The dollar's all at sea on a wave of change
Americans are poor exporters. A falling dollar can't change that. What with globalization, low-cost rivals and the downplaying of the greenback, a collapse rather than an adjustment looks likely.
I recently bought a superb Canadian Seaquest ocean-going kayak on the internet and had it shipped to my home in Hong Kong. I had sought quotes from 17 suppliers: eight in the US, four in Canada, three in the eurozone, one in the UK and one in Australia. All the Canadian, eurozone and Australian producers sent quotes promptly. None in the US did.
The kayaks of the US producers were just as good as the others, so I kept on bombarding them with emails. Finally two replied. None was interested in overseas business. They didn't know how to do it – packaging, shipping, customs documentation, insurance and freight forwarding was beyond them.
My experience confirmed my view that US companies are poor exporters. That's a big reason why the US external deficit has been relatively insensitive to a falling dollar.
What price benignity?
What then of those, including Federal Reserve chairman Alan Greenspan, who believe the US can achieve a benign adjustment to the deficit by a gradual fall in the dollar? I believe they are mistaken. That's because the interrelationship between the global system and the US economy has undergone fundamental change.