I know Germany is considering pretty much abandoning the U.S. capital markets. They say it's just as easy and less stressful to raise capital elsewhere. That would be bad. I know that even discussing the possibility of a run on dollars means things are really iffy. I know the handling (or non-handling) of any future invasions and the national debt and deficit will be what the world watches. What I don't know, given that it's human reactions more than rational economic considerations that drive decisions, is what is the tipping point?
Worldwide effects of sinking dollar
Its decline to a nine-year low is impacting everything from the price of goods at Wal-Mart to the vigor of Europe's economy.
By David R. Francis | Staff writer of The Christian Science Monitor
The sinking US dollar in recent weeks has raised what is suddenly a top concern from Washington to Berlin and Beijing: Is America's currency undergoing a benign adjustment or a precipitous plunge?
So far, the dollar's slide to nine-year lows doesn't reflect panic. But some analysts say a run on the dollar is possible. And even an orderly drop could affect everything from mortgages to prices at Wal-Mart.
The good news for Americans: It's getting easier for manufacturers to sell products overseas, and more likely that tourists from Germany will flock to US National Parks.
But the downside could be significant. America, the world's leading importer of goods, is now buying them at higher prices. And if the dollar's dive makes foreign investors wary, US interest rates may have to rise to attract buyers of federal debt.
More broadly, it's a shock to the global economy. Sunday in Germany, officials from the Group of 20 industrial and major developing countries called for the United States to cut its federal deficit, which is seen as a key factor in the dollar's fall.
