Down goes the dollar...

Atrios (a self-described "recovering economist") doesn't think this is quite as worrisome as Josh Marshall fears it might be. Essentially Asia would have to give the finger to the US and stop buying all its debt, but it would hurt itself in the process. That latter tidbit is what we are all banking on (no pun intended) as the Bushies continue to rack up debt.

But there are other factors that help prop up the dollar, so who is to say that Asia isn't going to see the Central Bank's diversification and want to sell off some of their dollars before they drop too far due to the Central Bank and other reasons? They might be hurt by selling off, but they would probably be hurt even more if they hold pat and the entire house of cards collapses. (Note to self: search Brad DeLong's archives for more information)

And even if this doesn't happen soon, do we really want to be in a position in which we are potentially beholden to Asia for our own economic security? This is no chicken-little crap... this kind of thing can happen to us. We are not invulnerable.

Bottomline: we are in a very tenuous economic position, more than the general public probably knows.

And Bush was huge in putting us there.