PRESTOPUNDIT -- A Good Blog at a Great Price. Guaranteed.

[The United States] is having to borrow almost $600 billion from foreigners this year to pay for the imported cars, televisions and other items Americans are buying. Foreigners so far are more than willing to lend the money. The unsettling worry, however, is what could happen if foreigners suddenly lost interest in holding dollar-denominated investments. The outward rush from U.S. stock and bond markets could send stock prices crashing and interest rates soaring.

That is one reason many analysts believe the administration is taking the right approach on the dollar: insist in public statements that it supports a strong dollar but do nothing to stop the slide. "The administration doesn't have any problem with a weaker dollar, but they don't want to say anything publicly for fear of roiling the markets and creating some sort of crisis," said Mark Zandi, chief economist at Economy.com.