Anybody around ever look at the charts? The dollar has been steadily advancing against nearly every currency but the yen, which is at a high (yay, I'm paid in yen). The Chinese "abandon" the US? Maybe they'll rearrange the ratios in their secret "basket of currencies" against which they peg the yuan, or maybe not. They own not only nearly a trillion in US debt- not being able to find enough of that to put their US dollar inflows into, they also bought roughly US$400 billion in Fannie and Freddie! Their little vendor-financing scheme is crumbling around them; of course, that's a bit unfair, since it is really Bretton Woods II, the biggest vendor financing scheme ever, that is falling apart. Europe is in chaos, hoping the Russians will bail them out. Funny old world.
Charts: 3-month dollar v Euro-
U.S. Dollar to Euro Exchange Rate - Yahoo! Finance
Dollar v British squid:
U.S. Dollar to British Pound Exchange Rate - Yahoo! Finance
Check out this blog- a bit technical but here is an especially good recent post:
Brad Setser: Follow the Money » Blog Archive » The damage spreads ….
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One friend just read me something which he has received from an fx trader which said that the only things that anyone desires to own are the US dollar,the Japanese Yen, gold, bottled water and bullets”
I might add "tinned sardines and camp stove fuel" to that, but otherwise sounds like a plan.Best explanation of what's going on that I've heard so far- "You’re in a room with 100 people, and 20 of those people have a deadly disease that is spread by touch. You have no idea who the 20 are, so your strategy is “touch no one”. The banks have no idea who is toxic and who is not, so lending has frozen." Not only that, but they might be toxic themselves and not know it. Can't trust anybody!