1. A recession in US and a continued boom in India?
2. One Euro is now worth $1.5; nearly doubled since 2000. Wow! Even Rupee is much stronger against the dollar. Will this trend continue?
3. If there is in fact a recession on the horizon, for sure there will be a lot of jobs lost in US. But, what happens to all those outsourced jobs?
The trigger for this steep slide in the US stock markets is the unfolding mortgage crisis. Back in August 2007, I wrote something about this topic. You can read it at: http://teluguoneradio.com/tori/lahari.jsp, click on: The ABCs of Housing Induced Credit Crunch.
On the other hand, the trigger for the weakness in dollar is George W. Bush's illegal war with Iraq. This war exposed the weakness of the so called 'the only superpower' nation. What was once considered as a reserve currency is now treated as toxic waste.
The situation for the US dollar was exactly opposite after the first Gulf War, which was the war of George HW Bush. The fall of the Soviet Union, which was followed by America's (and its real allies') decisive win in the first Gulf war made America look invincible. That's when America called itself the "Only Super Power." The dollar was sexy. People shunned gold and flocked to the dollar as the only reserve currency.
Then came the Euro in 2002, with the backing of the economies that are almost as big as the American economy. For decades, oil was traded only in Dollars. Saddam Hussain broke that tradition in 2001. Some say that GW Bush went to war with Saddam for accepting Euros for oil. I would suspect this may not be the only reason for the war, but it could be one of the main contributing factors to the current Iraq war. If Bush did go to war to solidify the dollar as the only reserve currency, he achieved exactly the opposite.
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