After three years of honey-roasted declines, it's hard to feel any pity for the bears. Still, market skeptics find themselves in something of a quandary these days. Major averages have rallied sharply since mid-March despite little evidence of economic resurgence and a host of potential negatives, including persistent weakness in the dollar. The dollar's recent downturn has done nothing to stem rallies in equities and Treasuries, i.e. the very assets it is supposed to hurt. The dollar's relatively controlled decline, thus far, plus some genuinely positive effects (and generally positive spin) has ameliorated any potential negative side-effects. But that doesn't mean the dangers of a declining dollar have been removed. Hardcore bears say it's only a matter of time before a (rude) awakening occurs for a currently overly complacent Wall Street. Going back to the boom era, a dollar doomsday has been a frequently cited scenario of naysayers, as follows: Unwilling to support the U.S.'s huge current account deficit (and now federal budget deficit), foreigners start liquidating their dollar-denominated assets, putting downward pressure on the dollar, stocks and Treasuries. Weakness in the dollar triggers a self-replicating cycle of selling, ultimately resulting in dramatically lower asset prices and sharply higher interest rates, choking off U.S. economic growth. (Just add water, bake at 350 degrees for 20 minutes and ta-da, economic apocalypse.) "We've said many times that you can't have a current account and/or budget deficit as onerous as we have right now without major consequences," said Charlie Minter, the oft-bearish co-manager at Comstock Partners, a Yardley, Pa.-based money management firm. Foreign holdings of U.S. financial assets totaled nearly $8 trillion at the end of 2002, including $3.4 trillion of fixed-income assets and $1.3 trillion of publicly traded equities, according to the Federal Reserve. The potential risk posed by a mass exodus of foreigners "actually exceeds the risk of public liquidation" of mutual funds, Minter warned.