Financial Tsunami or not, Pandora's Box has been opened and it's going to be very very Bad!

Now it is quite clear that the changes we have seen since July are dependent on the strength and weakness of the US dollar. What puzzles me is why suddenly everything changes to push up the US dollar? Is it carry trade? Is it the great work of some hedge funds? Is it a real improvement of the fundamentals supporting the US dollar? Or is it just pure speculation to make gains by shorting everything else except the US dollar? Or is it a political symphony played by the developed nations to uphold their reserves in USD?

Pimo is predicting a financial tsunami and urges that governmental actions be taken to avoid the disaster. Well, whether the tsunami may come, I must say that the situation is already very bad. You see either way that the US dollar moves will cause disaster:

• If the US dollar continues its strength, there will be a huge turnaround of the trend that has lasted for 5-6 years. All assets will depreciate as the US dollar appreciates and they include almost every important assets in any portfolio: real estate, stocks, bonds, oil, gold and other commodities (metals, agricultural commodities, etc.), major currencies including our strong Chinese yuan, RMB.
• The result will be a global correction (to put it mildly). As asset value depreciates, your capital account sinks. And when USD appreciates at the same time, your current account always sinks. The sad point is prices and inflation cannot go down together with your accounts. So consumption must go down and business growth will become negative. God knows how long it will take for the two sides to strike an acceptable balance. Is this stagflation? Is this deflation by depreciation?
• On the other hand, if (as I believe) the US dollar's upwards turnaround will stop by the end of the US election, then immediately the Pandora' s Box will be re-opened! Everything about the sinking USD, the accusations against printing paper money, spiraling inflation, asset bubbles, credit crunch, etc., will be released again. This time, I'm sure that no one will have any faith in the US dollar and this will trigger a global panic. True a financial tsunami!
• Think about everything released from Pandora's Box expanding and appreciating to the roof owing to the downturn of the USD. Think about the social and economic impacts on all nations particularly undeveloped ones.
• Either way, the situation is going to be very very bad.
• We are definitely at cross-road now. The rapid rise of the US dollar has in a way strengthened belief in the recovery of the US domestic economy but in another way it is digging out Pandora's Box by changing a status quo without properly making preparations for opening a new page in US history.
• The whole story of Pandora's Box is that you must NOT open it. But my God, it has been opened and we don't know what is being released out of it

I would think major countries will soon have to discuss again how to face this Pandora's Box and the financial tsunami that is perhaps only one of the disasters released from it.