As Dollar Weakens, Hidden Strengths May Stave Off Crisis
Up to a point, a falling currency is a blessing. After that, it's a curse.
The dollar has fallen 16% against a basket of its trading partners' currencies over the past three years. In theory, that should, with time, make U.S.-made goods more competitive with those made abroad, boosting U.S. growth and employment.
But a growing chorus warns that the U.S.'s gaping budget and trade deficits will lead to a crisis in which the dollar falls much more sharply, driving up interest rates and squeezing the economy.
There are plenty of troubling precedents. Over the past decade, a dozen smaller economies from Mexico to Thailand have gone from growth to deep recession when their currencies collapsed. Even rich countries like Canada have been forced to adopt austere budget policies to cope with currency-induced turmoil. "We are increasingly vulnerable to the kind of sudden stop, where the capital inflows dry up all at once, that's been the bane of emerging markets over the years," says Barry Eichengreen , an economic historian at the University of California at Berkeley.
Could it happen here? It certainly hasn't yet. In a crisis, foreign investors dump stocks and bonds, fearing depreciation will cause further losses. Yet U.S. Treasury bond prices, and thus long-term interest rates that move in the opposite direction, have changed little in the last year -- and stocks are higher. A review of past crises world-wide suggests the U.S. has enough going for it now to avoid a similar fate. Yet the magnitude of the imbalances hanging over the dollar is also without precedent, suggesting a crisis remains possible.
'70s Flashback
The contrasts with the last dollar crisis, in the late 1970s, are both encouraging and unsettling.
Between September 1977 and October 1978, the dollar fell 16% against major currencies, slammed by rising oil prices and sluggish economic growth that pushed the U.S. from a trade surplus to a trade deficit. The weaker dollar helped boost the price of imports, and inflation jumped to over 8% from 6%.
Worried the falling dollar was undermining its anti-inflation efforts, the Carter administration announced a multipart support package on Nov. 1, 1978: The Treasury would use gold sales and foreign borrowing and draw on its reserves with the International Monetary Fund to defend the dollar. At the same time, the Federal Reserve raised its discount rate a full percentage point.
The dollar stabilized but remained weak, and inflation rose to 10% by late 1979. In the summer of 1979, Mr. Carter took what turned out to be a more substantial step. He installed Paul Volcker, then president of the New York Federal Reserve Bank, as Fed chairman. Mr. Volcker concluded that dramatic action was needed to break the back of inflation.
On Oct. 6, the Fed adopted an unorthodox new monetary policy for strangling inflation by clamping down on growth in the money supply, knowing that would send interest rates soaring. Mr. Volcker's new strategy did bring down inflation and eventually bolstered the dollar, but the price was high: the deepest recession since the Great Depression.
A lot has changed since 1978. At the time, the falling dollar was both a cause and consequence of high inflation, which corroded its purchasing power at home and abroad. Today, inflation is much lower and investors believe the Fed will keep it that way. While the falling dollar and high oil prices have boosted inflation a bit lately, investors believe that will be temporary. Ten-year Treasury-bond yields remain near 40-year lows of 4%, compared with 9% in 1979. The Fed thus believes it can gradually raise its short-term interest-rate target, still very low at 2.25%, without slowing the economy in the process.
But some things are worse. In 1978, the U.S. current account deficit -- the balance on goods and services trade plus the balance on investment income between the U.S. and its trading partners -- was less than 1% of gross domestic product. It is now approaching 6%. That deficit represents the extent to which U.S. households, corporations and governments spend and invest more than they earn. Compared with 27 years ago, U.S. households save far less of their after-tax income, and thus must borrow more to finance their housing and consumption. The federal government also borrows more; its budget deficit was 2.7% of GDP in 1978 but was 4.5% last year.
Just as an individual who spends more than he earns must borrow or sell some of his assets to pay his bills, the U.S. finances its current-account deficit by either borrowing or attracting foreign investment in its businesses and stock market. Lately, it has borrowed heavily by selling Treasury bonds and other IOUs, often to foreign central banks. As a result, the U.S. has gone from having net foreign assets equal to 9% of GDP in 1978 to net liabilities equaling about 25% now. Mr. Eichengreen says there is no historical precedent for such a large economy being so heavily in debt to the rest of the world. Timothy Geithner, current head of the New York Fed, recently highlighted the risks: "We are significantly more dependent today on the confidence of the rest of the world in U.S. economic policy."
Real Emergency
The rash of crises that struck emerging markets in the last decade demonstrates the consequences of a sudden and severe loss of investor confidence. Brazil had moderate inflation in 2002 but large current-account and budget deficits. The rise of a leftist presidential candidate, Luiz Inacio Lula da Silva, undermined investors' faith that Brazil would keep inflation down and repay its debts. The government struggled to sell bonds. "All of a sudden, people who thought they had a safe investment started to run," says Arminio Fraga, then the central-bank governor and now head of his own investment firm, Gavea Investimentos. Between April and October Brazil's currency, the real, plunged 40%.
Mr. Fraga and his colleagues, after meeting with Mr. da Silva's advisers, assured officials overseas that Mr. da Silva would pursue "sensible" policies. Still, as the currency plunged, investors were steadily ratcheting up expectations of inflation. Given Brazil's history of hyperinflation in the late 1980s and early 1990s, Mr. Fraga knew those expectations had to be squelched. But at what cost?
Mr. Fraga concluded that "a recession was pretty much in the cards. Given the loss of confidence Brazil was experiencing, we felt: better a managed slowdown with no threat of hyperinflation than a total loss of control which would have led to a depression." So the bank jacked up its target for overnight interest rates to 25% from 18% in just three months.
Brazil went through a recession, though it was relatively mild; growth was flat in 2003. By comparison, Mexico's economy shrank almost 7% after its currency collapsed, Thailand's by 10% and Argentina's by more than 20%. Economists Nouriel Roubini at New York University and Brad Setser have identified several common factors in 14 emerging-market crises from Mexico in 1994 to Brazil in 2002. Among them: large current-account or budget deficits, financing of those deficits with foreign "hot money" that can leave as quickly as it comes in and political uncertainty.
Mr. Roubini says the U.S. shares several of these vulnerabilities: large current-account and budget deficits -- nicknamed "twin deficits" -- with little prospect of resolution, and a growing portion of those deficits financed with short-term borrowing from foreigners. "The average emerging economy would have already gone belly up with these twin deficits," Mr. Roubini says. The U.S. has been spared, he says, because it can still borrow in dollars instead of foreign currency, meaning others bear the pain if the dollar depreciates. By contrast, developing countries often borrowed in dollars to take advantage of lower interest rates but faced a crushing repayment burden when they could no longer keep their currency pegged to the dollar. Brazil's Mr. Fraga notes fear of government default was a key contributor to its crisis, but that has "zero probability" in the U.S.
"We have some residual credibility," says Mr. Roubini. Nonetheless, U.S. dependence on short-term borrowing from foreigners "is becoming increasingly dangerous."
Rich-Country Woes
Even rich countries can be rocked by a run on their currencies. It happened to Britain in the 1970s. Several times in the early 1990s, Canada's dollar came under pressure because of big current-account and budget deficits. The central bank raised interest rates in response, but that worsened the budget deficit by adding to interest on the public debt. Don Drummond, a top finance-ministry official at the time, remembers being bombarded by reporters' questions the day Standard & Poor's reduced the credit rating on Canada's foreign-currency debt. They thought "we were bankrupt internationally. It was a real blow to the Canadian pride."
Mr. Drummond, now chief economist at TD Bank Financial Group in Toronto, says the Canadian government used the crisis atmosphere to muster support for sweeping tax measures and spending cuts that eventually produced budget and current-account surpluses. The U.S. today "spookily" parallels Canada of 10 years ago, he says, with both current-account and budget deficits about the same size relative to GDP.
Canada never faced a single "crisis" moment at which investors balked at buying Canadian bonds, and even the S&P downgrade had negligible financial impact. The lesson for the U.S. is not to expect a "catalytic" event, Mr. Drummond says. "It's more of a drift where you pay more and more of a cost. Nothing changes dramatically in one day."
Foreign Aid, Deep Markets
The U.S. has an additional advantage over any other country when it comes to crisis prevention: Its economy is too important for the world to passively accept a dollar collapse.
That's one reason many countries prop up the dollar. China runs a large trade surplus with the U.S., something that would normally force its currency, the yuan, to rise against the dollar. To prevent that, China buys billions of dollars in Treasury securities. That protects its exports and helps keep U.S. interest rates low.
The increased depth, reach and sophistication of markets is one reason Federal Reserve Chairman Alan Greenspan is optimistic the U.S. can avoid a crisis. "An ever more flexible international financial system" means global imbalances are more likely to be "defused with little disruption," he argued in November 2003.
Indeed, as imbalances have grown in the past decade, currency markets, by some measures, have become more orderly. It's been a decade since the dollar's drop seemed dangerous enough to spark a concerted response from the U.S. and its allies. On the morning of March 2, 1995, Ted Truman, then top international staffer at the Fed, was getting reports of massive dollar sales, some triggered by derivatives strategies, driving the U.S. currency down sharply against the deutsche mark and yen. Bond yields were rising. Mr. Truman went to see Mr. Greenspan and recommended the Fed and Treasury intervene in the markets to buy dollars. "I don't think it's going to do any good," Mr. Truman recalls telling Mr. Greenspan. "But by not being there we are saying we totally don't care what the conditions of the markets are."
Mr. Greenspan agreed, and that afternoon the Fed and the Treasury waded in, buying $600 million worth of dollars in exchange for marks and yen. The next day it repeated the action, joined by 13 central banks. The dollar stabilized. Bond yields dropped.
The U.S. intervened to support the dollar a few more times that year, but hasn't done so since; markets have generally been smooth, and the Clinton and Bush administrations came to see intervention as being of limited use.
Mr. Truman, now a scholar at the Institute for International Economics in Washington, predicts that in the next five years, the U.S. will have to intervene again "either because it's a period of disorder or because we can't withstand the political criticism from our partner countries." He adds: "The very richness and increased flexibility of markets that Alan Greenspan has emphasized probably translates into fewer episodes of disorder, but when they come, they're going to be bigger."
美元下跌隐含深度危机
在一定程度上，一个国家本币的贬值堪称福音，然而贬值一旦超过了适当的限度，福音也就变成了诅咒。
过去3年中，美元兑一系列主要贸易伙伴国货币的平均汇率下跌了16%。从理论上讲，这应当使美国产品拥有比外国产品更强的竞争力，从而大大推动美国经济的增长和就业人口的增加。
然而，如今越来越多的人发出警告称，美国预算赤字和贸易逆差的日益扩大最终将会引发一场危机，导致美元加速下跌，从而不断推高利率，极大压制经济增长。
在这个问题上有过很多前车之鉴。过去10年中，包括墨西哥和泰国在内的十几个相对较小的经济体都曾有过本币大幅贬值导致经济由增长陷入深度衰退的经历。就连加拿大这样的发达国家也曾被迫实行严格控制预算的政策应对由本币大幅贬值引发的经济动荡。美国加州大学经济历史学家巴瑞?艾欣格林(Barry Eichengreen)说：“我们遭遇资本流入突然枯竭局面的可能性越来越大，多年来这种突如其来的停滞正是导致一些新兴市场国家经济陷入困境的祸根。”
这种事会在美国发生吗？当然现在还没有。一旦出现美元危机，海外投资者就会因为害怕美元贬值使其蒙受更大损失而大肆抛售美国股票和债券。所幸美国国债价格以及与国债价格走势相反的长期利率水平去年尚未出现太大变化，而且股市还有所上涨。回顾全球范围内以往曾经出现过的危机我们可以发现，美国当前仍有足够的回旋余地来避免类似的危机发生，但是美元汇率眼下所面临的高度失衡状况也是前所未有的，这就表明发生危机的可能性也依然存在。
对比发生于上个世纪70年代末的上一次美元危机，我们既会感到欣慰，同时也会感到不安。
在1977年9月到1978年10月这1年多一点的时间里，受油价不断上涨的影响，加之经济的增长乏力使得美国对外贸易由顺差滑入逆差的境地，美元兑主要货币汇率出现了高达16%的大幅下跌。美元的疲软导致进口价格的大幅攀升，通货膨胀率一下子从原来的6%跃升到了8%以上。
由于担心美元的不断下跌会有损其为抑制通货膨胀而作出的种种努力，当时的卡特政府于1978年11月1日宣布实行一系列支撑美元的措施：财政部将通过出售黄金、向外举债、动用其在国际货币基金组织(International Monetary Fund, IMF)的储备等手段来捍卫美元汇率。同时，联邦储备委员会(Federal Reserve, 简称Fed)一下子将联邦基金贴现率上调了100个基点。
美元汇率由此得到了稳定，但依然比较脆弱，而到1979年底，通货膨胀率更是进一步上升到了10%的水平。1979年夏，卡特总统采取了一项后来被证明是更具实质性的行动，那就是让当时的纽约联邦储备银行行长保罗?沃尔克(Paul Volcker)出任Fed主席。结果证明，这一任命实是遏制和消除高通胀的必要之举。
当年的10月6日，Fed开始实行非传统的新货币政策来消除通货膨胀。这一政策的精髓就是严格控制货币供应量的增长，即使导致利率水平大幅上升也在所不惜。沃尔克的新战略的确起到了降低通货膨胀水平的作用，而且最终也使美元汇率得到了巩固，然而代价也是巨大的：美国经济因此而经历了大萧条(Great Depression)以来程度最严重的一次衰退。
1978年以后，情况有了很大不同。当时美元汇率的不断下跌既是产生高通货膨胀的原因，同时也是高通货膨胀所带来的直接后果，在原因和结果的共同作用下，美元在国内和海外的购买力出现了大幅下降。今天，通货膨胀水平相对而言比当时低得多，而且投资者相信，Fed会继续使其保持这种状态。虽说美元的下跌和油价的攀升最近使通货膨胀水平有了些许上升，但投资者认为这只是暂时现象。10年期国债收益率依然保持著4%这一将近40年来的最低水平（1979年时为9%），Fed由此相信，它可以在不损及经济增长速度的情况下采取渐进的方式逐渐上调短期利率（目前依然维持在2.25%的较低水平）。
但有些问题情况却出现了恶化。1978年的时候，美国经常项目赤字总额占其国内生产总值(GDP)的比例不足1%，而如今，这一比例已接近6%。这个比例也正好反映了美国家庭、公司及政府消费和投资数额超出其收入水平的程度。与27年前相比，美国家庭今天的储蓄率（储蓄额占税后收入的比例）要低得多，因此他们就要借更多的钱以供他们购买住房和消费。联邦政府所借外债也更多了。去年联邦政府预算赤字占GDP的比例已从1978年的2.7%增加到了4.5%
一个人挣得少花得多，那他就得卖掉自己的一些资产来付帐。同理，美国为填补其巨额经常项目赤字就得大量借钱或吸引投资者投资于它本土的企业和股票市场。最近一段时间以来，它一直在通过向以外国央行为主的海外债权人发售国债和其他形式的债券来筹集大量资金，结果是，1978年的时候美国还拥有相当于其GDP总额9%的净海外资产，而到现在，它的身上却背负了相当于其GDP总额25%的外债。艾欣格林说，像美国这样的经济大国如此大规模地向外举债可说是史无前例。现任纽约联邦储备银行行长盖纳(Timothy Geithner)则在最近的一次讲话中进一步强调了目前这种状况所存在的巨大风险：“我们如今极大地依赖世界其他国家对美国经济政策的信心，而且这种依赖程度比以往大了许多许多。”
近10年来，遭受本币贬值危机的新兴市场国家的经历都表明，这是投资者信心突然崩溃导致的后果。2002年，巴西通货膨胀形势温和，但经常项目赤字和政府预算赤字规模都很大。但左翼总统候选人路易士?伊纳西奥?卢拉?达席尔瓦(Luiz Inacio Lula da Silva)在大选中获胜，沉重打击了投资者信心，他们对政府控制通货膨胀、偿还债务的前景深表质疑。结果，巴西政府不得不勉力抛售国债。时任巴西央行行长阿米尼奥?弗拉革(Arminio Fraga)后来表示，“一夜之间，认为巴西是个投资避风港的人们纷纷逃离”。弗拉革现在自己开办了一家投资公司Gavea Investimentos。当年4月至10月短短几个月之间，巴西货币雷亚尔暴跌40%。
弗拉革和同事与总统达席尔瓦的顾问会晤后，向外国官员保证，总统会执行“有理性”的经济政策。但是，随著货币贬值，投资者对通货膨胀的预期也在稳步增高。考虑到八十年代末期和九十年代初期巴西飞涨的通货膨胀率，弗拉革深知必须消除人们对通胀的担心，但是代价呢？
弗拉革总结出，“衰退已经迫在眉睫。投资者对巴西的信心已经丧失殆尽，我们觉得：在没有深度通胀威胁的前提下，经济在受控状态下放缓脚步，要远远好于彻底失控陷入萧条。”所以，在他的带领下，巴西央行勇挑重担，在短短3个月内，将隔夜拆款利率从18%一举升至25%。
巴西经济还是陷入了衰退，但程度相对温和。2003年经济增长基本持平。与之相比，墨西哥货币崩溃之后，经济降幅几乎达到7%，泰国和阿根廷在同样情况下的经济降幅分别是10%和逾20%。纽约大学(New York University)经济学家鲁里埃尔?鲁比尼(Nouriel Roubini)，和另一位经济学家布拉德?塞泽(Brad Setser)研究了从1994年墨西哥到2002年巴西经济衰退期间的14次新兴经济体危机，得出了几条重要的共同点，其中就包括：巨额经常项目赤字或预算赤字、用外资“热钱”筹集资金：一旦政策上有什么风吹草动，这些积极涌入提供融资的就会毫不犹豫地撤离、以及政局不稳。
鲁比尼指出，美国现在也有其中几项弱点：巨额经常项目赤字和预算赤字──被称为“双赤字”──看不到解决问题的办法；这些赤字越来越多地由短期外债支撑。鲁比尼说，“如果是个普通的新兴市场国家，早就被如此大规模的双赤字拖垮了。”美国能够幸免，是因为美国仍然能够用美元，而非外币举债。也就是说，如果美元贬值，承受损失的是别人，而不是美国。与此相反，发展中国家利用美国的低利率现状常常举借美元外债，可是一旦他们的货币不能和美元保持同步走势，就会面临沉重的偿债负担。巴西的弗拉革指出，担心巴西政府拖欠债务是导致巴西货币危机的重要原因，而对美国根本无需担心。
鲁比尼说，“我们还是有点儿信用。”但无论如何，越来越依赖短期外债的危险正在加大。
但即使是富国，也一样难免币值暴跌的打击。上世纪七十年代的英国就是如此。九十年代初期的加拿大也因为经常项目赤字和预算赤字过大而屡屡遭受货币贬值的沉重压力。央行以加息应对，但这样就加重了政府偿还国债的压力，预算赤字继续恶化。当时加拿大财政部高官唐?德吕蒙(Don Drummond)还清楚记得标准普尔(Standard & Poor's)下调加拿大外汇债券信贷评级当天被记者围攻时的情景。他说，记者们都觉得加拿大在国际上已经破产了，这对加拿大人来说的确是一次沉重打击。
德吕蒙现在是多伦多TD Bank Financial Group的首席经济师。他说，加拿大政府利用这种危机气氛，号召各界人士大力支持税制改革和削减政府开支的种种举措，最终实现了预算和经常项目的双重盈余。今天美国的情况同10年前的加拿大“惊人地相似”，经常项目赤字和预算赤字占GDP的比例基本一致。
在那之前，加拿大从未面临过这样的危机，投资者都不愿意购买加拿大债券。美国应该从中吸取的教训是，不要期待奇迹发生。德吕蒙说，代价会越来越大，一夜之间不可能出现重大改变。
相比其他国家，美国还有一项别人无法企及的优势：美国经济对这个世界来说太重要了，人们不能消极地接受美元崩溃。
这就是很多国家之所以推高美元的理由。中国对美国享有巨大的贸易顺差，这会推动人民币兑美元汇率上扬。为阻止这种情况发生，中国买入了数十亿美元的美国国债。这不但保护了本国出口，也帮助美国利率保持在低水平。
国际市场宽广深邃和纷繁复杂是Fed主席格林斯潘(Alan Greenspan)对美国不至于发生危机的信心所在。他曾于2003年11月表示，当今国际金融系统的灵活性前所未有，这就意味著全球性失衡可以很容易就被纠正过来，而全球经济发展的脚步不至于中断。
实际上，过去10年当中屡屡发生的货币市场失衡也在某种程度上使得国际货币体系更加有序。上一次发生可能会促使美国及其盟国携手认真应对的美元大幅贬值已经是10年前的事了。1995年3月2日的清晨，Fed高级官员泰德?杜鲁门(Ted Truman)接到美元被大肆抛盘的报告，部分来自衍生金融产品策略师的抛盘，导致美元兑德国马克和兑日圆汇率暴跌。债券收益率相应飙升。杜鲁门前去会晤格林斯潘，建议Fed和美国财政部干预市场，买入美元。他回忆著格林斯潘当时的话：“我认为这么做不会有好结果。”“但是，如果不加干预，就等于向大家表示我们对市场状况毫不在意。“
格林斯潘也同意他的看法，当天下午Fed和财政部联手入市，共买入6亿美元德国马克和日圆。第二天如法炮制，另外13个国家的央行也加入阵营。美元汇率稳住了。债券收益率开始下滑。
那一年，美国货币当局又入市干预了几次，但此后再也没有干预过；市场基本上运行稳定，克林顿(Clinton)和布什(Bush)当政期间，Fed很少使用干预手段。
杜鲁门现在是华盛顿的国际经济研究所(Institute for International Economics)的学者。他预计，5年之内美国政府必定会再度入市干预，不管是因为秩序已经破坏，还是因为再也无法承受伙伴国对美国政界的批评。他还说，格林斯潘强调的市场之富有和灵活可能都会演变成为几场无序的插曲，不过一旦来临，情况就会日益恶化。
