Bush has'nt got much to lose, his ranking, already low, is falling each month.
My opinion is that he will most likely be called the worst US president, the US ever had. And they had their share. He is now a lame duck and not really wanted by many countries.
But, apart from the 1929 depression, most presidents were effective overseas even if their US legacy was not that great.
That all changed with Bush who has exposed the world to new dangers, be it geopolitically or economically, the latter by flushing the world with surplus dollars while the US debt is astronomical. He also lost the initiative on the world stage.
No wonder then that influential Russia challenged the G7 about having the USD as the world's reserve currency:
"Dollar is no longer absolute international reference currency: Russia": http://archive.turkishpress.com/news.asp?id=119981
That could mean that some Principals are already very seriously thinking about replacing it. I would think that any new currency could be based on the Euro, the rubble and the Chinese yuan.
Russia is now becoming one of the influential countries due to its commodities and precious metals.
Whatever currency is decided upon, holding USD be it in cash or Bonds, is not a good idea, I think.
One can expect more negative statements on the USD, so expect it to fall. At the moment, it is 87.1
The biggest problem will be the change-over with China, Japan and others holding some large USD balances held in cash or bonds.
Somehow, it will need to be done gradually, otherwise large losses could be made or a recession/depression could result.
At the moment one is waiting for Asian consumption to pick up, making these economies less dependent on the US. Once, that moment is reached, then the change to a better Reserve currency may well occur.
Meanwhile, the smaller economies are not going to wait for that and are including less USD in their Reserves. This and less partaking of the Majors in financing the US deficits ought to be a warning for USD holders.
From now on, one can expect more fallout and more fabrication of numbers by the FED.
