George...
As I mentioned before, I have doubts about the $USD returning to the low levels that many (including myself) have been projecting.
I continue to believe that the extremely high and climbing current accounts deficit is unsustainable and demands that the dollar will decline from current levels. In turn, the slowdown of inflows of foreign capital will force even more weakness for the US economy and reinforce the recession. That has been the backbone of the arguments for a return of the $USD to the 90 and below range, and until recently I was in agreement with those targets.
The change in my thought has centered on the effects of the recession being global, rather than just domestic. While I still agree that the current accounts deficit and slowdown of foreign capital will force the dollar down, I look for that to be muted at least somewhat by the fact that the other primary economies will be suffering as much (or in the case of Japan, more) than our own, and that should act to prevent a huge decline in the dollar.
The capital has to go somewhere - Japan will be virtually eliminated as a choice, in my opinion, leaving the $USD, the Euro, Swiss Franc, and the Pound as the primary choices, all representing weak economies. Of course there is always.. ah, er, ummmm... gold.
Just an evolving opinion - any thoughts??
mlsoft
AI
