DEFLATION on the horizon?

The Euro was lower in late 2008 and mid 2010 (down to 1.1877 on Jun 7, 2010 to be exact). A weaker Euro will simply allow Americans (or other nationals) to enjoy a European vacation, spend money overseas, and potentially help the local economies. The USD on a relative basis to other currencies (CAD, JPY, CHF) continues to deteriorate and very few people will be worrying about a strong dollar for the foreseeable future (if ever again). Commodities are declining because of a perceived lack of demand as economies continue to deteriorate and demand for oil, raw metals, etc lessens; not exactly due to strong USD. The strength/weakness of local economies (rather than exchange rates) will ultimately determine tourism anyway.

I think the Fed looks at the situation and begins QE3.
If countries leave the Euro we may find some impoort prices lower, this is not what those predicting deflation fear, which is companies not being able to finance inventories and so dump goods on the market in a vicious spiral down. Nothing like that even remotely looks in the cards. In short decreasing prices is not the same as "the deflation". The chaos in Europe does increase the probability of lower U.S. growth next year..

The other big worry is China is renegging on contracts to buy commodities.

http://www.reuters.com/article/2012/05/21/china-coal-defaults-idUSL4E8GL1BS20120521

Beyond the blue horizon
lies a rising son.

That's all I got on this.
Back to you, Riversider.

and a rising sun

If at first you don't succeed............

...rise, rise again!

usd won't become strong, it is just we destroy EUR while making USD weaker. of course weaker is better than being sacked. in a word, the 99% will suffer more