Why US protectionism could topple the dollar

The US relies on foreign lenders, such as China and Dubai, to fund its massive current account deficit. And yet America's politicians seem set on increasing tensions between the US and its creditors with their objections to the takeover of P&O and complaints about cheap Chinese goods, says Morgan Stanley's Stephen Roach. But all this scapegoating could end up weakening the US economy...

The United States continues to struggle mightily with globalization. China-bashing is on the rise in Washington once again, even as the national unemployment rate falls below 5%.There is a political firestorm over a proposed acquisition by Dubai Ports World of a UK operator of five East Coast container terminals in the United States.

This backlash and the protectionist debate it has spawned reflect the dangerous mixture of macro and politics.America's saving shortfall has triggered a classic political blame game.Ever-complacent financial markets couldn't care less.

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