echoed in Davos by policymakers including European Central Bank President Jean-Claude Trichet and German Chancellor Gerhard Schroeder.

    The dollar fell 21 percent against a basket of six major currencies from the start of 2002 to the end of last year. The trade deficit swelled to a record $609.3 billion last year and total U.S. government debt rose 8.7 percent to $7.62 trillion in the past 12 months.

    ``It is a bit scary,'' Gates said. ``We're in uncharted territory when the world's reserve currency has so much outstanding debt.''

    A week before Group of Seven officials meet to discuss currency policy, Trichet repeated the ECB's concern over the dollar's drop to record lows against the 12-nation euro currency.

    Euro Rally

    The euro rose as high as $1.3666 per on Dec. 30 and last bought $1.3045. A stronger euro reduces the competitiveness of European exports and crimps growth among the nations sharing the currency.

    ``The governing council of the ECB has repeated a very, very short sentence, namely that the sharp moves upwards of the euro were unwelcome and that we thought they were counterproductive from the economic growth perspective,'' Trichet said at a Davos panel discussion today.

    The last meeting of G-7 finance ministers in Washington in October said that exchange rates should reflect economic fundamentals and that excess volatility in currencies is ``undesirable.''

    U.S. growth reached a five-year high of 4.4 percent in 2004, outpacing Europe for the 11th time in 12 years. The euro region probably grew 2.1 percent, according to European Commission estimates.

    Deficit Risks

    U.S. President George W. Bush is pledging to clamp down on spending to halve the budget deficit -- $427 billion in the 12 months through Sept. 30 -- during his second term. The administration releases its fiscal 2006 budget on Feb. 7.

    The U.S. budget shortfall is ``the No. 1 risk, disregarding geopolitical risks'' to the global economy, German Deputy Finance Minister Caio Koch-Weser said in a Jan. 27 interview in Davos. He urged Bush to present a ``credible'' plan for getting the deficit under control.

    Chinese central bank adviser Yu Yongding said in Davos the U.S. government should do more to tackle its record current- account deficit and ease pressure on China to loosen its currency's peg to the dollar.

    ``The U.S. should take the lead in putting its own house in order,'' Yu said. ``It's the root cause'' of global imbalances. ``China will make its contribution, but the world should not put disproportionate pressure'' on the country.

    Deficit Cutting

    U.S. policymakers including Trade Representative Robert Zoellick defended Bush's deficit-reduction plans and blamed the U.S. trade gap on sluggish growth in Europe and Japan, which reduces foreign demand for American goods.

    ``One has to get the budget deficit down, but the question is how do you do it,'' Zoellick said today on the same panel with Trichet. ``It's at least our view that you want to do it by slowing the growth of spending.''

    Gates reflected the views of his friend Warren Buffett, the billionaire investor who has bet against the dollar since 2002. Buffett said last week that the U.S. trade gap will probably further weaken the currency.

    ``Unless we have a major change in trade policies, I don't see how the dollar avoids going down,'' Buffett said in an interview with CNBC Jan. 19.

    Gates in December joined the board of Berkshire Hathaway Inc., the investment company that Buffett runs. Forbes magazine's list of billionaires ranks Gates, 49, No. 1. Buffett, 74, is second, with more than $30 billion. Almost all of it is in Berkshire stock.

    Gates described China as a potential ``change agent'' for the next two decades. ``It's phenomenal,'' Gates said. ``It's a brand new form of capitalism.''

    Gates's $27 billion foundation in September received approval from China's foreign-currency regulator to invest as much as $100 million in the nation's yuan shares and bonds.

    To contact the reporter on this story:
    James Hertling in Davos at [email protected]; Simon Clark in London at
    2059 or [email protected]

    To contact the editor responsible for this story:
    Emma Moody in New York at [email protected]
    Last Updated: January 29, 2005 06:08 EST


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