BAD ATTITUDES: "The U.S. economy now borrows $1.5 billion a day from foreign investors, said Sung Won Sohn, chief economist of Wells Fargo & Co., and that level could reach $3 billion a day in the near future.
Currency traders fretting over that dependency have been selling dollars fast and buying euros furiously. The fear is that foreigners will tire of financing America�s appetites. Foreign investors will dump U.S. assets, especially stocks and bonds, sending financial markets plummeting. Interest rates will shoot up to entice them back. Heavily indebted Americans will not be able to keep up with rising interest payments. Inflation, bankruptcies and economic malaise will follow.
A slow, orderly decline in the dollar�s worth may avoid a financial panic, but it also gives international investors time to shop for other places to put their money. That could actually put more pressure on interest rates than a sharp, steep drop, as investors demand a premium for holding dollar-denominated assets, Korjut Erturk of the Levy Economics Institute of Bard College, wrote recently.
But a rout on currency markets could be disastrous to the international economy�s psyche. In the November issue of Fortune, Berkshire Hathaway chief executive Warren E. Buffett confessed that he had bet against the dollar for the first time in his life by purchasing foreign currencies."