Well, the good thing is that the dollar is cheap on the PPP
basis, and the trade deficit is, in fact, finally
improving, a lot better than last year.
The only currencies that are way undervalued are
the Asian currencies. I am not so sure about the Euro. Maybe,
it will need to fall some as well. If consumption slows down,
I expect the trade deficit could improve a lot, and oil price would
fall. But I have no clue if they can disarm the bomb, still
ticking, and so far the ticking got louder. The idea was to
devalue the dollar gradually, so that imbalances take care
of themselves. I'd think some
long recession/slow growth period like Japan for 20 years, but
nothing like the Great Depression. Foreign economies are
stronger than US, so maybe we can export to them and ride
out the weakness for a while -g- |
