21:00 GMT- Feb 12 (global-view.com) Forex markets are in the midst of what could be a sea-change in general market sentiment. The focus since 2008 had been on the U.S. housing bust, with its undermining of confidence in the U.S. financial system which necessitated substantial government support and a recapitalization of many major players in the industry. As difficult as the process has been, at least there has been a significant blood-letting in the industry and presumably there are not now a lot of major problems hiding under the rug.
The U.S. problems have by no means been resolved yet with a spend thrift government committing taxpayers to heavy future deficits as far as the eye can see and eventually a heavier tax burden. Sharply higher taxes would seem to point to future deflation, just what the spending is intended to prevent. On balance this scenario has been a significant weight on the USD and has raised questions about its role as the world reserve currency.
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