China, the U.S. and the Dollar

The Mexicans are noticing the effects across their northern border of the weakness of the dollar and the creeping economic crisis.

An article translated by Watching America.com from the Spanish-language newspaper, La Jornada warns that the U.S. systemic economic problems are soon to affect the world.

The current state of affairs with the increasing deficit as a proportion of GDP, is incompatible with long-term stability. For that reason, the question is not simply whether trade deficits will be reduced, but whether the adjustment will be painful and destructive to the global economy.

And most worrisome perhaps to the U.S. should be that its financial health is in the hands of the Chinese…

China may restructure its portfolio of currencies at any time. And any reconfiguration of Chinese reserves certainly implies a massive sale of dollars, which could trigger herd behavior and panic in the financial markets.

Read this Mexican commentary on the U.S. and global economy here on Watching America.com