Dollar, in quiet desperation, continues to sink

Watching the dollar slip quietly below $1.25 to the Euro, I’m suddenly reminded of that poem not waving but drowning.

Too bad I can’t offer cheerier references. As it happens, I’m just now listening to Nitty Gritty Dirt Band’s rendition of “Keep on the Sunny Side of Life” but those lyrics don’t seem to apply.

The US is dangerously in hock to the rest of the world and unable admit or address its problem. If international investors panic out of the dollar and US assets, we’re in for a long ride down. Currency markets often overshoot, way overshoot, what seem to be reasonable levels, so it is not unreasonable to worry about $2 to the Euro. Anyone want to give me ten to one odds we hit this level in 2004?