After spending eight years in London and working for firms on both sides of the pond, my view of the role the dollar plays in global economics has become admittedly somewhat skewed. This is likely due to the fact that whenever I was getting paid primarily in dollars, the pound was strong; and when paid in pounds, the dollar was strong. It never failed. But now that I’m earning and spending exclusively in dollars stateside, I'm still having a hard time wrapping my head around exactly what’s going on with the greenback. Last year in April, after moving to Dallas, the buying power of one dollar seemed significantly weak – especially on the cost of imported goods. Such is the pull of inflation and deflation across economies. I'm not saying that we've should have returned to 2001 prices, but really? $5 for a pound (that’s a measure of weight) of Kerrygold butter? It costs less than a pound (that’s a monetary measure) in London! OK, so this anecdotal point uses hyperbole, but still…I thought the dollar was the world’s reserve currency. While on this so-called road to recovery stateside, I've found myself increasingly thinking the dollar might be more harm than help to an economy that is just now trying to pick itself up off the proverbial mat. I’m no economist. But the dollar remains of great interest to me, especially in its ability to trade strongly across a basket of major currencies. The large concern for me is the evolving role of the dollar as a form of worthy currency in the eyes of global investors. We all know the dollar’s worth is not based significantly on hard assets, but rather the triple-A sovereign debt rating of the United States' ability to repay its debts. But a country’s ability to pay its debts it inexorably comingled with the ability of its consumers to do the same, And we’ve clearly seen that doing so remains a problem, never far from the front page of most financial rags. In a recent article in the New York Times on Visa’s use of fees, Mallory Duncan, senior vice president of the National Retail Federation states: “A dollar is no longer a dollar in this country. It’s a Visa dollar. It’s only worth 99 cents because they take a piece of every one.” I like to take this point literally. Especially since there is a trend for consumers to remain current on their credit cards, while choosing instead to default on their mortgage. A source at Fitch Ratings explained this effect as to me as "the need for groceries." Anja Hochberg, an economic analyst at Credit Suisse, told HousingWire in an interview recently for our 'Hot Seat' section of the magazine that deflation, in fact, can be a key destroyer of recovery, as the desire to purchase things greatly wanes and consumers retrench on spending. This is truly interesting, and not something I think is given enough thought in relation to the future of housing in this country. A reader, Alan from San Francisco, recently wrote to us looking for help finding a law firm that is involved in class action lawsuits against big lenders. In explaining his case, he makes a strong (if one-sided) accusation: "I purchased a 4plex five years ago for $650,000 with my life savings of $150,000. The value of the building has dropped to $300,000, but Bank of America refuses to negotiate loan modification with me in good faith." I’m not really sure what the definition of “good faith” is when it comes to loan modifications. But I do know that not only has Alan seen the value of his property drop; he may also find it hard to find a buyer, even if he could get the lender/servicer to agree to a short sale. After all, unemployment is already running into the double digits, and set to push the needle upward ever further in coming months. So there remains the sticking point for us beginning in 2010: can a jobless economic recovery, replete with a government constantly testing its ability to repay its debts (hey, America can always raise taxes, right?) be a real recovery? And if employers continue to limit wage increases, which in turn, saps consumer confidence (what Hochberg calls the wage-price spiral), even as deflation is seen to be ebbing somewhat, what are we left with when it comes to mortgages? The answer is, of course, lies in another question. Even if distressed assets eventually find a place with ready investors (but without a return of third-party securitization), who, exactly, will be left to buy the properties from these investors?