This article talks about the mortgage and economic problems of Europe and reminds us the dollar cannot hold out as the reserve currency much longer if present trends continue. It is good big picture article.

http://counterpunch.org/whitney08202008.html: [b]The perception that the dollar is getting stronger is mostly an illusion. Deflation is "dollar positive" because investors who flee from toxic assets naturally move into cash. But that doesn't mean they have faith in the dollar; far from it. The fundamentals for the greenback get worse by the day. Fiscal and trade deficits are out of control, the national debt is tipping $10 trillion, foreign investment is drying up, and confidence in US leadership has never been lower. Paper currency is a country's IOU; and foreign central banks are wary of taking checks from a country that no longer wins wars or has the capacity to pay off its debts. That's why, for the first time, there's serious talk about the US losing its triple A rating on government debt. And it could happen sooner than anyone thinks. Every time the Fed uses the dollar to prop up the faltering banking system or provide limitless capital for defunct GSEs like Fannie Mae and Freddie Mac, the dollar comes under greater and greater pressure.

The ideal trade system is a single global currency based on the population, and issued
by sovereign banks, not private agents. From this ideal, we descend to a managed
system of national currencies all fixed to a relative peg so that trade and long term
borrowing are supported by government by its underwriting the sability by the peg.

But then drop down a few bardos, and we have a floating system where a huge bubble of
wealth sloshes around the planet distorting the economic power where its midriff sits,
and as it abandons US reserves, the capital bubble cripples markets wherever it goes.

They've printed up too much paper in their zeal, and now the wind god is whipping
it in to a tornado - a blizzard of paper so thick that visibility is down to 1 month
and a prayer the structured betting system was right. In this fog of financial war,
only a firm large enough to make markets can spike a currency. As no firm has near
this clout, only national governments and their stupid fiscal dodgeyness undermines
any stability at all, as wealth is constantly undermined by the shifting sands of
currency xrates. Then the investment bubble sucks all the currency off the streets
and creates inflation in whichever nation its owners believe they can suck out the
best premium - like drilling oil, except in the myth - created by the excellence of
good managers and creative thinkiers - like the star wars franchise.

But in practice, its lumber, oil, uranium, copper, zinc, tin, and the primitives of
industrial society.