By John Parry
A dollar plunge could ravage the U.S. economy as soon as 2012, when foreign investors are likely to exit en masse from U.S. assets, according to a new book by two analysts who forecast the recent credit crisis.
Even after credit, stock and housing bubbles popped in the past two years, dollar denominated assets are still overvalued, and a bigger crisis is yet to come, write the authors of "Aftershock: Protect yourself and profit in the next global financial meltdown".
Huge U.S. government debt issuance will drag the dollar into a much deeper dive, say analysts David Wiedemer and Robert Wiedemer, and writer Cindy Spitzer.
In the short term, China and other foreign investors will keep buying Treasuries to curb their currencies' appreciation against the dollar, say the analysts, who forecast the financial crisis in the 2006 book, "America's Bubble Economy".
Over the long run, investors will slash purchases as bond prices drop, according to the book published this month.
Though most of the pressure on the dollar will come from the Chinese yuan and other resurgent Asian currencies, the euro will eventually punish the debt-burdened dollar, said Robert Wiedemer in a telephone interview with Reuters this week.
U.S. dollar collapse could devastate economy: book
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