President Bush doesn't talk about the dollar much, but when he does, he's got exactly one thing to say about it: "We have a strong dollar policy."  

It's becoming increasingly clear, however, that Bush's "strong dollar policy" is driving the greenback into the ground.  

The dollar is hitting record lows this week amidst fears that the mortgage-market meltdown will spread to other parts of the economy and as the Chinese make noise about moving more of their investments into euros. But it is the underlying dynamics of the American economy -- continued massive trade deficits and a whopping national debt -- that have put the dollar in such a precarious position.  

A true strong dollar policy, aimed at increasing the confidence of international investors, would require Bush to do a bunch of things he doesn't want to do. For instance, he would have to stop borrowing so much money to fund his tax cuts and his wars. He would need to encourage the Federal Reserve to raise interest rates, rather than depend on it to keep propping up the domestic economy by decreasing them. That sort of thing.  

Instead, Bush just offers the strong-dollar line, without specifics, and moves on.

By letting the dollar continue to weaken, the Bush administration is making another in its long series of huge, avoidable mistakes.

It is an administration that . . . has been utterly incompetent, not to mention bullheaded in ignoring important data and empirical evidence, on far too many fronts. . . .

ALL THIS IS RELEVANT because it shows an administration that, no matter how high its ideals, has been repeatedly asleep at the switch. And so it is again with regard to the free-falling dollar. Other experts (here, here, here, and here, among many others) have explained and will continue to explain the details of what is now a crisis in the dollar's value. . . .

[T]he administration has been sending signals from day one that it actually prefers a weaker dollar, beginning when then-Treasury Secretary Paul O'Neill noted that a "strong dollar" meant little in policy terms. O'Neill's successor at Treasury, John Snow, continued with the message by asking at a G-8 meeting in France, "What's wrong with a weak dollar?" Now, though, even French President Nicolas Sarkozy is warning that a weak dollar is a threat to world economic stability -- and even supermodels are sounding the alarm.

Unless the dollar's decline is stopped by strong words and concrete actions, and soon, the American economy is in serious danger of sliding into the sort of stagflation -- stagnation plus inflation -- that rocked the nation throughout most of the 1970s.

The home foreclosure crisis slamming into the nation's neighborhoods is having the effect of about "one Hurricane Katrina per month," James K. Galbraith, an economist with the University of Texas at Austin, said Friday at a forum examining the credit crisis. 

In the immediate aftermath of Hurricane Katrina in the fall of 2005, nearly 275,000 Gulf Coast residents were forced to move into group shelters, according to the Federal Emergency Management Agency. 

Economists who recently completed a study for the U.S. Conference of Mayors predicted the number of home foreclosures will hit 1.4 million in 2008.

"This is a private sector effort, involving no government money," Hank Paulson, US Treasury secretary, said last week, announcing the deal he had just brokered among representatives of mortgage-security investors and mortgage-service companies to freeze interest-rate resets on some loans. He emphasised that the compact was voluntary. "The industry standards announced today do not change the nature of responsibilities in the servicing industry - servicers will continue to modify loans when it is in the best interests of investors." In short, he said, it is a "market-based approach".

Only an estimated 250,000 borrowers, at best, are likely to benefit from the plan’s main relief measure — a five-year freeze on certain adjustable loans’ introductory rates. Yet, from mid-2007 to now, some 800,000 homeowners have entered foreclosure. From 2008 through mid-2010, when the last of the potentially eligible loans would otherwise reset to sharply higher payments, there will be an estimated 3.5 million loan defaults.  

The plan is too little, too late and too voluntary. Mr. Paulson and his boss, President Bush, have left it to the private sector — the mortgage industry — to protect the public interest, without any negative consequences if it does not. That is not the way the private sector works. And it is not how government is supposed to work at a time when Americans are facing mass foreclosures that threaten entire communities, financial markets and the wider economy.  

Many mortgage servicers — lenders and private companies that collect mortgage payments on behalf of investors — have been reluctant to modify at-risk loans, even though the alternative is to foreclose on thousands of homeowners. That is because they fear being sued by mortgage investors. For some investors, letting a troubled borrower default would actually be better business, for others not. It all depends on how their particular security is set to pay out. 

The new plan establishes guidelines that lenders can use to determine which troubled borrowers might qualify for a rate freeze. But even lenders that stick to the government-brokered guidelines have no guarantee that they cannot be sued.  

The criteria for who gets relief and who does not are also a problem. Some are reasonable: borrowers must live in their homes and have a good repayment record on their mortgage loan. Others are far too restrictive: borrowers can be disqualified if they have improved their credit score during the loan’s introductory period, a move that is intended to weed out anyone with even the smallest probability of being able to afford a payment that is set to explode, but which could subject homeowners who need help to delays and denials. 

Investors may simply be too self-interested to pull off the aggressive, broad-based loan fixes that Mr. Paulson has said he wants — and that the nation needs. Rather than standing up to Wall Street, Mr. Paulson is hoping that the interests of investors — to make money — will magically align with the interests of homeowners, to keep a roof over their heads.

Fourth of July came on Dec. 3 this year for the U.S. intelligence community.

The nation's espionage agencies delivered their own declaration of independence from the war aims and rhetoric of President Bush and Vice President Cheney in a National Intelligence Estimate that was ostensibly about Iran's nuclear program.

But the CIA, DIA and 14 other agencies grouped under the director of national intelligence also delivered a riveting if implicit X-ray of the changing nature of leadership in Washington, where the White House's once-commanding authority over government has been smashed but not replaced by any other power center.  

The Bush-Cheney obsession with restoring presidential authority has provoked new challenges to powers the White House can legitimately claim. It is as if this administration has developed its own political version of Jimmy Carter's aborted project for a neutron bomb, which was intended to destroy people while sparing buildings. Bush consistently manages to destroy or damage goals he proclaims and friends who support him, while foes escapes harm.  

The publication of an unclassified version of the NIE, which concludes that Iran is "probably" not working on a nuclear weapon at this time, has triggered unintended consequences. Iran's diplomatic hand is strengthened, while foreign diplomats and officials who have pushed their governments to join the U.S. campaign of sanctions and international condemnation are suddenly undermined. "We will be exposed to a lot of criticism at home now," one official from the developing world glumly told me shortly after the estimate was issued.

"They won't say it, but our leaders must be devastated by the way this was handled," an Israeli friend said. "Not by the facts of the report, which can be discussed reasonably, but by the presentation and interpretation of the report. This happens when intelligence agencies become traumatized by previous mistakes and overreact the other way the next time."  

Domestically, the most significant fact about the NIE is its public manifestation. The White House was powerless to prevent publication of a document that made Bush aides unhappy and uncomfortable. The administration went along because it knew that the document -- and any attempt to suppress it -- would have been immediately leaked.