Snappy newsletters. Simple Facebook sharing. Spirited comments. Sweet features are waiting… GET THEM NOW!

$1T US Bailout May Crush Dollar's Rally

Plan's huge pricetag undermines confidence in the buck

By Jim O'Neill,  Newser User

Posted Sep 22, 2008 6:18 AM CDT

(Newser) – The US plan to spend up to $700 billion on suspect mortgage-related instruments and a possible additional $400 billion to insure money market mutual funds may stabilize financial markets—but it’s just as likely to send the dollar into a dive, eroding its 3-month rally, reports Bloomberg. “The dollar will get crushed,” predicted one expert.

Already, the dollar has begun to lose some of the luster it regained since June, including a 10% bump against the euro. Loss of faith in the dollar is driven by worries about increasing American debt, which would hit $11.3 trillion under the bailout plan. The slide began even before the plan went to Congress, with the dollar falling against 14 major world currencies. But some analysts believe the plan will ultimately help the greenback.

Federal Reserve Chairman Ben Bernanke testifies before the House Financial Services Committee hearing on Capitol Hill in Washington.
Federal Reserve Chairman Ben Bernanke testifies before the House Financial Services Committee hearing on Capitol Hill in Washington.   (AP Photo/Susan Walsh, file)
A currency exchange employee changes euros and US dollars in an exchange kiosk in downtown Milan, Italy.
A currency exchange employee changes euros and US dollars in an exchange kiosk in downtown Milan, Italy.   (AP Photo/Luca Bruno, File)
Treasury Secretary Henry Paulson appears on Meet the Press yesterday.
Treasury Secretary Henry Paulson appears on "Meet the Press" yesterday.   (AP Photo/Meet The Press, Alex Wong)
Treasury Secretary Henry Paulson appears on CBS's Face the Nation in Washington, yesterday.
Treasury Secretary Henry Paulson appears on CBS's "Face the Nation" in Washington, yesterday.   (AP Photo/CBS Face the Nation, Karin Cooper)
« Prev« Prev | Next »Next » Slideshow
To report an error on this story, notify our editors.
A snapshot of the day's best news stories.
 
COMMENTS
Be the first to comment on this story.

More Newser Stories

Japan, China Cut Currency Deal, Shun Dollar

ECB Makes Massive $639B Loan to Banks

Euro Dives Below $1.30

Ex-AIG CEO Sues US Over Bailout

As Vote Looms, Strike Shutters Greece 2nd Day


NEWS FROM OUR PARTNERS
Other Sites We Like:   24/7 Wall St.   |   Betty Confidential   |   BuzzFeed   |   Cracked   |   Fark   |   Timelines   |   The Frisky   |   Geek Sugar   |   NewsOne