... linked the strength of the dollar to the strength of the econ- omy and to the interest rate differential. When the dollar refused to weaken, the last of the trend fighters gave up and the exchange ... curities and the ,moFgage insurance companies were on the hook. The potential liability exceeded the assets of some of the insur- ance companies in question, and if they cannot meet their obli- ... variables: the budget deficit and capital inflows. The economy strengthened because the stimulus of the budget deficit outweighed the drag of the trade deficit. Economic activity is, of course,...