Regarding Our Perilous Economy

The dollar soared today against foreign currencies. Foreign newspapers are already indicating that it is a fool's rally.

In the UK the Telegraph is reporting that a "new credit crunch looms" because the dollar is about to collapse. Here's an excerpt:

There are concerns that a $75bn (£37bn) rescue operation put together by US Treasury Secretary Hank Paulson to stabilise the sub-prime market is intended to mask the scale of the crisis.

"This rescue has back-fired," said Hans Redeker, currency chief at BNP Paribas. "The central banks don't want anything to do with it. There is a fear that the big four US banks are trying to hide their debts," he said.

. . .

"The dollar is going to fall further because long-term funding for US assets has collapsed since the sub-prime crisis."

Outgoing IMF chief Rodrigo Rato warned yesterday that the adjustment may be brutal. "An abrupt fall in the dollar could either be triggered by, or itself trigger, a loss of confidence in dollar assets," he said.

Bill Moyers' October 12th interview with Robert Kuttner and William Donaldson -- about the similarities between 1929 and 2007 -- provides a succinct analysis of the challenges that we may soon be facing.