> 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?
Rebalancing would mean revaluation - the Chinese yuan and Japanese yen would appreciate significantly (15%-30%) vis-a-vis the dollar.
I'd caution LBO-sters against reading apocalypse in the death-throes of a few hedge funds, though. At most, we may see a $200-$250 billion bailout of selected mortgage lenders, and a nasty US recession. But it looks like East Asia and Europe have finally decoupled from the US - their trade links with their booming semiperipheries are large enough to mitigate even a severe American slowdown.
-- DRR