The Dollar, The Euro & Oil: The Red-Lining Of America

A

Anonymous

Guest
You know, there are thousands of pages of hard evidence that it's all about oil, but all bush defenders can ever say is one or two misinformed comments about the matter to detract from the point. Why is there no more convincing argument that it's not about oil? Is it because public opinion has changed so greatly?
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
Is this going to be used as an excuse to topple more governmetns in charge of oil resources? I am also worried to see the UK doesn't make the top 10 but releaved we didn't make the bottom 10 ;)

We sneak in at 11.

POSTED AT 9:44 AM EDT Wednesday, Oct 20, 2004

Oil leads to corruption, survey finds

Associated Press



London — Most oil-producing nations are also rife with corruption, and oil companies should provide more information about their operations to help clean up the market, a global watchdog group said Wednesday in an annual report.

Angola, Azerbaijan, Chad, Ecuador, Indonesia, Iran, Iraq, Kazakhstan, Libya, Nigeria, Russia, Sudan, Venezuela and Yemen scored very low in clean government practices, said Transparency International chairman Peter Eigen in releasing the Corruption Perceptions Index for 2004.

"In these countries, public contracting in the oil sector is plagued by revenues vanishing into the pockets of Western oil executives, middlemen and local officials," he said.

Corruption index

Least Corrupt
1. Finland 9.7
2. New Zealand 9.6
3. Denmark 9.5
3. Iceland 9.5
5. Singapore 9.3
6. Sweden 9.2
7. Switzerland 9.1
8. Norway 8.9
9. Australia 8.8
10. Netherlands 8.7
12. Canada 8.5
17. United States 7.5

Most corrupt
133. Angola 2.0
133. DR of Congo 2.0
133. Ivory Coast 2.0
133. Georgia 2.0
133. Indonesia 2.0
133. Tajikistan 2.0
133. Turkmenistan 2.0
140. Azerbaijan 1.9
140. Paraguay 1.9
142. Chad 1.7
142. Myanmar 1.7
144. Nigeria 1.6
145. Bangladesh 1.5
145. Haiti 1.5

Scores are based on a scale of 0 (most corrupt) to 10 (least corrupt).
Mr. Eigen said oil companies could help stamp out corruption by publishing details of the fees, royalties and other payments made to governments and state oil companies.

Transparency International said 146 countries were surveyed for the report — not just oil-producers — and it found corruption rampant in 60 nations.

The survey, with a top score of 10 being the least corrupt, found that 106 scored lower than a 5.

Bangladesh, Haiti, Nigeria, Chad, Myanmar, Azerbaijan and Paraguay were perceived to be the most corrupt, all scoring lower than 2.

Canada, with a score of 8.5, fell to 12th place, just ahead of Austria and Luxembourg. In 2003, Canada scored an 8.7 to rank 11th in a tie with Luxembourg and Britain.

The United States ranks number 17, with a score of 7.5, tied with Belgium and Ireland.

The index is compiled from a series of polls on perceptions of corruption made by independent organizations. This year's report is based on 18 surveys conducted since 2002 by a dozen groups. The index rates only those countries that appear in three or more surveys.

Finland, New Zealand, Denmark, Iceland, Singapore, Sweden and Switzerland were rated the least corrupt, all scoring higher than 9 out of 10 on the index.

Compared with last year's report, corruption was perceived to be worse in Bahrain, Belize, Cyprus, Dominican Republic, Jamaica, Kuwait, Luxembourg, Mauritius, Oman, Poland, Saudi Arabia, Senegal, and Trinidad and Tobago.

Improved scores were recorded by Austria, Botswana, Czech Republic, El Salvador, France, Gambia, Germany, Jordan, Switzerland, Tanzania, Thailand, Uganda, United Arab Emirates and Uruguay, Transparency International said.
http://www.theglobeandmail.com/servlet/story/RTGAM.20041020.wcorr1020/BNStory/International/

details:

http://www.transparency.org/pressreleases_archive/2004/2004.10.20.cpi.en.html
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
Dollar Hits All-Time Low Against Euro

Fri Nov 5, 7:53 PM ET

Business - AP

By MADLEN READ, AP Business Writer

NEW YORK - The U.S. dollar fell to an all-time low against the euro Friday as European political leaders signaled they have no unified plan to stem the rise in the five-year-old currency used by 12 countries.


Currency traders shrugged off positive U.S. employment data that in other times has boosted interest in the dollar, which has been burdened by high oil prices and the U.S. budget deficit.

The euro reached a new high of
Dollar Hits All-Time Low Against Euro

Fri Nov 5, 7:53 PM ET

Business - AP

By MADLEN READ, AP Business Writer

NEW YORK - The U.S. dollar fell to an all-time low against the euro Friday as European political leaders signaled they have no unified plan to stem the rise in the five-year-old currency used by 12 countries.


Currency traders shrugged off positive U.S. employment data that in other times has boosted interest in the dollar, which has been burdened by high oil prices and the U.S. budget deficit.

The euro reached a new high of $1.2962 Friday in late New York trading. It had reached its previous peak of $1.2927 in February. That means that each dollar now buys only about three quarters of a euro. When the shared currency was introduced in 1999 it was pegged at 1 to 1 against the dollar.

The Labor Department (news - web sites) reported Friday that October payrolls gained 337,000, and the failure of the currency market to react to the news shows the weakening dollar is a long-term trend, said Dan Katzive, foreign exchange strategist for UBS AG.

"It's a structural theme," Katzive said. "The price action today bore that out."

The dollar's decline cuts two ways for Americans: It's a shot in the arm for exporters like Caterpillar Inc., but it boosts the cost of European vacations and could lead to higher prices for goods imported from France, Germany, Italy and the other euro nations. U.S. companies such as Estee Lauder Cos., 3M Co., Avon Products Inc. and Samsonite Corp. have profited from a weak dollar.

In Europe, the stronger euro has raised fears that it will dampen what has been a moderate economic recovery because of a slowdown in exports. The euro is now 57 percent above its all-time low against the dollar of 82 cents from October, 2000.

French President Jacques Chirac said on Friday that he is "a little bit worried about the weakness of the dollar," and hinted the European Union (news - web sites) should take action. "This should provoke certain reactions on our part," he said during a summit of European leaders in Brussels.

But Chancellor Gerhard Schroeder of Germany — whose economic recovery has been fueled by strong export growth — told reporters at the summit that he sees no reason for "serious concern," adding that the exchange rate "is not yet dramatic."

Analysts said that amounted to a green light for currency traders to press their bets because it is unlikely the Treasuries of those countries and the European Central Bank will intervene to reverse the euros rise.

Commerzbank economist Christoph Balz said he expected to see the euro hit $1.31 in the next couple of months, but to settle in the long-term. "The U.S. economy is stronger than people think, which will lead to higher interest rates and make the dollar more attractive," he said.

In addition, many analysts believe the Bush administration has deliberately sought a lower dollar in order to help U.S. exports.

The ECB has kept its key euro-zone interest rate unchanged for 17 consecutive months at 2 percent. Most analysts still bet the bank will not raise interest rates for several quarters.

After the ECB held rates steady at its meeting Thursday, bank president Jean-Claude Trichet declined to comment on the euro exchange rate, other than to warn that the bank didn't like sudden moves. "Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth," he said.

The dollar fell broadly Friday against other major currencies. In late New York trading, the British pound was worth $1.8563, up from $1.8437 late Thursday. The dollar bought 105.65 yen, down from 106.08; 1.1776 Swiss francs, down from 1.1876; and 1.1976 Canadian dollars, down from 1.2072.
.2962 Friday in late New York trading. It had reached its previous peak of
Dollar Hits All-Time Low Against Euro

Fri Nov 5, 7:53 PM ET

Business - AP

By MADLEN READ, AP Business Writer

NEW YORK - The U.S. dollar fell to an all-time low against the euro Friday as European political leaders signaled they have no unified plan to stem the rise in the five-year-old currency used by 12 countries.


Currency traders shrugged off positive U.S. employment data that in other times has boosted interest in the dollar, which has been burdened by high oil prices and the U.S. budget deficit.

The euro reached a new high of $1.2962 Friday in late New York trading. It had reached its previous peak of $1.2927 in February. That means that each dollar now buys only about three quarters of a euro. When the shared currency was introduced in 1999 it was pegged at 1 to 1 against the dollar.

The Labor Department (news - web sites) reported Friday that October payrolls gained 337,000, and the failure of the currency market to react to the news shows the weakening dollar is a long-term trend, said Dan Katzive, foreign exchange strategist for UBS AG.

"It's a structural theme," Katzive said. "The price action today bore that out."

The dollar's decline cuts two ways for Americans: It's a shot in the arm for exporters like Caterpillar Inc., but it boosts the cost of European vacations and could lead to higher prices for goods imported from France, Germany, Italy and the other euro nations. U.S. companies such as Estee Lauder Cos., 3M Co., Avon Products Inc. and Samsonite Corp. have profited from a weak dollar.

In Europe, the stronger euro has raised fears that it will dampen what has been a moderate economic recovery because of a slowdown in exports. The euro is now 57 percent above its all-time low against the dollar of 82 cents from October, 2000.

French President Jacques Chirac said on Friday that he is "a little bit worried about the weakness of the dollar," and hinted the European Union (news - web sites) should take action. "This should provoke certain reactions on our part," he said during a summit of European leaders in Brussels.

But Chancellor Gerhard Schroeder of Germany — whose economic recovery has been fueled by strong export growth — told reporters at the summit that he sees no reason for "serious concern," adding that the exchange rate "is not yet dramatic."

Analysts said that amounted to a green light for currency traders to press their bets because it is unlikely the Treasuries of those countries and the European Central Bank will intervene to reverse the euros rise.

Commerzbank economist Christoph Balz said he expected to see the euro hit $1.31 in the next couple of months, but to settle in the long-term. "The U.S. economy is stronger than people think, which will lead to higher interest rates and make the dollar more attractive," he said.

In addition, many analysts believe the Bush administration has deliberately sought a lower dollar in order to help U.S. exports.

The ECB has kept its key euro-zone interest rate unchanged for 17 consecutive months at 2 percent. Most analysts still bet the bank will not raise interest rates for several quarters.

After the ECB held rates steady at its meeting Thursday, bank president Jean-Claude Trichet declined to comment on the euro exchange rate, other than to warn that the bank didn't like sudden moves. "Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth," he said.

The dollar fell broadly Friday against other major currencies. In late New York trading, the British pound was worth $1.8563, up from $1.8437 late Thursday. The dollar bought 105.65 yen, down from 106.08; 1.1776 Swiss francs, down from 1.1876; and 1.1976 Canadian dollars, down from 1.2072.
.2927 in February. That means that each dollar now buys only about three quarters of a euro. When the shared currency was introduced in 1999 it was pegged at 1 to 1 against the dollar.

The Labor Department (news - web sites) reported Friday that October payrolls gained 337,000, and the failure of the currency market to react to the news shows the weakening dollar is a long-term trend, said Dan Katzive, foreign exchange strategist for UBS AG.

"It's a structural theme," Katzive said. "The price action today bore that out."

The dollar's decline cuts two ways for Americans: It's a shot in the arm for exporters like Caterpillar Inc., but it boosts the cost of European vacations and could lead to higher prices for goods imported from France, Germany, Italy and the other euro nations. U.S. companies such as Estee Lauder Cos., 3M Co., Avon Products Inc. and Samsonite Corp. have profited from a weak dollar.

In Europe, the stronger euro has raised fears that it will dampen what has been a moderate economic recovery because of a slowdown in exports. The euro is now 57 percent above its all-time low against the dollar of 82 cents from October, 2000.

French President Jacques Chirac said on Friday that he is "a little bit worried about the weakness of the dollar," and hinted the European Union (news - web sites) should take action. "This should provoke certain reactions on our part," he said during a summit of European leaders in Brussels.

But Chancellor Gerhard Schroeder of Germany — whose economic recovery has been fueled by strong export growth — told reporters at the summit that he sees no reason for "serious concern," adding that the exchange rate "is not yet dramatic."

Analysts said that amounted to a green light for currency traders to press their bets because it is unlikely the Treasuries of those countries and the European Central Bank will intervene to reverse the euros rise.

Commerzbank economist Christoph Balz said he expected to see the euro hit
Dollar Hits All-Time Low Against Euro

Fri Nov 5, 7:53 PM ET

Business - AP

By MADLEN READ, AP Business Writer

NEW YORK - The U.S. dollar fell to an all-time low against the euro Friday as European political leaders signaled they have no unified plan to stem the rise in the five-year-old currency used by 12 countries.


Currency traders shrugged off positive U.S. employment data that in other times has boosted interest in the dollar, which has been burdened by high oil prices and the U.S. budget deficit.

The euro reached a new high of $1.2962 Friday in late New York trading. It had reached its previous peak of $1.2927 in February. That means that each dollar now buys only about three quarters of a euro. When the shared currency was introduced in 1999 it was pegged at 1 to 1 against the dollar.

The Labor Department (news - web sites) reported Friday that October payrolls gained 337,000, and the failure of the currency market to react to the news shows the weakening dollar is a long-term trend, said Dan Katzive, foreign exchange strategist for UBS AG.

"It's a structural theme," Katzive said. "The price action today bore that out."

The dollar's decline cuts two ways for Americans: It's a shot in the arm for exporters like Caterpillar Inc., but it boosts the cost of European vacations and could lead to higher prices for goods imported from France, Germany, Italy and the other euro nations. U.S. companies such as Estee Lauder Cos., 3M Co., Avon Products Inc. and Samsonite Corp. have profited from a weak dollar.

In Europe, the stronger euro has raised fears that it will dampen what has been a moderate economic recovery because of a slowdown in exports. The euro is now 57 percent above its all-time low against the dollar of 82 cents from October, 2000.

French President Jacques Chirac said on Friday that he is "a little bit worried about the weakness of the dollar," and hinted the European Union (news - web sites) should take action. "This should provoke certain reactions on our part," he said during a summit of European leaders in Brussels.

But Chancellor Gerhard Schroeder of Germany — whose economic recovery has been fueled by strong export growth — told reporters at the summit that he sees no reason for "serious concern," adding that the exchange rate "is not yet dramatic."

Analysts said that amounted to a green light for currency traders to press their bets because it is unlikely the Treasuries of those countries and the European Central Bank will intervene to reverse the euros rise.

Commerzbank economist Christoph Balz said he expected to see the euro hit $1.31 in the next couple of months, but to settle in the long-term. "The U.S. economy is stronger than people think, which will lead to higher interest rates and make the dollar more attractive," he said.

In addition, many analysts believe the Bush administration has deliberately sought a lower dollar in order to help U.S. exports.

The ECB has kept its key euro-zone interest rate unchanged for 17 consecutive months at 2 percent. Most analysts still bet the bank will not raise interest rates for several quarters.

After the ECB held rates steady at its meeting Thursday, bank president Jean-Claude Trichet declined to comment on the euro exchange rate, other than to warn that the bank didn't like sudden moves. "Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth," he said.

The dollar fell broadly Friday against other major currencies. In late New York trading, the British pound was worth $1.8563, up from $1.8437 late Thursday. The dollar bought 105.65 yen, down from 106.08; 1.1776 Swiss francs, down from 1.1876; and 1.1976 Canadian dollars, down from 1.2072.
.31 in the next couple of months, but to settle in the long-term. "The U.S. economy is stronger than people think, which will lead to higher interest rates and make the dollar more attractive," he said.

In addition, many analysts believe the Bush administration has deliberately sought a lower dollar in order to help U.S. exports.

The ECB has kept its key euro-zone interest rate unchanged for 17 consecutive months at 2 percent. Most analysts still bet the bank will not raise interest rates for several quarters.

After the ECB held rates steady at its meeting Thursday, bank president Jean-Claude Trichet declined to comment on the euro exchange rate, other than to warn that the bank didn't like sudden moves. "Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth," he said.

The dollar fell broadly Friday against other major currencies. In late New York trading, the British pound was worth
Dollar Hits All-Time Low Against Euro

Fri Nov 5, 7:53 PM ET

Business - AP

By MADLEN READ, AP Business Writer

NEW YORK - The U.S. dollar fell to an all-time low against the euro Friday as European political leaders signaled they have no unified plan to stem the rise in the five-year-old currency used by 12 countries.


Currency traders shrugged off positive U.S. employment data that in other times has boosted interest in the dollar, which has been burdened by high oil prices and the U.S. budget deficit.

The euro reached a new high of $1.2962 Friday in late New York trading. It had reached its previous peak of $1.2927 in February. That means that each dollar now buys only about three quarters of a euro. When the shared currency was introduced in 1999 it was pegged at 1 to 1 against the dollar.

The Labor Department (news - web sites) reported Friday that October payrolls gained 337,000, and the failure of the currency market to react to the news shows the weakening dollar is a long-term trend, said Dan Katzive, foreign exchange strategist for UBS AG.

"It's a structural theme," Katzive said. "The price action today bore that out."

The dollar's decline cuts two ways for Americans: It's a shot in the arm for exporters like Caterpillar Inc., but it boosts the cost of European vacations and could lead to higher prices for goods imported from France, Germany, Italy and the other euro nations. U.S. companies such as Estee Lauder Cos., 3M Co., Avon Products Inc. and Samsonite Corp. have profited from a weak dollar.

In Europe, the stronger euro has raised fears that it will dampen what has been a moderate economic recovery because of a slowdown in exports. The euro is now 57 percent above its all-time low against the dollar of 82 cents from October, 2000.

French President Jacques Chirac said on Friday that he is "a little bit worried about the weakness of the dollar," and hinted the European Union (news - web sites) should take action. "This should provoke certain reactions on our part," he said during a summit of European leaders in Brussels.

But Chancellor Gerhard Schroeder of Germany — whose economic recovery has been fueled by strong export growth — told reporters at the summit that he sees no reason for "serious concern," adding that the exchange rate "is not yet dramatic."

Analysts said that amounted to a green light for currency traders to press their bets because it is unlikely the Treasuries of those countries and the European Central Bank will intervene to reverse the euros rise.

Commerzbank economist Christoph Balz said he expected to see the euro hit $1.31 in the next couple of months, but to settle in the long-term. "The U.S. economy is stronger than people think, which will lead to higher interest rates and make the dollar more attractive," he said.

In addition, many analysts believe the Bush administration has deliberately sought a lower dollar in order to help U.S. exports.

The ECB has kept its key euro-zone interest rate unchanged for 17 consecutive months at 2 percent. Most analysts still bet the bank will not raise interest rates for several quarters.

After the ECB held rates steady at its meeting Thursday, bank president Jean-Claude Trichet declined to comment on the euro exchange rate, other than to warn that the bank didn't like sudden moves. "Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth," he said.

The dollar fell broadly Friday against other major currencies. In late New York trading, the British pound was worth $1.8563, up from $1.8437 late Thursday. The dollar bought 105.65 yen, down from 106.08; 1.1776 Swiss francs, down from 1.1876; and 1.1976 Canadian dollars, down from 1.2072.
.8563, up from
Dollar Hits All-Time Low Against Euro

Fri Nov 5, 7:53 PM ET

Business - AP

By MADLEN READ, AP Business Writer

NEW YORK - The U.S. dollar fell to an all-time low against the euro Friday as European political leaders signaled they have no unified plan to stem the rise in the five-year-old currency used by 12 countries.


Currency traders shrugged off positive U.S. employment data that in other times has boosted interest in the dollar, which has been burdened by high oil prices and the U.S. budget deficit.

The euro reached a new high of $1.2962 Friday in late New York trading. It had reached its previous peak of $1.2927 in February. That means that each dollar now buys only about three quarters of a euro. When the shared currency was introduced in 1999 it was pegged at 1 to 1 against the dollar.

The Labor Department (news - web sites) reported Friday that October payrolls gained 337,000, and the failure of the currency market to react to the news shows the weakening dollar is a long-term trend, said Dan Katzive, foreign exchange strategist for UBS AG.

"It's a structural theme," Katzive said. "The price action today bore that out."

The dollar's decline cuts two ways for Americans: It's a shot in the arm for exporters like Caterpillar Inc., but it boosts the cost of European vacations and could lead to higher prices for goods imported from France, Germany, Italy and the other euro nations. U.S. companies such as Estee Lauder Cos., 3M Co., Avon Products Inc. and Samsonite Corp. have profited from a weak dollar.

In Europe, the stronger euro has raised fears that it will dampen what has been a moderate economic recovery because of a slowdown in exports. The euro is now 57 percent above its all-time low against the dollar of 82 cents from October, 2000.

French President Jacques Chirac said on Friday that he is "a little bit worried about the weakness of the dollar," and hinted the European Union (news - web sites) should take action. "This should provoke certain reactions on our part," he said during a summit of European leaders in Brussels.

But Chancellor Gerhard Schroeder of Germany — whose economic recovery has been fueled by strong export growth — told reporters at the summit that he sees no reason for "serious concern," adding that the exchange rate "is not yet dramatic."

Analysts said that amounted to a green light for currency traders to press their bets because it is unlikely the Treasuries of those countries and the European Central Bank will intervene to reverse the euros rise.

Commerzbank economist Christoph Balz said he expected to see the euro hit $1.31 in the next couple of months, but to settle in the long-term. "The U.S. economy is stronger than people think, which will lead to higher interest rates and make the dollar more attractive," he said.

In addition, many analysts believe the Bush administration has deliberately sought a lower dollar in order to help U.S. exports.

The ECB has kept its key euro-zone interest rate unchanged for 17 consecutive months at 2 percent. Most analysts still bet the bank will not raise interest rates for several quarters.

After the ECB held rates steady at its meeting Thursday, bank president Jean-Claude Trichet declined to comment on the euro exchange rate, other than to warn that the bank didn't like sudden moves. "Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth," he said.

The dollar fell broadly Friday against other major currencies. In late New York trading, the British pound was worth $1.8563, up from $1.8437 late Thursday. The dollar bought 105.65 yen, down from 106.08; 1.1776 Swiss francs, down from 1.1876; and 1.1976 Canadian dollars, down from 1.2072.
.8437 late Thursday. The dollar bought 105.65 yen, down from 106.08; 1.1776 Swiss francs, down from 1.1876; and 1.1976 Canadian dollars, down from 1.2072.
http://news.yahoo.com/news?tmpl=story&u=/ap/20041106/ap_on_bi_ge/euro_rally_22
 

lopaka

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Sep 17, 2001
Messages
2,014
Reaction score
61
Points
79
November 23, 2004


GOING DOWN
Issue of 2004-12-06
Posted 2004-11-29

Americans long ago became accustomed to the pleasing notion that there is nothing quite so sound as the dollar. During the nineteen-twenties and thirties, when Pound, Hemingway, and Stein were in Paris, they lived on modest remittances from home which, translated into francs, bankrolled lazy afternoons in the Jardin du Luxembourg and giddy evenings on the Boulevard Montparnasse. “Two people, then, could live comfortably and well in Europe on five dollars a day and could travel,” Hemingway wrote. Near the end of the Second World War, an international conference in Bretton Woods, New Hampshire, confirmed the American currency’s role as the linchpin of the global economy, setting up a system of fixed exchange rates that survived for almost thirty years, and ushering in an age of unprecedented international prosperity. John Maynard Keynes, the leader of the British delegation, acknowledged the new economic reality. He and his fellow-Brits might have the brains, he is said to have commented, but the Americans had the money.

Not anymore, as anybody who has visited Europe recently will confirm. Five dollars for a cup of coffee, a hundred dollars for a mediocre meal, three hundred dollars for a modest hotel room—if Hemingway had been forced to pay such prices, Paris would loom less large in the history of American letters.

Since the nineteen-seventies, the dollar’s value has been determined in the financial markets, where traders buy and sell currencies like any other commodity. In the past few weeks, the dollar has fallen sharply. The depreciation reflects two intractable, and related, problems. First, as manufacturing and production have shifted to countries with low labor costs, the trade balance has declined alarmingly: America cannot sell as much abroad as it buys. Second, the United States has emerged as the world’s biggest debtor. Ten years ago, the country ran a modest trade deficit (less than a hundred billion dollars), and, as a consequence of investments that Americans made overseas, the rest of the world owed us trillions of dollars. Today, the trade deficit is about five per cent of the gross domestic product—bigger than it has ever been—and we owe the rest of the world about three and a quarter trillion dollars.

Running a trade deficit and borrowing from abroad, even borrowing heavily, aren’t necessarily bad things. Many developing nations do so because they don’t have enough capital to invest in industrial equipment, education, and infrastructure. But the United States isn’t a developing nation, and it isn’t borrowing to finance investment: it is taking on debt to finance the government’s day-to-day expenses, and to pay for imported consumer goods, such as autos, toys, and electronics.

The dollar’s fall, along with the trade and budget deficits, is a classic symptom of a country living beyond its means. Twenty years ago, American households saved about nine cents of every dollar they earned; today, they save less than a penny. The federal government is spending about four hundred billion dollars a year more than it raises in taxes, which means that the Treasury has to sell about thirty-four billion dollars’ worth of bonds every month to remain solvent. By far the biggest purchasers of Treasury bonds are the central banks of China and Japan, which, last year alone, accumulated some four hundred billion dollars’ worth of them. Since the purchases were made in dollars, they also provided much needed support for the currency.

Hardly coincidentally, China and Japan run the biggest trade surpluses with the United States. To maintain export-led growth in their own countries, both governments have been financing the American budget deficit and preventing their currencies from appreciating against the dollar. Some observers have labelled this arrangement a “new Bretton Woods”—we import consumer goods from Asia, and they lend us the money to pay for them, at fixed exchange rates. The system worked for a while, but, at some point, all countries have to pay their own way, which means restoring the trade balance and paying down debts. One way to do this is to cut back on imports by reducing consumer spending, but this would probably require a recession. The only other option is to devalue the currency, which makes imports more expensive and exports cheaper.

In recent weeks, John Snow, the Treasury Secretary, and Alan Greenspan, the Federal Reserve Board chairman, have made statements that can be interpreted as attempts to devalue the dollar. Not surprisingly, their comments prompted more selling on the foreign-exchange markets. But debasing the dollar is a high-risk strategy. Currency movements tend to be self-reinforcing. If traders come to see the dollar as a one-way bet, its slide could turn into a rout. During the past decade, record trade deficits, soaring foreign debts, and prolonged fiscal irresponsibility presaged full-blown currency crises in Mexico, Russia, Brazil, and many other countries. The crises eventually erupted when foreign investors rushed to get their money out of the stricken countries. If that were to occur here, the Federal Reserve would be forced to raise interest rates in order to stop the panic selling, which, in turn, would torpedo the stock and the real-estate markets. The economy would be plunged into a deep recession.

Given the dollar’s unique status as an internationally accepted means of exchange, many economists doubted that such a catastrophe could befall the United States. Now they are not so sure. Russia just announced that its central bank might change some of its dollar reserves into euros, and rumors persist that Saudi Arabia and other Middle Eastern oil producers will soon begin to set oil prices in euros, a move that would undermine the dollar’s privileged status. Most ominously, the Bush Administration has alienated some of the dollar’s biggest supporters by trying to deflect responsibility for America’s growing financial dependency onto China and other low-cost producers. Last week, Li Ruogu, the deputy governor of the People’s Bank of China, told the Financial Times, “China’s custom is that we never blame others for our own problem. The United States has the reverse attitude. Whenever they have a problem they blame others.”

Ultimately, the value of a currency is an international verdict on the honesty and competence of the government that issued it. President Bush may have recovered in the domestic polls, but in the currency markets his ratings are still falling. And, with his Administration determined to pursue further tax cuts and costly Social Security privatization, his numbers don’t seem likely to turn around soon.
— John Cassidy

Copyright © CondéNet 2004. All rights reserved.
http://www.newyorker.com/talk/content/?041206ta_talk_cassidy
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
This could signal the start of real problems for the US:

Opec sharply reduces dollar exposure

By Steve Johnson and Javier Blas in London
Published: December 6 2004 21:12 | Last updated: December 6 2004 21:12

Oil exporters have sharply reduced their exposure to the US dollar over the past three years, according to data from the Bank for International Settlements.

Members of the Organisation of Petroleum Exporting Countries have cut the proportion of deposits held in dollars from 75 per cent in the third quarter of 2001 to 61.5 per cent.

Middle Eastern central banks have reportedly switched reserves from dollars to euros and sterling to avoid incurring losses as the dollar has fallen and prepare for a shift away from pricing oil exports in dollars alone.

Private Middle East investors are believed to be worried about the prospect of US-held assets being frozen as part of the war on terror, leading to accelerated dollar-selling after the re-election of President George W. Bush.

The BIS data, in the organisation's quarterly review, state that Opec countries' stock of dollar-denominated deposits has fallen by 4 per cent in cash terms since 2002 in spite of Opec revenues' surging to record levels this year.

Opec officials say the cartel is trying to protect its purchasing power per barrel, as Europe is its largest trading partner. Opec imports from Europe rose 29 per cent between 2001 and 2003 while those from the US fell by 14 per cent, according to Morgan Stanley, the US investment bank.

Simon Derrick, head of currency research at Bank of New York, said: "It makes sense to diversify their reserves as much of their spending is in the eurozone and Japan."

Opec officials also point to political motivations after the 2001 terror attacks on the US.

Middle Eastern foreign exchange reserves are relatively small - those of Saudi Arabia, UAE, Kuwait and Qatar are estimated at $61bn by BNP Paribas - but any switch may be seen as indicating the mood of private investors in the region, who control far greater wealth.

Hans Redeker, global head of foreign exchange strategy at the French bank, said the Patriot Act, introduced after September 11 to stop US financial institutions being used by terrorists to launder money, was worrying private investors.

"If you trade with what the US regards as a 'dodgy' bank, you are at risk of your assets in the US being frozen," he said. "After the re-election of George Bush, the Middle East started to sell dollars like crazy due to the fears of assets being frozen."

The BIS report also showed that, in spite of oil prices having risen 85 per cent since the fourth quarter of 2001, overall OPEC bank deposits have barely risen. "Oil reserves have not been channelled into the international banking system in the most recent cycle," the report said.

One school of thought is that Middle Eastern businesses and individuals increasingly prefer to invest at home, leading to sharp rises in real estate and equity prices in many countries. Another argument is that many Opec governments are having to increase public spending to support rapidly growing populations.
Source
 

Mal_Adjusted

Justified & Ancient
Joined
Aug 6, 2003
Messages
2,262
Reaction score
31
Points
69
Hi

more on this

The Dollar's Decline Does Matter
LONDON, Dec. 6, 2004


(CBS) Tom Fenton, in his fourth decade with CBS News, has been the network's Senior European Correspondent since 1979. He comments on international events from his "Listening Post" in London, and other parts of the world as well.Most Americans pay no attention to the exchange rate of the dollar, unless they take a trip to Europe and gasp at forking over the equivalent of five dollars for a cup of coffee.

Only then do they realize that their paper currency which they once thought was as good as gold, is only worth what foreigners think it's worth. And right now, foreigners have a very low opinion of the dollar.

Since the end of the Clinton administration - or to put it another way, since the beginning of the Bush administration - the dollar has been heading south at an alarming rate.

Against the Euro, a relatively new currency backed by a European economy that is bigger than America's, the dollar has lost more than a third of its value. The same thing has happened to its value against the British pound.

What's going on here?

Economists can give you a lot of arguments and counter arguments, most of them complex and some a little dodgy, but the simple answer is that America is living beyond its means.

Our government has been doing what the average American has been doing. While American families pile up credit card debt and re-mortgage their homes, the government is piling up national debt and mortgaging our future.

Who is our government borrowing from? Mostly other governments, it seems. Foreign central banks now hold 2.3 trillion dollars (that's $2,300,000,000,000) in American IOUs such as U.S. Treasury bills and bonds. China and Japan are among the biggest creditors. If they decided to sell off a substantial part of this mountain of dollar assets, the dollar would collapse.

Should we care? You bet, as Defense Secretary Donald Rumsfeld would say. The collapse of the dollar would drive American interest rates sky high. Your mortgage would suddenly become unaffordable, your credit card debt all but unpayable. And forget about those foreign trips. Who could afford a ten dollar cup of coffee?

How did our government get to the edge of this cliff? Again, the answer is simple. The Bush administration cut taxes, launched two wars in what it calls the Greater Middle East, and is now bleeding lives and money in an Iraqi insurgency that shows no signs of abating.

Americans think of their dollar as the world currency that is welcome everywhere - something like those old American Express ads in which the salesperson says, "That will do nicely, sir," when you hand over your green credit card. Well, now our foreign creditors are taking a second look at our credit.

Since World War Two, the dollar has been the world's reserve currency. Foreign governments hold most of their reserves in dollars. Commodities - most notably oil - are priced in dollars. And most useful of all for the American government, when it needs more cash to finance its deficit spending, it can just print more IOUs to fob off on foreigners.

Most Americans probably think things were always that way. But in the nineteenth and early twentieth centuries, it was the British pound that was the world's reserve currency, and before that, the Dutch guilder, etc., all the way back to the Roman dinarius.

Currencies come and go, like empires. At the beginning of the twentieth century, when it ran a costly empire that spanned the world, Britain was the world's biggest creditor. Within a generation, both the British Empire and the pound were shattered by two world wars and economic mismanagement.

America has not yet reached that point, of course, but we ignore the lessons of history at our peril. Unless we put our economic house in order and stop living beyond our means, we could go the way of the British.

And by the way, if the dollar were to lose its status as the world's reserve currency, what could replace it? Possibly the euro, and a combination of the currencies of the Asian giants who make all those toys and gadgets you have been buying for Christmas.


By Tom Fenton ©MMIV, CBS Broadcasting Inc. All Rights Reserved.
http://www.cbsnews.com/stories/2004/12/06/opinion/fenton/main659179.shtml

Mal
 

Mal_Adjusted

Justified & Ancient
Joined
Aug 6, 2003
Messages
2,262
Reaction score
31
Points
69
Economic `Armageddon' predicted

Hi

more doomsaying!

Economic `Armageddon' predicted
By Brett Arends/ On State Street


Tuesday, November 23, 2004

Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.
But you should hear what he's saying in private.
Roach met select groups of fund managers downtown last week, including a group at Fidelity.
His prediction: America has no better than a 10 percent chance of avoiding economic ``armageddon.''
Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, ``it struck me how extreme he was - much more, it seemed to me, than in public.''
Roach sees a 30 percent chance of a slump soon and a 60 percent chance that ``we'll muddle through for a while and delay the eventual armageddon.''
The chance we'll get through OK: one in 10. Maybe.
In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates further and faster than he wants.
The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded.
Less a case of ``Armageddon,'' maybe, than of a ``Perfect Storm.''
Roach marshalled alarming facts to support his argument.
To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day.
That is an amazing 80 percent of the entire world's net savings.
Sustainable? Hardly.
Meanwhile, he notes that household debt is at record levels.
Twenty years ago the total debt of U.S. households was equal to half the size of the economy.
Today the figure is 85 percent.
Nearly half of new mortgage borrowing is at flexible interest rates, leaving borrowers much more vulnerable to rate hikes.
Americans are already spending a record share of disposable income paying their interest bills. And interest rates haven't even risen much yet.
You don't have to ask a Wall Street economist to know this, of course. Watch people wielding their credit cards this Christmas.
Roach's analysis isn't entirely new. But recent events give it extra force.
The dollar is hitting fresh lows against currencies from the yen to the euro.
Its parachute failed to open over the weekend, when a meeting of the world's top finance ministers produced no promise of concerted intervention.
It has farther to fall, especially against Asian currencies, analysts agree.
The Fed chairman was drawn to warn on the dollar, and interest rates, on Friday.
Roach could not be reached for comment yesterday. A source who heard the presentation concluded that a ``spectacular wave of bankruptcies'' is possible.
Smart people downtown agree with much of the analysis. It is undeniable that America is living in a ``debt bubble'' of record proportions.
But they argue there may be an alternative scenario to Roach's. Greenspan might instead deliberately allow the dollar to slump and inflation to rise, whittling away at the value of today's consumer debts in real terms.
Inflation of 7 percent a year halves ``real'' values in a decade.
It may be the only way out of the trap.
Higher interest rates, or higher inflation: Either way, the biggest losers will be long-term lenders at fixed interest rates.
You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent.
http://business.bostonherald.com/businessNews/view.bg?articleid=55356]

Mal
 

lopaka

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Sep 17, 2001
Messages
2,014
Reaction score
61
Points
79
Bush Pledges Strong-Dollar Policy


By TERENCE HUNT, AP White House Correspondent

WASHINGTON - President Bush (news - web sites) pledged Wednesday to work with Congress to reduce the United States' huge deficits to assure markets that his administration supports a strong dollar.


"The policy of my government is a strong-dollar policy," Bush said during an Oval Office meeting with Italian Prime Minister Silvio Berlusconi.

"We're going to take this issue on seriously with the Congress," the president said, after Berlusconi raised concerns about the dollar's fall.

Bush, during a photo opportunity in the Oval Office, also expressed confidence about resolving bitter differences between Israel and the Palestinians. "I think there's a very good chance we can achieve that peace," Bush said. "I look forward to working toward that end."

The president also issued a warning to Iran and Syria, saying that "meddling in the internal affairs of Iraq (news - web sites) is not in their interest." His comments came after Iraq's defense minister accused neighboring Iran and Syria of supporting terrorists in his country and charged that a senior Iraqi Shiite was leading a "pro-Iranian" coalition into next month's national elections.

Berlusconi expressed agreement with Bush on a wide range of policies. "So we fully share the work carried out by the American administration. And the political program that has been announced for the next four years is something we fully agree on," Berlusconi said.

Bush noted that in addition to the budget deficit, America suffers from a huge trade deficit.

"That's easy to resolve," Bush said. "People can buy more United States products if they're worried about the trade deficit."

Bush's comments came a day after the government reported that America's trade deficit hit a monthly record of $55.5 billion in October.

Some economists believe that the administration, while publicly professing support for a strong dollar, actually prefers the decline in the greenback's value against other currencies as a way of dealing with the country's huge trade deficit.

A weaker dollar would make U.S. goods cheaper on foreign markets while making imports more expensive for Americans, thus boosting the fortunes of domestic manufacturers. The country has lost 2.7 million manufacturing jobs over the past three years.

Europeans have been particularly hard-hit by the dollar's decline because most of the adjustment has occurred against their currencies, including the euro and the British pound.

Despite White House expressions of support, the administration has not taken action to prop up the dollar. During Bush's four years in office, not once has the administration intervened in currency markets to support the dollar or done anything else to stop the dollar's slide.

"We believe that the markets should make the decision about the relationship between the dollar and the euro," Bush said.

The decline in the dollar means that a vacation for Americans in Europe is now more expensive, and European products coming into this country cost more.

Berlusconi raised the dollar issue with Bush, and expressed the concern of many Europeans.

"The best thing we can do from the executive branch of government in America," Bush said, "is work with Congress to deal with our deficits. One deficit is a short-term budget deficit. Another deficit is the unfunded liabilities that come with Social Security (news - web sites) and some of the health programs for the elderly."

He said Social Security was at the top of his agenda.

While at a meeting of Pacific Rim economies in Santiago, Chile, last month, Bush said some of the leaders there had also expressed concern about the declining value of the U.S. dollar. In a joint press conference with Chilean President Ricardo Lagos, Bush said he had reiterated to them the U.S. government's commitment to a strong dollar.

Copyright © 2004 The Associated Press. All rights reserved.

http://story.news.yahoo.com/news?tmpl=s ... pr_wh/bush

On this and many other issues, after four years I still haven't decided whether he's a pathological liar or simply this delusional. G*d help us.
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
Thursday January 20, 3:28 AM

Warren Buffett sees no way but down for US dollar



The dollar cannot avoid further declines against other major currencies unless the US trade and current account deficits improve, legendary investor and businessman Warren Buffett said.

"I think, over time, unless we have a major change in trade policies, I don't see how the dollar avoids going down," the world's second-richest individual told CNBC television.

"I don't know when it happens. I don't have any idea whether it will be this month or this year or next year, but we are force-feeding dollars on to the rest of the world at the rate of close to a couple billion dollars a day, and that's going to weigh on the dollar."

Buffett noted the record US deficit of 164.7 billion dollars in the third quarter of 2004 in the current account, which measures trade and investment flows.

Buffett, nicknamed the Oracle of Omaha for his investment acumen, has a net worth of some 41 billion dollars, second only to Microsoft chief Bill Gates, according to Forbes magazine. But he said he saw few opportunities in the near term.

"I'm having a hard time finding things to buy, if that says anything about the market," he said.

"If I find something ... tomorrow to buy, I don't give a thought as to whether the market is going up," he added. "I barrel in."
Source
 

Mal_Adjusted

Justified & Ancient
Joined
Aug 6, 2003
Messages
2,262
Reaction score
31
Points
69
Greets

Central banks shift reserves away from US
By Chris Giles Financial Times January 24 2005 00:03


Euro and dollarCentral banks are shifting reserves away from the US and
towards the eurozone in a move that looks set to deepen the Bush
administration's difficulties in financing its ballooning current account
deficit.

In actions likely to undermine the dollar's value on currency markets, 70
per cent of central bank reserve managers said they had increased their
exposure to the euro over the past two years. The majority thought eurozone money and debt markets were as attractive a destination for investment as the US.

The findings emerge from a survey of central bank reserve managers
published today and conducted between September and December of last year.

About 65 central banks, controlling assets worth $1,700bn, took part and
the results showed a marked change in attitude over the past two years.

Any rebalancing of central bank reserve portfolios has serious implications
for the global financial system as the US has become increasingly dependent on official flows of funds to finance its current account deficit,
estimated at $650bn in 2004.

At the end of 2003, central banks held 70 per cent of their official
reserves in dollar- denominated assets and central bank purchases of US
securities had financed more than 80 per cent of the the US current account deficit in 2003.


Any reluctance to increase exposure to dollar assets further could cause
the greenback to plunge on currency markets.

"The US cannot take support for the dollar for granted," said Nick Carver,
one of the authors of the study conducted by Central Banking ublications,
a company that specialises in reporting on central banks.

"Central banks' enthusiasm for the dollar seem to be cooling off."

In a further worrying sign for the greenback, 47 per cent of reserve
managers surveyed said they expected the growth of official reserves to
slow to less than 20 per cent over the next four years. Between the end of
2000 and mid-2004, official reserves had increased by 66 per cent.

Slower reserve accumulation growth implies the supply of official finance
is likely to become more limited but few expect the demand from the US for
finance to slow. The consensus among economists is that the US current
account deficit will increase to $694bn in 2005.

More than 90 per cent of central bank reserve managers said that the income from reserve management was "important" or "very important".

In the two years since a similar survey was conducted, reserve managers had begun to seek higher returns for the money under management.

For these managers, dollar assets have become less attractive because the fall in the dollar since 2002 has reduced the yield they received and, in some cases, has led to negative real returns.

Alan Greenspan, the chairman of the Federal Reserve, warned in November that there was a limit to the willingness of foreign governments to finance the US current account deficit.

The survey was conducted on the guarantee of anonymity for the banks
involved. The 65 central banks that participated control 45 per cent of
global official reserves. Individually, they had up to $250bn under
management.
http://news.ft.com/cms/s/9ef63678-6d7d-11d9-9b69-00000e2511c8.html

mal
 

lopaka

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Sep 17, 2001
Messages
2,014
Reaction score
61
Points
79
Y'know, I appreciate that what is more-or-less "monetary policy" isn't table talk for most people, but despite a smattering of articles/editorials in the mainstream press (like this one) it just floors me that this has not permeated the consciousness of the vast, vast majority of people in the US. We've been talking about this for a year-and-a-half now.

The Koreans are now balking at bankrolling our profligacy.

Hey, WAKE UP, suckers: this will have a significant effect on YOU, not just people who travel to Europe, and probably sooner than later. (addressed of course to the "American public", not this MB) :evil:

Honey, I Shrunk the Dollar
By THOMAS L. FRIEDMAN

Published: February 24, 2005

I have just one question about President Bush's trip to Europe: Did he and Laura go shopping?

If they did, I would love to have been a fly on the wall when Laura must have said to George: "George, do you remember how much these Belgian chocolates cost when we were here four years ago? This box of mints was $10. Now it's $15? What happened to the dollar, George? Why is the euro worth so much more now, honey? Didn't Rummy say Europe was old? If we didn't have Air Force One, we never could have afforded this trip on your salary!"


The dollar is falling! The dollar is falling! But the Bush team has basically told the world that unless the markets make the falling dollar into a full-blown New York Stock Exchange crisis and trade war, it is not going to raise taxes, cut spending or reduce oil consumption in ways that could really shrink our budget and trade deficits and reverse the dollar's slide.

This administration is content to let the dollar fall and bet that the global markets will glide the greenback lower in an "orderly" manner.

Right. Ever talk to someone who trades currencies? "Orderly" is not always in the playbook. I make no predictions, but this could start to get very "disorderly." As a former Clinton Commerce Department official, David Rothkopf, notes, despite all the talk about Social Security, many Americans are not really depending on it alone for their retirement. What many Americans are counting on is having their homes retain and increase their value. And what's been fueling the home-building boom and bubble has been low interest rates for a long time. If you see a continuing slide of the dollar - some analysts believe it needs to fall another 20 percent before it stabilizes - you could see a substantial, and painful, rise in interest rates.

"Given the number of people who have refinanced their homes with floating-rate mortgages, the falling dollar is a kind of sword of Damocles, getting closer and closer to their heads," Mr. Rothkopf said. "And with any kind of sudden market disruption - caused by anything from a terror attack to signs that a big country has gotten queasy about buying dollars - the bubble could burst in a very unpleasant way."

Why is that sword getting closer? Because global markets are realizing that we have two major vulnerabilities that this administration doesn't want to address: We are importing too much oil, so the dollar's strength is being sapped as oil prices continue to rise. And we are importing too much capital, because we are saving too little and spending too much, as both a society and a government.

"When people ask what we are doing about these twin vulnerabilities, they have a hard time coming up with an answer," noted Robert Hormats, the vice chairman of Goldman Sachs International. "There is no energy policy and no real effort to reduce our voracious demand of foreign capital. The U.S. pulled in 80 percent of total world savings last year [largely to finance our consumption]." That's a big reason why some "43 percent of all U.S. Treasury bills, notes and bonds are now held by foreigners," Mr. Hormats said.

And the foreign holders of all those bonds are listening to our debate. They are listening to a country that is refusing to raise taxes, and an administration talking about borrowing an additional $2 trillion so Americans can invest some of their Social Security money in stocks. If that happened, it would almost certainly weaken the dollar, further depreciating the U.S. Treasury bonds held by all those foreigners.

On Monday, the Bank of Korea said it planned to diversify more of its reserves into nondollar assets, after years of holding too many low-yielding and depreciating U.S. government securities. The fear that this could become a trend sparked a major sell-off in U.S. equity markets on Tuesday. To calm the markets, the Koreans said the next day that they had no intention of selling their dollars.

Oh, good. Now I'm relieved.

"These countries don't have to dump dollars - they just have to reduce their purchases of them for the dollar to be severely affected," Mr. Hormats noted. "Korea is the fourth-largest holder of dollar reserves. ... You don't want others to see them diversifying and say, 'We'd better do that, too, so that we're not the last ones out.' Remember, the October 1987 stock market crash began with a currency crisis."

When a country lives on borrowed time, borrowed money and borrowed energy, it is just begging the markets to discipline it in their own way at their own time. As I said, usually the markets do it in an orderly way - except when they don't.


Copyright 2005 The New York Times Company
http://www.nytimes.com/2005/02/24/opini ... _popular_1

(registration required)[/quote]
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
Worrying stuff. I saw a report on the news about how the Japanese and Chinese (who are two of the biggest lenders of money to the US) were getting jittery too.

It does start to look like a situation where the US administration is placing its bets on the fact that people they owe vast quantities too won't pull the rug out from under them because it would be disasterous for everyone but as that report suggests all they really need to do is start diversifying and that would be bad enough. Also bringing us back to oil - how long will oil be traded in dollars?
 
A

Anonymous

Guest
A low US$ will be good for US exporters. US exports will be relatively cheap.

Also good for their tourist industry. And flights to the US from Europe are currently very cheap again.

The low value of the US$ will have a negative impact on companies which export to the US. Imported goods will be relatively expensive in the US.

The US administration might say that they favour a strong US$ and it would be in their interests to keep saying that. In reality the weak US$ (it was over valued for years) is probably good news for US industry.

US interest rates might go a little higher as part of a token effort to defend the value of the currency. But I very much doubt that they will push rates seriously higher as this would cause unemployment. And apart from fiscal - knob - size - comparisons - there really isn't any good reason, from a US point of view, why they would favour a strong $.

The value of sterling fell dramatically just before Britain fell out of the ERM on 'Black Wednesday'. That prompted a boom which lasted for years. The Major and Blair governments have done very well out of that. The relative economic success of the Labour years has been based on that.

Ironically Britain may do rather badly out of this situation. In many ways Britain is now stuck between two systems. Especially given Britain's over valued property market, non membership of the Euro and huge levels of personal debt.

And Britain does more trade with the US than most of her EU neighbours. The greater part of Euro Zone trade is with other Euro Zone countries.

My opinion is that we are looking at an immediate future in which the US trades mostly with itself. Ditto the Euro Zone. And Britain suffers from being of neither system.
 

Mal_Adjusted

Justified & Ancient
Joined
Aug 6, 2003
Messages
2,262
Reaction score
31
Points
69
Oil exporters' shift to euros behind dollar's fall: Soros

Greets

more...
/Published on Tuesday, February 22, 2005 by Reuters/

Oil exporters' shift to euros behind dollar's fall: Soros

*By Mona Migalla*

JEDDAH, Saudi Arabia (Reuters) - Moves by Middle East oil exporters and Russia to switch some revenue from dollars to euros lie behind the U.S. currency's weakness, and a further rise in crude prices could prompt more declines, the billionaire investor George Soros said on Monday.

Soros told delegates to the Jeddah Economic Forum that the dollar's fall should help to lower the U.S current account and trade deficits, but warned that a fall beyond an undisclosed "tipping point" would severely disrupt markets.

The U.S. current account deficit is more than five percent of gross domestic product despite the currency's three-year slide. The dollar, however, has staged a comeback recently, gaining about 3.6 percent against the euro and three percent versus the yen so far this year.

"The oil exporting countries' central banks ... have been switching out of dollars mainly into euros and Russia also plays an important role in this. That is, I think, at the bottom of the current weakness of the dollar," Soros said.

Soros, dubbed "The Man who broke the Bank of England" for his role as a hedge fund manager in betting the pound would drop in 1992, said he was not predicting further falls in the value of the dollar. But he linked its fate to the price of oil.

"The higher the price of oil the more the dollars there are to be switched to euro (so) the strength of oil will reinforce the weakness of the dollar," he said. "That is only one factor, but I think there is such a relationship."

U.S. crude hit a record $55.67 a barrel late last year and prices remain close to $50 a barrel.

In later comments to Reuters, Soros said the U.S. current account deficit could be financed at the current level of the dollar. "There are willing holders of the dollar. There are the Asian countries that are happy to accumulate dollar balances in order to have an export surplus and a market for their dollars," he said.

Soros would not make detailed comments on why long-term borrowing costs have fallen in the face of short-term rate increases, a development U.S. Federal Reserve Chairman Alan Greenspan said on Wednesday he found difficult to explain.

"A flattening of the yield curve is usually an indication of a slowing economy, but here I don't know," Soros said.

The Hungarian-born financier, a critic of U.S. involvement in Iraq, said he was considering backing an Arab foundation to promote the ideals of civil and open societies in the region. /*Article found at : *
http://www.energybulletin.net/newswire.php?id=4447
*Original article : *
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7687384/

more

US deficits risk crash: Treasury

01,00.html
February 25, 2005

PETER Costello's closest adviser fears the US is heading for a devastating
financial crash that could ravage Australia's economic growth.

As the Reserve Bank considers raising interest rates at its board meeting
next Tuesday, Treasury Secretary Ken Henry likened the flood of money
pouring into the US to support its budget and current account deficits to
the stockmarket's dotcom bubble of the late 1990s.

Were it suddenly to stop, there would be shockwaves felt throughout the
world's economies.

The financial crash feared by Dr Henry would involve a sharp fall in the US
dollar and a bond market sell-off, which would push up US and world
interest rates.

This would hit US economic growth and, as a result, cut Chinese exports of
manufactured products to the American market. In turn, this would threaten
the boom in Australian mineral exports to China.

Fears that the world economy is in grave danger are growing in the major
financial capitals.

The International Monetary Fund, which is responsible for stability of the
world economy, also warned yesterday of a sudden collapse.

IMF managing director Rodrigo de Rato said urgent combined international
action was required to head off the dangers.

The main cause of concern is the fact the US is running a trade deficit of
about $US600billion ($760billion) and a budget deficit of about
$US430billion for 2005.

US imports are almost 50per cent greater than the country's exports, with
the deficit being financed by international central banks and funds
managers.

Despite signs that the deficit is getting bigger, money is pouring into the
US from Asia and Europe at such a rate that the US has been able to keep
its long-term interest rates steady at 4.2 per cent since the middle of
last year.

Dr Henry said the flood of money was "worryingly reminiscent of Federal
Reserve chairman Alan Greenspan's warning in 1996 of irrational exuberance
in US stocks".

He said that, as with the dotcom bubble in the 1990s, one could not tell
how long it would keep going, but it would burst eventually.

Dr Henry's comments, made to a meeting of Asian treasurers in Sydney
yesterday, reveal that Treasury is much more worried about the health of
the world economy than is the Reserve Bank.

Reserve Bank governor Ian Macfarlane said last week that he did not think
the US current account deficit was a serious threat.

"I suspect the rest of the world will continue to finance the US current
account deficit," he said. But if it did not, all that would happen would
be a fall in the US dollar, which would not have serious consequences.

The Reserve Bank expects world economic growth to slow only slightly from
last year, when it recorded the fastest growth in almost 30 years.

The different views about the economic risks may be aired at the Reserve
Bank meeting on Tuesday. Dr Henry sits on the Reserve Bank board.

The bank does think there are risks of financial collapse in the US, but
believes it would be caused by the complexity of new financial products.

The IMF also thinks economic growth will remain firm over the year ahead,
but Mr de Rato says there are "serious threats and challenges ahead".

Mr de Rato warned that it was highly unlikely that the US would continue to
have access to "easy credit", based on its present economic policies.

Mr de Rato said the fall in the value of the dollar should act as a "timely
wake-up" to policy makers around the world to tackle the imbalances in the
world economy.

Mr de Rato said these included not only the US's deficits, but also
resistance to economic reforms in Europe and Japan, as well as China's
fixed exchange rate.

Dr Henry said the problems went beyond the American deficits, which he said
were mirrored by excessive surpluses in Asia.

He said Asian countries were not allowing their domestic economies to grow
fast enough, and were relying too much on exports. This put them at risk in
any world economic downturn.

The boom in investment in American financial markets could be brought to a
halt by a number of developments, Dr Henry said.

A slowdown in American growth could lead international private investors to
pull out of the country.

Foreign central banks, which have been buying long-term American government
bonds, are already facing big losses as a result of the fall in the value
of the greenback.

"What if they change their mind?" Dr Henry asked.

He said it was imperative that the Americans take action to reduce their
budget deficit, while they should allow the value of the US dollar to fall
further.
http://www.theaustralian.news.com.au/common/story_page/0,5744,12364202%5E6

Debtor Nation
By Susan J. Douglas, In These Times
Posted on February 26, 2005, Printed on February 26, 2005

As the president and his corporate patrons seek to turn the management
of Americans' retirements – a.k.a., our "golden years" – over to those
highly trustworthy, humanitarian types on Wall Street, we should look
at another model of how corporate America helps people manage their
finances – the credit card companies – to get a glimpse of where we are

headed.

Here are some of my recent favorite credit card gambits: The amount of
time my credit card company gives me to turn around and pay the bill
has shrunk to about two and a half weeks – otherwise, I'm late. The
late fee I pay even if the check arrives one day late has, within two
years, gone from about $20 to about $40. They have begun posting a
payment due date that is a Sunday – when, of course, they don't do
business – and if the check arrives Monday, you are docked the late fee
plus all the interest. The interest rates, given what the rest of us
get paid on our savings accounts and CDs, would make Shylock blush and
certainly revive the word "usurious." Dare to miss a payment, and the
company may raise your interest rate up to an outrageous 25 percent.
And let's not forget that the financial institutions that issue credit
cards are major Washington lobbyists and, thus, virtually unregulated.

All of this and more was recently exposed in "The Secret History of the
Credit Card," produced by "Frontline" and the New York Times. Here are
some underreported doozies from the show: Through a policy called
"universal default," if you are late with a payment to someone else –
say your mortgage company – your credit card company can raise your
interest rates automatically because they feel you have become a
riskier client. How do they know if you've been late on a car payment?
They can now monitor, on a daily basis, your financial transactions and
your credit rating.

Always, always, they are trolling for and sticking it to the most
financially vulnerable; just as in Bush's budget, those in the most
financially precarious positions are the ones made to pay the most.
Millions of people already in financial hot water are solicited to
accept yet more credit cards. The companies also set the minimum
monthly payments so low that consumers could easily be in debt for the
rest of their lives.

According to "Frontline," since there is no federal government
regulation of late payment fees, "the amount of revenue the companies
generate from fees ... has doubled" in the last 10 years. Some predict
that late fees will go to $50 within the year. The companies can also
change your interest rate at will – they just have to give you 15 days'
notice. And why are so many of these card companies, like Citibank or
Bank USA, based in places like South Dakota or Delaware? Because these
states (unlike some others) have no caps on interest rates.

Approximately 10 companies control nearly all credit card accounts, and
they have their own individual and collective lobbyists working the
Hill daily to make sure there is no investigation into the industry.
One thing they also want to ensure is their continued ability to
violate your privacy by sharing your financial information with
telemarketers or other third parties, even if you object. According to
U.S. PIRG, they have also been lobbying hard to change the bankruptcy
laws so that it would be harder to qualify for Chapter 7 "fresh start"
bankruptcy; instead, people would have to go into a Chapter 13 "5-year
repayment plan" program, which, not surprisingly, would include unpaid
credit cards. Both Sen. Christopher Dodd (D-Conn.) and John Kerry have
proposed legislation that would require greater disclosure about what
it really costs to carry this debt and that would prohibit the
arbitrary increasing of interest rates. Given who controls Congress,
don't hold your breath.

In part because of these shenanigans, the Kiplinger newsletter reports,
"the rate at which people file for bankruptcy has increased 40 percent
over the past 10 years and now totals 8.6 out of every 1,000
Americans." Older Americans, Kiplinger predicts, will lead the way.
Burdened by taking care of children and aging parents in middle age,
and then confronted by escalating health and medical bills while on a
fixed – or, if Bush has his way, declining – income in old age, it will
be senior citizens whose bankruptcy rates will soar.

The Bush version of Social Security will be just like this. It will
further impoverish the poor, the working classes and women and be
filled with hidden scams that benefit the financial institutions at our
expense. Given that most Americans hate their credit card companies –
the industry has a very high complaint rate – opponents of Bush's
efforts to privatize Social Security might do well to use the industry
as a predictor of what is to come.

Just imagine – the same financial interests that gouge you now, have
indecipherable rules in their microscopic agreements, enjoy no
regulation and can do whatever they want to screw the average American
will soon control our retirements. Priceless.
http://www.alternet.org/story/21356/

mal
 

bazizmaduno

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Feb 12, 2003
Messages
280
Reaction score
4
Points
49
Just a thought...

I wonder if the US will pay off its debt burded by selling/leasing off "UFO technology" to the worlds' governments...

Baz (mad by name mad by nature)
:?:
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
Buffett deepens dollar worries

By Dan Roberts in New York
Published: March 5 2005 18:22 | Last updated: March 6 2005 22:47

Warren Buffett has warned that the US trade deficit risks creating a “sharecropper’s society” as his letter to shareholders sounded an increasingly bearish tone about the value of the dollar.

The billionaire fund manager said his own performance as chairman of Berkshire Hathaway was “lacklustre” because he struck out in his quest for new investments. Annual results showed the book value of Berkshire shares underperformed the stock market for the second year in a row while full-year profits fell 10 per cent.

But his sceptical view of current market valuations continued as Berkshire’s holdings of cash rose from $36bn in 2003 to $43bn by the end of December – equivalent to nearly all the “float”, or excess cash, generated by its insurance businesses.

Mr Buffett’s bet against the dollar also grew. Foreign exchange contracts – mostly short positions against the US dollar – nearly doubled over the year to $21.4bn, generating $1.8bn in gains as the greenback fell against other major currencies.

These currency profits were partly responsible for a sharper than expected rise in fourth quarter earnings from $2.39bn to $3.34bn, although Berkshire earnings are notoriously volatile due to the timing of investment gains.

Mr Buffett stepped up his warning about the US trade deficit and the need to finance it with foreign investment, devoting more than two full pages of the annual report to the topic.

“This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily, an increase of 20 per cent since I wrote you last year,” he said. “Consequently, other countries and their citizens now own a net of about $3,000bn of the US”

In particular, he warned that this meant a sizeable portion of what US citizens earned in future would have to be paid to foreign landlords.

“A country that is now aspiring to an “Ownership Society” will not find happiness in – and I’ll use hyperbole here for emphasis – a “Sharecropper’s Society,” added Mr Buffett. “But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.”

Nevertheless, Berkshire’s chairman and chief executive conceded he did not do his job very well last year in finding ways to profit from the unusual market conditions

“My hope was to make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have. But I struck out,” he said “Additionally, I found very few attractive securities to buy. Berkshire therefore ended the year with $43 billion of cash equivalents, not a happy position.”

Berkshire’s net earnings, which are subject to volatile swings in realised investment gains, fell from $8.15bn to $7.31bn for the year. Total assets rose from $181bn to $189bn and shareholder equity increased from $77.6bn to $85.9bn.

Mr Buffett added little new information about an ongoing investigation into potentially illegal trading practices in the insurance industry.

“Berkshire cannot at this time predict the outcome of these investigations, is unable to estimate a range of possible loss, if any, and cannot predict whether or not that outcome will have a material adverse effect on Berkshire’s results,” said the report.
Source
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
Commentary: "A Global Accounting: An Occasional Column"
from the March 24, 2005 edition

A poorer OPEC no longer spreads its wealth

By David R. Francis

In the bad old days of an oil embargo and gasoline lines, Americans at least got billions of petrodollars back from the oil-rich Middle East.

That money got recycled into the United States, mostly in safe bank deposits. The banks then invested it at great risk in Latin America and elsewhere.

So this time as gasoline prices soar again - an average $2.11 cents a gallon this week in the US - some Americans may be expecting another influx of Mideast cash. They shouldn't. The petrodollar is losing its international clout.

That trend says much about how oil-rich nations have changed, often for the worst, despite the big windfalls they're currently reaping.

"Oil is a curse, not a blessing" for oil producers, says Leo Drollas, chief economist of the Center for Global Energy Studies in London. "They tend to blow [their oil money]." Some nations spend it on arms and other military costs, some on job creation or bureaucrats' pay.

One of the key drivers is demographics. The population of most Middle East nations has about doubled in the past 30 years. Population has also soared in other OPEC nations. That means more youths to feed, educate, and house - at a cost. It also explains why seven of the 11 nations that make up the Organization of Petroleum Exporting Countries (OPEC) are poorer (or no richer) today per capita than they were in 1974.

So instead of investing their petrodollars abroad this time, most OPEC nations have ways to spend or use them at home.

Saudi Arabia's government, for instance, is repaying some $12 billion a year of the $160 billion it had borrowed from domestic pension funds in prior years to cover its deficits. Other OPEC members also are using extra oil money to reduce budget deficits.

Venezuela's President Hugo Chávez is spending it on programs to bolster his political base, the nation's poor. Nigeria and Indonesia are heavily in debt, and find no trouble in spending every extra dime.

Another factor behind the reduced outflow of petrodollars: The price of oil today has not reached the peak in 1981, if inflation is factored in. Moreover, the record $57 a barrel reached this week in oil markets exaggerates the return to many OPEC members. It is for high-quality crude, not the heavier oils that many fields provide. The average price is less than $35 a barrel, says A.F. Alhajji, an economist at Ohio Northern University's business school in Ada.

Of the petrodollars that do leave home, fewer find their way to the US. In a post-9/11 scene, citizens of the Middle East are uneasy about traveling to America to splurge. They expect to be fingerprinted and possibly face other indignities at the airports.

Oil money going abroad is now spent mostly in Europe and Asia. And that's in spite of the fact that the decline of the dollar - by 40 percent against the euro - makes US goods cheaper.


While OPEC may seem to be riding high as oil prices soar, its influence is limited. Except for Saudi Arabia, members have only marginal influence in setting prices.

For example, several ministers of the cartel would like to see prices drop to the low $40s or high $30s, says John Lichtblau, an economist at the Petroleum Industry Research Foundation in New York. They fear today's relatively high prices could reduce demand for their oil by slowing the world economy, prompting more conservation, and encouraging more output in non-OPEC countries.

But they're having a hard time getting markets to go along.

Meeting in Iran last week, OPEC pledged an immediate 1.9 percent rise in its overall quota to 27.5 million barrels per day. Ministers spoke of raising their output ceiling by 500,000 barrels per day, and maybe another 500,000 b.p.d. in May. Talks about the latter hike are already under way, says the Saudi oil minister.

Oil markets were not impressed, however. Prices stayed above $57 a barrel. It may be that speculators have pushed up oil's price by buying futures - delivery of oil in the months ahead. But most market experts agree that rapidly rising demand, especially from China and India, has put a strain on surplus capacity.

The Iraq war hasn't helped. Before the conflict, it exported 3 million b.p.d. Because of sabotage, Iraq now exports 2 million b.p.d. at best.

OPEC can't do much about these factors. "One shouldn't blame OPEC for high prices," says Mr. Lichtblau.

Within the cartel today, only Saudi Arabia can raise output decidedly, from about 9.5 million b.p.d. now to 11 million over a short period of time. Other OPEC members together might stretch to get another 500,000 b.p.d., he says.

In reality, OPEC has been mostly a failure as a cartel. OPEC first introduced quotas in 1983, long after its founding in 1960. When oil prices were dropping, these quotas "kept prices higher than they would have been," says Lichtblau.

But it hasn't been particularly effective when demand is growing, despite appearances.

It has no punishment mechanism for cheaters, Professor Alhajji says. (The Saudis have acted independently, punishing nations by flooding the market and driving down prices.) OPEC has no buffer stocks, no division of the market, and an insufficient market share (40 percent) to be effective.

The International Energy Agency in Paris expects growth in demand to slow to 1.5 million b.p.d this year. That may not be enough to trim prices.
Source
 

Mal_Adjusted

Justified & Ancient
Joined
Aug 6, 2003
Messages
2,262
Reaction score
31
Points
69
N YUAN WE TRUST

greets

IN YUAN WE TRUST
Issue of 2005-04-18
Posted 2005-04-11

In the 2004 Hollywood comedy “EuroTrip,” which chronicles the adventures of a group of American teen-agers on a debased modern version of the Grand Tour, our heroes end up trapped in Bratislava with a mere $1.83 in their pockets. Things look bleak, until they discover just what a dollar and change will buy: a luxury suite, massages, three-course meals with champagne, and assiduously servile service. Feeling flush, they toss their waiter a five-cent tip. He turns to his boss and says, “A nickel! You see this? I quit! I open my own hotel.”

If only. Nowadays, when you’re abroad, you’re lucky if $1.83 buys you a cup of coffee. In the past three years, the value of the dollar has fallen by more than fifty per cent against the euro and twenty-five per cent against the yen, and, a recent rally notwithstanding, most analysts say that the dollar is only going to get weaker in the months to come. Europeans now routinely fly across the Atlantic to go shopping, and they have also started to nose around in the American real-estate market. You know the dollar’s in trouble when our puffed-up real estate starts looking cheap.

The dollar has fallen for a simple reason: Americans spend a lot more than they save. American consumers, of course, are known for living on credit, and they buy hundreds of billions of dollars’ worth a year of foreign goods—cars, TVs, T-shirts, khakis. In addition, since 2001 the American government has been running giant budget deficits, thanks to the magical combination of tax cuts and spending increases. We don’t have enough money at home to pay for all this spending, so we borrow from foreigners to make up the difference. Because we keep piling on this foreign debt—more than three trillion dollars so far—and have no clear strategy for paying it back, people are made anxious about the United States economy; this anxiety encourages them to sell dollars, and that drives down the value of our currency.

The dollar’s decline, grim as it seems, has so far had little impact on the everyday lives of most Americans. To be sure, there are new burdens: the price of truffles is up sharply, and the cost of a trip to Paris now rivals that of a semester in college. But inflation and interest rates are still low, the stock market is above where it was three years ago, and Americans have had no trouble slaking their appetite for foreign-made goods. Doomsayers have been predicting for a while that the profligacy will lead to serious trouble. So why hasn’t it?

One answer is that Asia won’t let it. Last year, Asian countries invested almost four hundred billion dollars in the United States, mostly in government bonds. China is effectively taking most of its excess national savings and lending it to the United States. The Japanese, who despite their creaking economy remain flush with savings, bought a quarter trillion dollars of American debt last year, even though the interest is lousy and the assets themselves are losing value. More than any other nation in history, the United States depends, economically, on the kindness of strangers. Right now, Asian investors appear very kind.

Markets are hardly known for their tenderness. Usually, you can assume that everyone in a market is trying to make as much money as possible, with as little risk, but the currency market isn’t like most others. In the market for the dollar, many of the players have other things on their mind. China needs to go on selling Americans hundreds of billions in exports in order to keep its economy humming. A weaker dollar makes that harder. Asian central banks also already own trillions of dollars in American assets. As the dollar falls, so does the value of those assets. There are plenty of other traders in the currency markets—who have the luxury of being single-minded regarding profit—but the Asian banks are powerful enough to be, in effect, the lenders of last resort. As long as it’s in their self-interest to keep America afloat, the dollar will not crash.

Of course, the Chinese and the Japanese could decide that the costs of the falling dollar are too great, and suddenly stop (or, at least, cut back sharply) their lending to the United States. This would lead to a so-called “hard landing” for the U.S. economy: high inflation, punitive interest rates, collapsing stock prices and housing prices. It would also lead to bedlam for China and Japan. Their best customers would effectively be unable to afford their wares. To paraphrase John Paul Getty: If you owe the bank a hundred dollars, you’ve got a problem. If you owe the bank three trillion dollars, the bank’s got a problem.

There’s a good chance, then, that the landing will be soft—we lose the truffles but keep our homes—as long as everyone involved in keeping the dollar aloft continues to play the same game. No one, in Asia or anywhere else, wants to be the last guy out. What the Chinese and the Japanese do depends in large part on what they think everyone else is going to do. If the Chinese get the idea that Japan’s commitment to the dollar is wavering, or if they decide that the United States has no interest in altering its deadbeat ways, then they may try to make a run for it. Then again, that threat could act as a prod to keep the Americans in line. The currency market is a great example of what George Soros calls “reflexivity”: people’s predictions about what will happen to the dollar end up having a major impact on what actually does happen to the dollar. Our lenders are trying to strike a delicate balance: they’d like the dollar’s predicament to seem dire enough to make us change, but not so dire as to spark panic. So be afraid. Just don’t be very afraid.


— James Surowiecki
http://www.newyorker.com/talk/content/articles/050418ta_talk_surowiecki

mal
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
There was a reasonable Conspiracies on this tonight.

They had the author of this book on:

Petrodollar Warfare: Oil, Iraq and the Future of the Dollar
W.R. Clark
www.amazon.co.uk/exec/obidos/ASIN/08657 ... ntmagaz-21
www.amazon.com/exec/obidos/ASIN/0865715 ... enantmc-20

Synopsis

Meticulously researched, this book examines US dollar hegemony and the unsustainable macroeconomics of 'petrodollar recycling', pointing out that issues underlying the Iraq war also apply to geostrategic tensions between the US and other countries including the member states of the EU, Iran, Venezuela and Russia. The author warns that without changing course, the American Experiments will end the way all empires end -- with military over-tension and subsequent economic decline. He recommends the multilateral pursuit of both energy and monentary reforms within a United Nations framework to create a more balanced global energy and monetary system -- thereby reducing the possibility of future oil and oil-currency related warfare.
Book Description

The invasion of Iraq may well be remembered as the first oil currency war. Far from being a response to 9/11 terrorism or Iraq's alleged weapons of mass destruction, Petrodollar Warfare argues that the invasion was precipitated by two converging phenomena: the imminent peak in global oil production and the ascendance of the euro currency.

Energy analysts agree that world oil supplies are about to peak, after which there will be a steady decline in supplies of oil. Iraq, possessing the world's second-largest oil reserves, was therefore already a target of US geostrategic interests. Together with the fact that Iraq had switched to paying for oil in euros-rather than US dollars-the Bush administration's unreported aim was to prevent further OPEC momentum in favor of the euro as an alternative oil transaction currency standard.

Meticulously researched, Petrodollar Warfare examines US dollar hegemony and the unsustainable macroeconomics of ‘petrodollar recycling,' pointing out that the issues underlying the Iraq war also apply to geostrategic tensions between the United States and other countries, including the member states of the European Union, Iran, Venezuela and Russia. The author warns that without changing course, the American experiment will end the way all empires end-with military overextension and subsequent economic decline. He recommends the multilateral pursuit of both energy and monetary reforms within a UN framework to create a more balanced global energy and monetary system-thereby reducing the possibility of future oil and oil currency-related warfare.

A sober call for an end to aggressive US unilateralism, Petrodollar Warfare is a unique contribution to the debate about the future global political economy.

------------
William R. Clark is manager of performance improvement at Johns Hopkins University School of Medicine. His research on oil depletion, oil currency issues and US geostrategy received a 2003 Project Censored Award and was published in Censored 2004. He lives in Columbia, Maryland.
He reckons Iran's opening of its own oil trading exchange trading in Euros could be very bad for them considering what happened to the last guy who floated the idea -Saddam in Autumn 2000.
 
A

Anonymous

Guest
I think that if many countries want to trade their black gold for the Euro then yes, there will be big changes in the world.

As for why the US government invaded Iraq and Afghanistan and why they are pressurising Iran - they all have oil don't they?

If GB was a decent bloke who just wants to fight crime and terrorism in the world, then his next target would be Mugabe after he deals with Iran, wouldn't it?

As for a Euro army, no way in a million years that will ever happen. Too many people arguing like pidgeons squabbling over a piece of bread in a park. No European country will ever agree with eachother for more than five minutes it seems IMHO.

:?
 

Jerry_B

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Apr 15, 2002
Messages
8,054
Reaction score
58
Points
129
The irony is that a move by Iran to create an oil bourse is, as far as capitalism's concerned, simply an effort at competition. By the 'rules' of capitalism, this can only be a good thing. But that depends on whether everyone wants to play by the rules...
 

Heckler

The unspeakable mass
Joined
Jul 16, 2004
Messages
5,289
Reaction score
2,222
Points
219
coldelephant said:
I think that if many countries want to trade their black gold for the Euro then yes, there will be big changes in the world.

As for why the US government invaded Iraq and Afghanistan and why they are pressurising Iran - they all have oil don't they?

If GB was a decent bloke who just wants to fight crime and terrorism in the world, then his next target would be Mugabe after he deals with Iran, wouldn't it?

As for a Euro army, no way in a million years that will ever happen. Too many people arguing like pidgeons squabbling over a piece of bread in a park. No European country will ever agree with eachother for more than five minutes it seems IMHO.

:?
But if his agenda was just oil why not just overthrow Hugo Chavez in Venezuela, after all it's a good deal closer and has a Boliviarian agenda that must really tick the Right Wing of America off.
 

Pietro_Mercurios

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 10, 2005
Messages
12,019
Reaction score
186
Points
114
Heckler20 said:
...

But if his agenda was just oil why not just overthrow Hugo Chavez in Venezuela, after all it's a good deal closer and has a Boliviarian agenda that must really tick the Right Wing of America off.
http://usgovinfo.about.com/library/weekly/aairaqioil.htm

In a Feb. 26 address, Secretary of Defense Donald Rumsfeld called suggestions that the US is really after Iraq's oil "utter nonsense."

"We don't take our forces and go around the world and try to take other people's real estate or other people's resources, their oil. That's just not what the United States does," he said. "We never have, and we never will. That's not how democracies behave."

Nonsense aside, the sands of Iraq hold oil... lots of it. According to the US Energy Information Administration (EIA), "Iraq holds more than 112 billion barrels of oil - the world's second largest proven reserves. Iraq also contains 110 trillion cubic feet of natural gas, and is a focal point for regional and international security issues."

...

Iraq's Oil Reserves: Untapped Potential
While its proven oil reserves of 112 billion barrels ranks Iraq second in the work behind Saudi Arabia, EIA estimates that up to 90-percent of the county remains unexplored due to years of wars and sanctions. Unexplored regions of Iraq could yield an additional 100 billion barrels. Iraq's oil production costs are among the lowest in the world. However, only about 2,000 wells have been drilled in Iraq, compared to about 1 million wells in Texas alone.

...
Venezuala is seventh in the World OIL reserve league tables, with about 77.8 billion barrels of proven reserves and there becoming increasingly difficult and expensive to extract.
http://www.energybulletin.net/3346.html

Published on 23 Nov 2004 by Vheadline.com. Archived on 23 Nov 2004.
Attempts to offset oil depletion in Venezuala through heavy oil processing

by Oliver L. Campbell

VHeadline.com oil industry commentarist Oliver Campbell writes: It is no secret that Petroleos de Venezuela (PDVSA) is having trouble maintaining production capacity. With a natural production decline of around 25% a year, it is necessary to develop that magnitude of additional oil for the production level to remain where it was.

There is some doubt whether PDVSA has been able to replace this natural decline. It is not enough to discover new oil through further exploration: the oil has to be producible now, not some years down the road, and that is the problem.

...
More info. on differing Western atitudes to the Middle East and the Americas, here:
http://homepage.mac.com/smorourke/mystuff/Middle_East.html
 

techybloke666

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Mar 9, 2005
Messages
2,630
Reaction score
3
Points
54
But if his agenda was just oil why not just overthrow Hugo Chavez in Venezuela, after all it's a good deal closer and has a Boliviarian agenda that must really tick the Right Wing of America off.
don't think for one moment GB isn't still thinking about Hugo ;)

but he'll wait

hes not planning to sell his OIL in Euros now is he !!!!!!!!!!
 

mah_magic

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 8, 2002
Messages
165
Reaction score
3
Points
49
Having watched the conspiracies program on the petro dollar last night, we need to financialy distance ourselves as far away from the US as possible.

If however the UK joined the Euro, what effect would this have on the US? Are there countries in the world that don't give the Euro the credibility that it would get if the UK had joined? would the UK give the Euro any further credibility as an international currency? I alwys believed that Stirling was an international currency, equal to the Dollar, is that not the case? And if the US economy did crash, what effect would this have on the UK?

Perhaps our attitude to Europe, and our membership of it has been influenced by the US more than we like to think.

The program left a lot of questions unanswered.
 

Mighty_Emperor

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Aug 18, 2002
Messages
19,442
Reaction score
176
Points
129
techybloke666 said:
But if his agenda was just oil why not just overthrow Hugo Chavez in Venezuela, after all it's a good deal closer and has a Boliviarian agenda that must really tick the Right Wing of America off.
don't think for one moment GB isn't still thinking about Hugo ;)

but he'll wait

hes not planning to sell his OIL in Euros now is he !!!!!!!!!!
And is still quite happy to sell to the US too. While he plays ball it isn't in the US' interest to kick his ass but thats not to say its not on the cards - see this thread:

www.forteantimes.com/forum/viewtopic.php?t=2581

mah_magic said:
Perhaps our attitude to Europe, and our membership of it has been influenced by the US more than we like to think.
I think I've mentioned it above (or elsewhere around here) - the majority of the anti-Euro newspapers are run by companies with vested interests in N. American. If the UK went to the Euro then Brent crude would no longer be traded in dollars and it is one of the standards and could be the first domino in other countries moving to trading in the Euro whih would be disasterous for the US (well they'd no longer be able to afford a bloated military and throw their weight around quite as much). Obviously people like Rupert Murdoch and Conrad Black have/had a lot of interest in stopping that happen and oddly their papers are some of those spreading Euro Myths. They did mention that people in the US were not being told the truth which was a brave enough thing to do on Sky but they clearly couldn't follow this story all the way to the places it should have gone. Which is rather ironic. ;)
 

Jerry_B

Gone But Not Forgotten
(ACCOUNT RETIRED)
Joined
Apr 15, 2002
Messages
8,054
Reaction score
58
Points
129
All currencies are, technically, international - it depends on whether any given currency can be cashed in any other country. As far as currency markets are concerned, some currencies carry more weight than others, depending on their market value. The UK joining the Euro may bolster it, it may not. There has been some mention recently from Europe that the UK's defecit is running at too high a rate, which would probably not bolster the Euro if the UK were to join tomorrow.

The problem is that alot of commodities are pegged to the value of the dollar. If the dollar collapses or faces serious problems, the knock on effect is that some goods and services could become expensive, or at least increase in cost. It really depends on how much other countries have staked in the economy of the US. Ultimately the US would suffer most - especially if it's major economic sponsors (i.e. China) became nervous and withdrew their interests.

The US economy is already facing alot of problems because of it's budget deficit (i.e what it owes in comparison to what it earns and is worth). The Iraq war has certainly made this worse. It really isn't in any position to extend itself too far any more, which could mean that a war against Iran is simply not affordable. If the US borrows money to wage war in Iran and Iraq, promising to pay back later with oil gains (if we believe that the conspiracies are true), then there's no garuntee that (a) that money can be made or repaid at some later point, and (b) that oil will be worth anything in the long term if the whole region goes into a state of economic flux. After all, invading Iraq caused much more in terms of economic costs to the US than was envisaged, or so it seems. To do the same again without hindsight WRT Iran would be foolish in the extreme IMHO.
 
Top