Skip to comments.Watch the Dollar—It Could Trigger the Next Crisis
Posted on 02/04/2013 10:59:37 PM PST by ExxonPatrolUs
Expectations of an end to ultra-easy U.S. monetary policy are likely to set in during the second-half of 2013, triggering a bull run in the dollar that could last for five years, says independent economist Andy Xie. And this, he argues, could lead to a "crisis" in emerging markets as hot money inflows unwind.
The U.S. economy has begun to show signs of life again - with factory activity touching a nine-month high in January - prompting talks about an end to the Federal Reserve's quantitative easing program.
Xie forecasts the dollar index [ .DXY 79.73 +0.17 (+0.22%) ] which measures the performance of the greenback against a basket of currencies - will rise to 100 in the next three years, a 25 percent rise from current levels around 80 on relative strength in the world's largest economy.
"The dollar bull market tends to trigger crises in emerging economies. This time is likely to be the same," the former Morgan Stanley economist said, citing the Latin American debt crisis in the 1980s and the Asian Financial Crisis in 1997, during which a rise in the U.S. dollar against local currencies led to a spike in interest payments on external debt.
"During the last ten year's dollar bear market, massive amount of hot money flowed into emerging economies, causing currency appreciation, asset bubbles.(But) when the dollar turns the direction, so does the liquidity. The virtuous cycle on the way up becomes a vicious one on the way down," he added.
(Excerpt) Read more at m.cnbc.com ...
They can’t end ultra easy monetary policies. Government can’t afford to pay for it.
A strong dollar will not be tolerated by folks like Obama and many bankers/corporate executives.
Of course you are correct...but ovomit and his scumbag lowlife followers may have no control on “outside” demand.
Most folks in the former US of A dont follow the dollar closely. Those of us that travbel and live part time outside the country see the results of dollar movement.
Here in Colombia there is a boom in construction, euro money is flowing in as well as a small amount of US money.(not much left). Factories are booming and expanding and life seems to be good...on the surface. Colombias has been forced to buy US bonds and now WE are indebt to the Colombians for about 20 billion as I recall.
The US doesnt export too much to Colombia anymore....we dont export much to anyone anymore, and Colombia has a solid manufacturer base. Mostly the export flowers, fruits and veggies to us.
The dollar has dropped so much against the peso that a home here bout 5 yrs ago if sold today would have to be double the original price just to break even in dollars!!!
I say it’s Japan’s coming crisis that pushes us down the rabbit hole
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