More bad news:
The head of the International Monetary Fund, Rodrigo Rato, warned Monday of a potential "abrupt fall" in the US dollar that could roil the global economy.
Not really news, given the credit crunch, housing slump, and recent milestones like the on-par US-CDN currency valuations. However, he goes on to give us a really important nugget:
"There are risks that an abrupt fall in the dollar could either be triggered by, or itself trigger, a loss of confidence in dollar assets," Rato said at the close of annual meetings here of the IMF and the World Bank.
Taking that apart piece by piece we get:
1) There are risks that loss of confidence in dollar assets could trigger a fall in the dollar.
2) There are risks that a fall in the dollar could trigger a loss of confidence in dollar assets.
Which is to say... a drop in the dollar is
a loss of confidence in dollar assets and a loss of confidence in dollar assets is expressed by a drop in the dollar.
Which is to say... what was he saying again? The best I can tell is that he meant to say: "If things get bad, that is going to be bad." or, rather "If the dollar isn't worth much, you won't be able to buy a lot with it" or "One dollar is worth one dollar in dollar assets."
Right. Luckily, he goes on to clarify this a bit:
"The turbulence in the credit markets is a warning that we cannot take the benign (global) economic environment of recent years for granted," Rato said..
"Given recent bad things, we know things might not always be good."