I know. But it is too early to conclude that it won't
happen.
Andrew, you should take a look back into mid-2006 when people
began to notice America's swelling twin deficits and early 2007
when first batch of news about subprime mortgage emerged in
newspapers. A young man, 26, possessed up to 4 houses and found
himself defaulting the mortgage payments. Some economists came out
to warn that a disaster might be eminent. Then time flied til early
2008 and people kept saying the same thing "it hasn't happened.",
while the Dow kept climbing to 12,XXX. Then one day Lehman Brothers
came up and said they were broke.
Now people keep saying America still has a lot of power and that
the dollar is the only safe haven. I am very skeptical about this
notion.
We got to stick to the principle
that if a type of product is churned out in massive quantity, its
price must go down heavily too.
Wen Jiabao has so far indicated twice late last year and also
yesterday that he is worried about America's ability to sustain
these mountains of debts. Obviously, China is pondering of
diversifying out of the Almighty Dollar slowly and slowly. And this
is to America's concern. Why is China now on a shopping spree,
buying up resources companies and making deals in South America,
Australia, and Africa?
Now....I am not sure if the recent incident of China VS America
small feud in the South China Sea is related to the current
economic crisis. Both giants are playing games. But there's one
thing for sure in my mind. Sorry, I
won't buy America anymore!
Look at this:
...see how it rebouded even as
the US was printing more and more money form the low of ~70 to now
~88?
That is why I said that at the
moment, it does not seem like it is going to happen any time
soon.
That is because the whole world is still
dependent on the USA. You kill the US$, you kill the goose and you
kill the goose, you kill yourself.
If the chart changes trend I
will be willing to change my position. This is not like the stock
market which is rather easy to predict. Exchange rates involves not
just the exchange rates of the two countries but cross rates as
well!