Besides the shoe throwing incident in Iraq Bush’s recent trip to Iraq and Afghanistan yielded some very interesting information. In an interview with reporters on Air Force One Bush hinted that he may use money from the Treasury program to aid financial services companies in order to avoid the bankruptcy of U.S. automakers. Unfortunately Mr. Bush would not provide a timeline. Mr. Bush stated, “An abrupt bankruptcy for the autos could be devastating for the economy.”

When asked if he would use money from the $700 billion dollar Treasury Troubled Asset Recovery Program (TARP) earmarked for Wall Street Bush said, “I signaled that that’s a possibility.” The failure of the ‘big 3’

US automakers would in all probability cause economic chaos in the US and weaken the dollar limiting Forex opportunities for investors.

The proposed $14 billion dollar bailout remains in limbo since the Senate rejected the bailout last week. If no bailout funds are forthcoming the ‘big 3’

may have to declare bankruptcy. Since bankruptcies of this size have no historical precedent many fear the effect it would have on the economy and the value of the dollar. At present many are taking advantage of the relative safety and Forex opportunity the dollar provides.

Many believe that the risk that the collapse of Detroit poses to the American economy and the dollar is not one of fact but of perception. Despite the growing recession the US dollar has not paid the penalty many think it should have. Some think that the early recognition of the severity of the crisis by the Fed and corrective actions taken has given the dollar an advantage. While much of the rest of the world considered the crisis an American problem they did not move to act until the crisis had spread and deepened.

Because of the early actions by the Fed and the Treasury the perception is that the US will surmount the recession first. This has given the dollar a distinct advantage on Forex markets and has given investors Forex opportunity in a time of crisis. A long and public bankruptcy of any of the ‘big 3’

could have very unpleasant consequences for the US economy and undermine the dollar and the Forex opportunities it presently provides.