The dollar’s slide: How far, how hard?

– The US Trade Deficit and the US National Debt are, in many people’s minds, getting seriously over extended and there will come a time when this perception gains general traction with those foreign investors who like to stockpile their money in US Bonds because of their safe and certain returns. When they decided too much is too much and shift their investments elsewhere, the US is going to come in for a hard financial landing. Since the US Trade Deficit and National Debt continue to rise year after year as if there is no tipping point, one can only wonder when we’ll cross it and everything will suddenly change. This possibility is just one of the many threads that make up the Perfect Storm hypothesis.


The currency sank about 2.5 percent against the euro in the last 5 sessions. More losses may be coming.

(Fortune Magazine) — U.S. currency traders gorged on Thanksgiving turkey and took a half day last Friday while the rest of the world quietly bet against the dollar.

At first, it looked like a handful of speculators were taking advantage of light trading volume, which makes it easier to move a market up or down. But then more players started lining up against the greenback, too, and the worries hit harder than post-holiday indigestion.

The dollar has tumbled about 2.5 percent against the euro in the five sessions through Tuesday. Although the greenback came back a bit Wednesday, the dollar’s near its weakest against the euro since March 2005. The dollar also fared badly against the British pound, though it’s done slightly better against the lowly Japanese yen.

“With the dollar debacle, the health of the economy, current and future, is on trial,” said Brian Wesbury, chief economist at First Trust Advisors.


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