Posted: Wed Sep 08, 2004 3:43 pm Post subject: The Euro vs the Petro Dollar
How had the U.S. government come up so quickly with such a comprehensive and coordinated response to the attack of 9/11? How had they decided within hours that an extended "War on Terrorism"was the appropriate action? Why was the current administration willing to expend so much domestic and international political capital in order to pursue the Iraq war? The administration most likely was able to respond so quickly--because it simply had to pull the plans off the shelf.
Since I joined this site, I have observed that the focus on Iraq and the oil there has overshadowed the true reason for the war...that the continued strength of the dollar is in question.
For the past half-century, the U.S. dollar has been the international currency of account for nearly all nations, and it is the currency with which all oil-importing nations must pay for their fuel from the Organization of Petroleum Exporting Countries (OPEC). For U.S. geo-strategists, the prevention of an OPEC switch from dollars to euros must therefore seem paramount. An invasion and occupation of Iraq would effectively give the U.S. a voting seat in OPEC while placing new American bases within hours' striking distance of Saudi Arabia, Iran, and several other key OPEC countries.
For much of Saddam Hussein's regime, possession of U.S. dollars was a crime punishable by the amputation of a hand. But nowadays the greenback is the hottest item in Baghdad. Since the U.S. led war in Iraq, dollars, either looted from banks or handed out by U.S. administrators, have flooded the currency market. The $100 bill, or the "waraqa," Arabic for paper, has become the preferred trade tool in the city of 5.5 million. "Iraqis see the military in the streets, and they go to shops where many goods are priced in dollars. They can't help but wonder if the dollar will be the main currency," said Dr. Yosra al-Samarai, professor of finance at Baghdad University. Their most frequent complaint is the lack of dinars, which haven't been printed since Saddam's fall.
Here is a well-documented and lengthy article that explains my point great detail. If there is to be a sudden change in world economics, it will happen around the strength of the dollar and oil production.
If the dollar were to cease being the world's reserve currency, all of that would change overnight. So, in a nutshell, it is not about oil, but about which currency "the euro or the dollar" is used to buy and sell oil. President Bush did promise to protect the American way of life. This is what he meant.
Last edited by MonteQuest on Fri Nov 12, 2004 11:30 pm; edited 4 times in total
After the US won 2 World Wars, was the leading economy /oil User and an leading Producer of Oil....not many argued against using the dollar to buy Oil.
Fast forward almost 60 years and Europe has found her legs again, Oil is starting a decline, China makes most things in the US, and the worls is not so happy with the US being the only "superpower" for 10 years or so....
But the Euro was always meant to compete against the Federal Reserve Note, and so it did....
The Iraq war is a temporary "save" for the "Dollar." _________________ With Love to all, and Malice to none.
"A people is conquered not when they lose a war, but when they adopt the song and customs of the enemy"
-Chacham S
Yes, that is why they call it the "petro dollar". A temporary save may well be true, but are we going to see more colonial adventures into say.....Iran to protect the dollar? I guess what I have been looking for is the long-term game plan by the neo-cons and their use of the military.
From all outward appearences and posturing, we just may well see a reinstatement of the draft (now upgraded to 18-26 and includes women) in the spring along with a show-down with Iran over nuclear proliferation....regardless of costs in money or lives.
My word, look at what lengths a lot of us are going to, to survive PO. Does anyone thing the Cheney/oil cabal is not aware of the implications? _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Last edited by MonteQuest on Thu Oct 28, 2004 8:12 pm; edited 1 time in total
Posted: Wed Sep 08, 2004 6:08 pm Post subject: Euro
The_Virginian wrote:
Fast forward almost 60 years and Europe has found her legs again, Oil is starting a decline, China makes most things in the US, and the worls is not so happy with the US being the only "superpower" for 10 years or so....
But the Euro was always meant to compete against the Federal Reserve Note, and so it did....
And then think of why England is also a big player in the Iraq war. Although they belong to the EU, they do not use the Euro for currency. Do you think that if they used the Euro, they may have sat this thing out?
Who else in Europe does not use the Euro? What "side" are they on?
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
The Netherlands
Portugal
Spain
Sweden
United Kingdom
Cyprus
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Malta
Poland
Slovakia
Slovenia
Candiadates:
Bulgaria
Croatia
Romania
Turkey
Application Pending:
Former Yugoslav Republic of Macedonia _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Posted: Wed Sep 08, 2004 10:13 pm Post subject: EU
The list of countries that belong to the European Union is not necessarily the same as the list of countries that use the Euro as currency.
In the technical world, you often find companies willing to join standards organizations or embracing common specifications. The most devious companies often times are the ones that make the biggest noise about standards, then cheerlead the organization startup, and split with their own proprietary solution as soon as the org gets going. Thus leaving everyone else in their wake, fighting over a too-late-to-market piece of the pie. England could be conceivably doing this with the EU. Blair saying they will switch to the Euro amounts to playing this kind of game.
Oh, I agree entirely. I can see many bankers and economists sitting on the edge of their seats watching this all play out. Japan is my canary in the mineshaft country to watch. They are very susceptible to currency fluctuations with regards to oil prices. They could very well start the house of cards falling if oil prices stay up this high for any length of time. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Posted: Wed Sep 08, 2004 10:51 pm Post subject: Japan
yes, Japan is one country and economy that will be the last to fold like a house of cards. They almost went into a liquidity gap, but managed to maintain their bearings. How would the US respond when faced with that kind of situation?
You mean the "first" to fold, don't you? Being that we count on Japan as one of our primary investors to float our debt, I guess we would tumble along with them.
Check out my new post in the news forum. I'm still agape! _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Yes most of our allies in Iraq from europe were the junior (new) members of the EU that still do not use the EU currency...
The crown will not allow a switch to the Eu currancy IMHO. The puond is too profitable....maybe they are just holding out for a larger slice of the pie, time will tell.
Monte,
Yes i agree Japan is in deep trouble allong witht he USA. No matter that they at least preserved much of the countries industrial infrastructure, they depend on imporitn 99% of all the oil they use...
Their reactors will keep the grid up, but "Toyota" (etc.) is in trouble.
Factor in the debt they buy (as you say), and the fact they depend on exporting to China, USA, Europe Etc. and the whole world is in for an economic disaster if the USA implodes too quickly... _________________ With Love to all, and Malice to none.
"A people is conquered not when they lose a war, but when they adopt the song and customs of the enemy"
-Chacham S
Factor in the debt they buy (as you say), and the fact they depend on exporting to China, USA, Europe Etc. and the whole world is in for an economic disaster if the USA implodes too quickly...
Yes, the central bankers face a choice: let the dollar sink, or pump up their domestic money supply making credit easier to obtain. But it can have a disastrous effect on homegrown banking systems—as the Asian countries discovered in 1997 and 98. Excessive dollar purchases led to excessive money creation, which led to rampant speculation, asset price bubbles and—eventually—a full-blown financial panic, which in turn led to the tech stock bubble crash in 2000.
The irony of this may have been lost on Americans (most of whom were oblivious anyway) but not on the Asians: In trying to prop up the dollar, they blew up their own banking systems, causing a massive run on their own currencies, forcing them to go hat in hand to the International Monetary Fund (IMF) for emergency loans of, yes, dollars.
You know, sometimes I wish I didn't know jack-crap about all this economics crap and could just sit back and drink my Corona and lime in peace. And you know, trying to explain PO and currency markets and such to Joe-Blow the Rag Man makes me very afraid of what the coming crisis has in store for us all. Either they won't listen or they don't get it. Never saw so many rolling eyes. Denial will be everywhere , not just in Egypt.
_________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Joined: May 26, 2004 Posts: 1190 Location: Zoorope
Posted: Thu Sep 09, 2004 7:26 am Post subject:
About one month ago, Iran announced they'll adopt Euro as oil currency.
That's why they are facing a war with USA... _________________ **no english mothertongue**
--------
Objects in the rear view mirror
are closer than they appear.
Joined: Aug 13, 2004 Posts: 115 Location: United Kingdom
Posted: Thu Sep 09, 2004 8:46 am Post subject:
MonteQuest wrote:
The_Virginian wrote:
Factor in the debt they buy (as you say), and the fact they depend on exporting to China, USA, Europe Etc. and the whole world is in for an economic disaster if the USA implodes too quickly...
Yes, the central bankers face a choice: let the dollar sink, or pump up their domestic money supply making credit easier to obtain. But it can have a disastrous effect on homegrown banking systems—as the Asian countries discovered in 1997 and 98. Excessive dollar purchases led to excessive money creation, which led to rampant speculation, asset price bubbles and—eventually—a full-blown financial panic, which in turn led to the tech stock bubble crash in 2000.
The irony of this may have been lost on Americans (most of whom were oblivious anyway) but not on the Asians: In trying to prop up the dollar, they blew up their own banking systems, causing a massive run on their own currencies, forcing them to go hat in hand to the International Monetary Fund (IMF) for emergency loans of, yes, dollars.
You know, sometimes I wish I didn't know jack-crap about all this economics crap and could just sit back and drink my Corona and lime in peace. And you know, trying to explain PO and currency markets and such to Joe-Blow the Rag Man makes me very afraid of what the coming crisis has in store for us all. Either they won't listen or they don't get it. Never saw so many rolling eyes. Denial will be everywhere , not just in Egypt.
Given that future scenarios are never proveable until they happen, I could argue the other way round. Having the euro become a petro currency would make it appreciate considerably against the dollar. While this might not be pleasant to tourists ($10 for a Coke - ridiculous!), US manufacturers would love it.
European businesses would find their exports in precipitous decline (everything denominated in euros - too expensive to buy) while the US would export like crazy (everything in $ is now cheap). European countries are even more dependent on exports than the US is since their populations are even more biased towards old people because of the low birth rate. The German and French pension systems make Social Security look robust.
JackBob, let me give you a few more things to consider. If Euro becomes the standard for purchasing oil, the US loses a position of power over oil. The country will be at the mercy of the countries who print Euros. The US imports more oil than anyone, so we would certainly need a huge reserve of Euros. I think the US would collapse without the power over oil. The difficulty in buying energy would make things tough to manufacture and export goods. With the oil dependence and deficit, the US is in a point of no return. The country needs currency control over oil in order to stay afloat. _________________ "If humans don't control their numbers, nature will." -Pimentel
"There is not enough trash to go around for everyone," said Banrel, one of the participants in the cattle massacre.
"George W. Bush loves poor people. He keeps making more of them." -unkn
Joined: Aug 13, 2004 Posts: 115 Location: United Kingdom
Posted: Thu Sep 09, 2004 9:29 am Post subject:
Falconoffury wrote:
JackBob, let me give you a few more things to consider. If Euro becomes the standard for purchasing oil, the US loses a position of power over oil. The country will be at the mercy of the countries who print Euros. The US imports more oil than anyone, so we would certainly need a huge reserve of Euros. I think the US would collapse without the power over oil. The difficulty in buying energy would make things tough to manufacture and export goods. With the oil dependence and deficit, the US is in a point of no return. The country needs currency control over oil in order to stay afloat.
Well as I say, we won't know for sure until it happens. I do agree with the idea in another post that when the US catches a cold, all the world sneezes...
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