Following the deficit debate, I've been hearing about this day of reckoning for 12 years. It must be getting really close!
I'd say the key issue in all this is the Bubble. U.S. assets still seem to be over-valued. As for the accounting scandal, it may be that the ingenuity of Euro and japanese accounting just hasn't seen the light of day yet. We can't doubt an equal capacity for chicanery by our capitalist brethren. Perhaps it is greater, if we grant that U.S. capital markets are more honest, relatively speaking, then the rest. Bob Eisner used to point out that those holding dollar-denominated assets who started to bail out ran the risk of taking a bath as the process continued. Paul Davidson would reply that on the micro level, with atomized decision-making, anyone in the midst of such a wave has a rational reason to try and dump before the next fool, leading to the big communal bath. Given the age structure of the U.S. population, with aging Boomers trying to save after leading our dissolute lives, this ought to prop up asset values for another ten years or so. At that point who knows what shape the world will be in. mbs FM: > Related to the Business Week article sent to the list last Friday by Jim > D. on the danger of the US deficit on the current account and increasing > foreign debt, below is an article in last Saturday's Financial Times, > which concludes that the "day of reckoning" for the dollar "is close at > hand". . .