When Currencies Collide

Yes, we realize you know Asia's crisis is bad, but beware the impact if the yen keeps sliding and China devalues. Here's how it might happen

Last week in Hong Kong, a multibillion-dollar game of chicken was being played out. Currency speculators--the kind of financial gamblers whose cold-bloodedness could freeze mercury at 10 paces--made a run at the Hong Kong dollar, essentially trying to force its value vs. the U.S. dollar lower by manipulating the supply. It's the type of monetary maneuvering that doesn't mean much to most of us. Yet had the speculators won--and the game isn't over--the economic damage could have been huge, and the already wobbly U.S. stock market would have understood the true meaning of the word correction.

It seems illogical that a...

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