Some analysts are beginning to talk of a very big correction, suggesting that it would take very little to trigger panic selling leaving the world economy down a very slippery slope. The US Treasury is calling the bluff of all its creditors, mainly Japan and China, who would not dare start a run on the dollar as it would merely devalue the assets that they have sitting in their central banks. Doomsayers are starting to talk about horrific scenarios, the United States becoming an overnight Argentina and the Euro and gold sky-rocketing in value. Mainstream commentators are avoiding such reckless forecasts for the moment if only to ensure that they are not the ones to trigger the slide but such nightmarish visions are certainly in their thoughts if not in their articles. The Bush administration's weak dollar policy may prove to be brinksmanship taken a little too far.
25 January 2005