NEW YORK: The weakness in the US dollar risks inflating a bubble in the oil market, which could threaten consumer spending and potentially cause Ghosts of 1929 Top 10 US bankruptcies Top 20 Global Banks a double dip recession. The greenback's decline this year has been lauded as good for America as it benefits earnings, stimulates exports and helps rebalance the US economy. But runaway oil prices could be the Achilles' heel to the thesis that sees only a benign impact of a weak dollar. This year, when the dollar has been weak, oil has been strong; a weaker dollar supports oil because dollar-priced commodities become cheaper for buyers using other currencies. The inverse relationship between the dollar and crude has been remarkably tight: the 200-day correlation coefficient between the dollar index and oil is -0.94, Reuters data showed. In some respects, this is a repeat of last year when a weak dollar, along with low interest rates and growth in energy-intensive Asia, drove oil to a record near $150 a barrel, which contributed to a deep global recession. "Many factors are the same as the summer of 2008," said Ethan Harris, head of global economics at Bank of America Merrill Lynch in New York. "What are the things that would derail the recovery? I think that an oil price bubble is near the top of the list."

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