> ...By "rebalancing
> of currencies" I assume that means devaluing some of
> the dollar's competitors. Wouldnt that make foreign
> products cheaper, and hence more attractive to
> "debt-strapped" consumers?
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No, the idea is to make the yuan, yen and other Asian currencies rise
against the dollar to make their products more expensive rather than
cheaper, which in theory would force an increase in the US savings rate and
a working off of consumer debt as well as a reduction of the trade and
budget deficits. The BofJ is also being pressed to boost interest rates and
the value of the yen in order to curb excessive speculation in the carry
trade.
Of course, it's the Western central banks which have been pushing this "rebalancing" hardest in the interest of their exporters, but Western retailers and manufacturers with subsidiaries and suppliers in China and other low-cost countries have been resisting these pressures because cheap Asian currencies and prices boost their profits. The Chinese understand the need for more balanced growth, but are worry a sharp upward revaluation would cause too drastic a falloff in exports and a social crisis.
By and large, Wall Street - which also benefits from the recycling of foreign export earnings into US debt, helping keep a lid on US interest rates - backs this cautious approach, as do most Western politicians and the central banks. The pressure to quickly revalue the Chinese currency is primarily coming from Congress, especially representatives from regions with industries hardest hit by foreign competition, and even here, Schumer, Graham, et al are mostly playing to the galleries.
I think it would require a profound economic crisis and a loss of confidence by global capital in the dollar as the reserve currency to trigger a more abrupt realignment of the currencies.