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December 4, 2004 08:22 AM

Balancing Act On The Buck


Excerpt: President Bush has another Texas-sized challenge on his hands. He wants to navigate an already weaker dollar low enough to shrink the trade deficit and rein in concerns that the nation's excessive borrowing and spending runs the risk of a global economic implosion. And yet, a currency-policy mistake could tip the United States into another recession.


President Bush has another Texas-sized challenge on his hands.

He wants to navigate an already weaker dollar low enough to shrink the trade deficit and rein in concerns that the nation's excessive borrowing and spending runs the risk of a global economic implosion.

And yet, a currency-policy mistake could tip the United States into another recession.

The next few months may determine whether a depreciating U.S. dollar remains just a challenge -- short-term pain for long-term gain -- or turns into the economic black mark of the Bush presidency, analysts say.

The White House is "prepared to see the currency market get to almost the verge of crisis before they draw the line," says Brian Dolan, director of research with Gain Capital Group, a currency trading firm based in Warren, N.J.

Financial markets will likely play the bigger role in distinguishing a correction from a crisis. Official jawboning may only go so far, as foreign investors eyeing U.S. fiscal and trade deficits have sold the dollar at a faster rate since last month's re-election of the tax cut-promoting president.

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Read all 21 posts in the same category of Economy:

U.S. Quiet on China Trade Tax - Dec 17, 2004
Fed Raises Interest Rates for 5th Time This Year - Dec 17, 2004
OPEC Considers Output Cut to Keep Prices From Falling - Dec 09, 2004
A Plan For U.S. Energy Security? - Dec 08, 2004
Fed Heading For A Pause - Dec 07, 2004
Social Security Reform = New Debt - Dec 06, 2004
Fed Sees Growth, Measured Rate Hikes - Dec 05, 2004
Weak Employment Rport Casts Doubts Over US Economic Strength - Dec 05, 2004
Fed: Inflation Not Setting Off Alarms - Dec 05, 2004
Job Growth Is Well Below Wall Street Forecasts - Dec 03, 2004
Fed Reports Growth In 11 Of 12 Regions - Dec 02, 2004
Inflation Under Control, Fed Gov. Says - Dec 02, 2004
Global Forecasts for 2005 Growth Are Reduced - Nov 30, 2004
Borrowing For Social Security Plan? - Nov 28, 2004
No Longer Top Dollar? - Nov 26, 2004
Don't Worry ... Don't Be Happy - Nov 26, 2004
Is Another Recession Brewing? - Nov 25, 2004
Inflation Is Tame, Right? - Nov 24, 2004
The Dollar Is Down, But Should Anyone Care? - Nov 21, 2004
Bush Sets Plans To Revamp Taxes, Social Security - Nov 04, 2004