[Beck_isright]

"This has led commentators to lament how America's twin deficits could grow into a 'full-blown, Third World-style financial crisis'."

Any crisis of confidence would see them withdrawing their loans, triggering a fall in American financial markets and then a run on the greenback.

The writing is already on the wall.

In the past year, the greenback has racked up losses of more than 20 per cent against the euro - falling to a seven-year low of around 80 US cents to the euro. Against the yen, it has shed 11 per cent to hit a three-year low of 105 yen to the dollar.

And we've been saying this for a while now and just tagged as being stupid little "goldbugs". Amazing.

[Beck_isright]

$$$$$$$$$$$$$ PING $$$$$$$$$$$$$$$$$

[lelio]

This has led to a massive current account deficit of more than US$500 billion (S$850 billion) - a far cry from 10 years ago, when the US enjoyed a trade surplus of US$82 billion.

According to some on FR this is a sign of the US's growing wealth -- that we can afford to import more than we can create ourselves. They don't seem to follow this to the next step: that we're beholden to foreign governments that buy our debt.

[cynicom]

Bottom line reads "profit"..If it takes Asian workers to enlarge that bottom line, so be it. If we transfer enough wealth to China, they will not want to make war and will become a peace loving friend.

[Dane]

Mr Paul Krugman, a prominent economist who foresaw the 1997 Asian financial crisis, drew the conclusion as early as last October

Real good source there Beck. And don't give me that cliche that a broken clock is right twice a day. The clock is still broken.

[RussianConservative]

bump

[BlazingArizona]

The article speculates about the disastrous results of a Weimar-style mega-devaluation, while citing actual figures showing a much more modest develation of 25% or so against the Euro and gold. What Asians are really afraid of is that the devaluation that has already taken place will cause us to make more of our own goods, and put Americans back to work doing so.

[Jaysun]

The US$ to Euro has plunged from about $1.29US to $1.23US per one Euro within the last week. That's a 5% change in the direction of a stronger dollar. I trade currencies and I don't follow this guy.....

[A. Pole]

As French economist Jacques Rueff said: 'If I had an agreement with my tailor that whatever money I pay him returns to me the very same day as a loan, I would have no objection at all to ordering more suits from him.'

Especially when the price is lower than domestic producer costs. Free market/free suits bump.

[Redleg Duke]

Somebody ping Willie Green! He will have a whiteout!

[Screaming_Gerbil]

At what time will this price be paid by Joe six pack is what should be addressed...

When will that be???

[the invisib1e hand]

blah blah blah blah blah yadda yadda blah.

say it with me, students: you WANT a lower dollar when you're in debt. it's cheaper to pay it back....

[dr_who_2]

Never mind that. Let's go to Mars and add prescription drug coverage to Medicare!

[dr_who_2]

Never mind that. Let's go to Mars and add prescription drug coverage to Medicare!

[ninenot]

Aside from the flight to gold--what might the Chinamen and Nipponese do? Burn their T-Bonds? Demand gold?

I suspect that at this point, the rise in the Euro's value is about over. The Euro was undervalued to the dollar two years ago (read Agora's old stuff) and gold was undervalued, as well.

The problem for all those other guys is that there is really no substitute for the dollar, and as long as the US economy is picking up (which the Admin steadfastly tells us is the case,) the Bond-holders will wait.

What else can they do?

[DoctorMichael]

Bump.

[the invisib1e hand]

US Dollar plunge could lead to full-blown financial crisis

we could pull this title apart one phrase at a time. start with 'plunge.'

your assignment is to find a historical chart of the US Dollar index, and locate where the $ has 'plunged' in the past, to establish the economic context. Then, notice how the sky failed to fall and the world failed to end in those periods.

Point to ponder: has the $ ever been lower viz a vis a basket of foreign currencies? Do economic phenomena ever take place in a static world, or do conditions change and affect conditions, thereby altering premises in the process? Have world's currencies been inflated as well, so that sheer dollar amount of US debt may be deceiving regarding it's magnitude relative to foreign economies? Has the wealth of the US increased substantially such that a debt/equity ratio in current dollars might not be as staggering as the absolute $ amount of the debt suggests? Are people unaccustomed and therefore afraid of ten digit amounts, since only a generation ago those numbers were far rarer?

[dennisw]

Higher oil prices and higher gold prices are the first impacts of a weakened US dollar. Our economy can be pulled down by gasoline permanently at $2.25/gallon which is one projection I hear.

So far the price of imports have not risen because the Chinese Rembi is tied (mated) to the US dollar. But they will.

[Paul Ross]

Mr Paul Krugman, a prominent economist who foresaw the 1997 Asian financial crisis, drew the conclusion as early as last October. In a New York Times column, he said the US economy was approaching a 'Wile E. Coyote' moment - when the coyote in the famous Road Runner cartoon runs off a cliff, only to realise at the last minute - too late - that it is about to plunge to the bottom.

Wile E. Coyote - GENIUS

[dfwgator]

What's plunging worse, the dollar or Howard Dean's candidacy?

[Henchman]

CLINK not PING! The EUROpeans will panic first. They will support the dollar because they don't want the dollar to be weak cyphoning trade and JOBS. The Germans started to panic at 1.28 US to 1 EURO