The last few months the dollar has gained a little over some currencies and been relatively stable. Keeping the dollar weak is helping a little, but it probably is not a long term option. One theory is that the so-called ‘petrodollar’ has created an ‘oil standard’, creating a link between oil prices and the dollar value. As relevant is that US manufacturing has declined, and is being replaced by financial services, a volatile industry that can cause problems for economies, as we are now seeing. I would hope that once the housing woes have blown over, and the economy has a chance to recover, problems like a weak dollar and deficits can be tackled. I don’t think the dollar will collapse unless China and Japan divest themselves of US treasury debt, which judging by the amount, is probably not going to be doing anyone any favors. But then who knows? The problem is what would you replace the dollar with? Perhaps the answer lies in the future and the export of state capitalism from the Far East.
Foreign owned companies is nothing new really. A weak dollar has seen a feeding frenzy, and access is easier in the US than some other countries, but some would argue the US has been equally aquisative in the past. Problems exist where foreign management engage in cost cutting exercises.
