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To: stan_hughes who wrote (363318)	3/23/2008 3:49:40 PM
From: Real Man	Respond to of 436258

I remember the net international investment position in the ballpark of - 3 Trillion, or around 25% of GDP. Many other nations have been much worse off in their respective currency crises. Iceland had 300% of GDP borrowed from abroad? The buck did fall a whole lot already, and the trade deficit with the Asian countries is improving a lot (perhaps, for now due to recessionary forces). In comparison with other crises in developed nations, the move for USD is quite extraordinary already, but it is still overvalued. I agree with you, and expect the buck to fall to 50 or below eventually, but I'm not so sure the fall will be without some sharp rallies - we shall see as it goes. In particular, a global recession (definitely on its way if USD falls and US falls into a deep recession) will reduce energy demand, and energy is the main component of current account deficit right now. Deficit with Asia was cut in half! Note that the current account deficit in Euro/USD is not an issue, the buck has to fall against other currencies now. But to say that US has no manufacturing is an overstatement. My main concern remains the Fed and their policies. Faulty policies in a currency crisis situation may lead to hyperinflation. In particular, the Fed needs to be more concerned about reviving manufacturing rather than bailing out the financial Ponzi scheme. Manufacturing will need lower but STEADY USD. Definitely no hyperinflation. It's quite hard to fight this mess of their own creation. The current account deficit fell from 7% of GDP to 5%, I think, even though the dollar amount stabilized.