Quote:
Originally Posted by peter12
So... is this temporary? Will it lead to a crash in the USD before November 20?
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Temporary? Well, that all depends upon the timespan you are looking at. If I had to guess, I would say no chance there is a drastic shift back the other way.
Just think of all the things happening even from the Canuck point of view. US investments in Canada made a few weeks ago have lost a lot of money. Will that cause investors to be scared similar to a bear stock market, or are Canadian labour and materials now a bargain to Americans? Now add these questions to almost every other country.
The old belief was that when a country adopted a "Beggar-thy-neighbour" policy (the act of devaluing your own currency to make your goods appear cheaper was teh classic example I was taught(
wiki link)) it would take 2 years to realize the full impact of these types of policies.
However, with the speed of international banking and the amount of information that is almost immediately available, I'm sure adjustments occur much quicker.
I'd imagine there are going to be more ripples or echos from this credit shock, and economists are good at figuring out why stuff happened, but what is going to happen all depends in a large part upon the human responses, so until people always react predictably, there will always be uncertainty.