Gisele Bundchen, Currency Trader

Never has an FX trader looked so good or been this sexy. And never has "buy me some Euro forwards" sounded more enticing. Top supermodel Gisele Bundchen reportedly wants her new contract with Pantene hair products (a Procter & Gamble (PG) brand) to be paid in a currency other than the US dollar. Gisele deems promised future dollar payments to be an unsafe store of value. A million dollars agreed to today but paid next year may be worth less when measured against other currencies in twelve months.

Leaving aside the obvious point that Gisele could easily put in place a forward sale of dollars to neutralize any fluctuations, we observe that asset revaluations in past cycles have sometimes reversed once a certain level of group-think absurdity has been reached. It would take a brave soul to affirm that the dollar has reached its nadir and that it would start rising from here. However, we live in an interlinked global economy and an isolated protracted decline of the dollar vs. other currencies is not a realistic scenario.

Contrary to what many foreigners of the jet set, cocktail party, modeling runway, circuit may think, the dollar is not a voting machine for or against the administration of George W. Bush. Its very decline has an adverse effect on the economies of other countries which are exporting into the US market.

The fall of the dollar is only the first event in a chain reaction that may weaken the rest of the world economy. As other economies falter, the dollar will regain its footing. In a recession, the next contract with Pantene or anyone else is likely to command lower dollars. In this world of uncertainty, what is a supermodel to do? Accept your payments in any of the world's leading currencies and be thankful for your blessings. What you can control is vastly outmatched by what you cannot.