Joined: Nov 11, 2004 Posts: 978 Location: Heart of Canada's Oil Country
Posted: Mon Sep 26, 2005 4:53 pm Post subject: Re: World Dollar crash?
We saw what the US response was to Iraq going to the euro. _________________ Do not underestimate the difficulties of surviving the transition of peak oil, nor the dangers of global warming. We must embrace nuclear energy and renewables.
Yawn, the dollar already crashed and you missed it. We went from .8 dollars to the euro to 1.2 dollars to a euro in about 4 years. The reason the dollar hasn't fallen further though is because the European economy is even more pathetic than the American economy. Asia wants export led growth and isn't ready to switch over to internal consumption so that just leaves the Euro and the Dollar and the European economy has been suffering the same decline in manufacturing as the US.
Posted: Tue Sep 27, 2005 2:38 am Post subject: Re: World Dollar crash?
Petrodollar - I have William Clark's article Oil Currency Geopolitics on my desk in front of me. If I quote you The Da Vinci Code verbatum would it make the story true? It is published isn't it? Thanks anyway.
The dollar has declined some 40% in the last 25-years against the yen, the legacy currencies of the euro, the pound and the swiss franc. I would maintain that the nominal price of crude oil at $65 per barrel is higher than it would have been had the dollar not devalued by 40%. In effect, the price of oil is more expensive in dollars, but worth comparatively less when measured in euros, yen, pounds and swiss franc. Perhaps not capturing the entire 40%, but some portion there of.
The US is not getting a free ride when it comes to the price of oil. It is getting a good deal as silly OPEC members are not only willing to sell their oil in dollars, but instead of hedging their own foreign exchange risk, they hold dollars in the form of US treasuries, in a currency that is losing its external value. Not very good business. I am sure their investments in London real estate have performed much better on an exchange adjusted basis?
Gazprom is western Europe's largest supplier of natural gas. Those contracts are priced in euros. It doesn't matter. If they want to hedge their price risk, they would still hedge in dollars on either the IPE or NYMEX and manage their forex exposure accordingly. Really, anyone who has an excel spreadsheet and a live Reuters feed can view the price of oil & gas in dollars or euros or rubles in real time.
By your logic, the US is also getting a free ride when it purchases grain & oilseeds, precious or ferrous metals or any commodity that is priced in US dollars? If Russia sells China oil or gas or aluminum they may price the deal in dollars (or not), but the true cost will be determined by their respective purchasing power parity not the external value of the dollar which is just a scorecard.
The history of the Gold Standard and the Bretton Woods Treay is a matter of public record as it the ERM crisis in 1992. Governments sign agreements all the time. Just because European governments sign the Maastrict Treaty doesn't mean the euro will not go up and down in value in line with its fundamentals. Some conspiracy? _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Tue Sep 27, 2005 9:53 am Post subject: Re: World Dollar crash?
MrBill wrote:
Quote:
Any comments on the bolded sentences in Mr. Benson's article regarding the dollar's role as the World's Reserve currency, underpinned by petrodollar recycling?
Sorry there were quite a few. I will have to go back and review them.
Just for your guide, at 1.2000 I have been converting USD into EUR, as well as holding GBP and CAD, but I would not only own EUR. Also, there is a case to be made to own JPY or CNY, but the problem is what to invest in Yen? And, how do you execute a CNY trade? It is not so easy.
The best hedge against peak oil is just to buy oil & gas futures & options. Easy. Set-up a margin account and buy with 8% down if you are bullish on the price of oil. If you're not, then all other arguments are quite academic.
What do you think about oil companies? Most of the integrateds have a barrel of oil behind every $12-$25 of market cap along with refining capacity. Admittedly, the oil will get delivered over the course of 20 years and extraction costs will make the reserves more akin to options than futures, but it seems like a good deal for someone who just wants to hedge their energy needs?
Also, have you figured out how to buy any Yuan? Is it some insider secret?
Posted: Tue Sep 27, 2005 3:08 pm Post subject: Re: World Dollar crash?
Mr. Bill,
Your reference to the Da Vinci Code is a false dilemma, and appears to be a defense mechanism to avoid addressing the actual subject matter... Indeed, what I posted earlier is regarding the 1974-1975 agreements is a matter of historical fact, backed by US gov't docs. Again, here's the one of the few books that reveals the facts, and I strongly encourage anyone interested in these issues to read this fascinating book:
David E. Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Cornell University Press, 1999
Amazon
...one more note about your post...
"By your logic, the US is also getting a free ride when it purchases grain & oilseeds, precious or ferrous metals or any commodity that is priced in US dollars?"
Yes, you are correct, the US dollar as the monopoly currency for these commodities effectively reduces the currency risk for the US consumer. Oil, given its relative inelastic demand qualities, if of course the most important "commodity." (BTW, I do not consider oil a mere commodity). What is unque about petrodollar recycling is that the money flows of all OPEC customers flows back into the Federal Reserve....which of course allows us to create strange things like a $600B annual trade account deficit, a $400B annual budget shortfall, and $7.7 trillion dollar debt - and yet - nations continue to accept our currency, in part b/c they need it to pay their monthly oil/energy/survial bill....
...FWIW, here's what an OPEC executive stated in April 2002...
"The question that comes to mind is whether the euro will establish itself in world financial markets, thus challenging the supremacy of the US dollar, and consequently trigger a change in the dollar's dominance in oil markets. As we all know, the mighty dollar has reigned supreme since 1945 .… Having said that … in the long run the euro is not at such a disadvantage versus the dollar when one compares the relative sizes of the economies involved, especially given the EU enlargement plans.
Moreover, the Euro-zone has a bigger share of global trade than the US and while the US has a huge current account deficit, the euro area has a more, or balanced, external accounts position … looking at the statistics of crude oil exports, one notes that the Euro-zone is an even larger importer of oil and petroleum products than the US.
From the EU’s point of view, it is clear that Europe would prefer to see payments for oil shift from the dollar to the euro, which effectively removed the currency risk.
.… There is also very strong trade links between OPEC Member Countries (MCs) and the Euro-zone, with more than 45 percent of total merchandise imports of OPEC MCs coming from the countries of the Euro-zone
.… Of major importance to the ultimate success of the euro, in terms of the oil pricing, will be if Europe’s two major oil producers —– the United Kingdom and Norway join the single currency .… This might create a momentum to shift the oil pricing system to euros.
In the short-term, OPEC MCs, with possibly a few exceptions, are expected to continue to accept payment in dollars …. In the long-term, perhaps one question that comes to mind is could a dual system operate simultaneously? Could one pricing system apply to the Western Hemisphere in dollars and for the rest of the world in euros?
…Should the euro challenge the dollar in strength, which essentially could include it in the denomination of the oil bill, it could be that a system may emerge which benefits more countries in the long-term .... Time may be on your side. [emphasis added]
– Javad Yarjani, Head of OPEC’s Petroleum Market Analysis Department, in a speech to Spanish officials, April 2002
...and this is interesting quote from a member of the CFR...
"The Saudis are holding the line on oil prices in OPEC and should they, for example, go along with the rest of the OPEC people in demanding that oil be priced in euros, that would deal a very heavy blow to the American economy."
– Yosef Ibrahim, Managing Director of the Strategic Energy Investment Group in Dubai and member of the US Council on Foreign Relations, as reported in the Observer (UK), February 2003
...and finally, here's an exert from my book...
Yosef Ibrahim, the managing director of the Strategic Energy Investment Group in Dubai and a member of the US Council on Foreign Relations, stated that Saddam’s switch to the euro for Iraqi oil trades ‘was another reason [why the US attacked]. There is a great political dimension to this. Slowly more power and muscle is moving from the United States to the EU, and that’s mainly because of what happened in Iraq.’[emphasis added]
Further evidence that Russia is gravitating toward a petroeuro system was provided by Lukoil vice president Leonid Fedun, who stated that the transaction cost for the switch would be minimal at just 0.08 percent. Fedun said, ‘There is no problem .... If the state decides to do this, then we will support this initiative. From the point of view of the [Russian] economy, there’s no difference.’
This Moscow Times article included comments from Yevgeny Gavrilenkov, chief economist at Troika Dialog, stating that debate is growing on a move toward the euro as Russia mulls siding with the EU: “Such an idea is really possible. Why not? More than half of Russia’s oil trade is with Europe. But there will be great opposition to this from the United States.”
The proposition that Russia, the second-largest oil exporter in the world, switching to the euro will be met with “great opposition” from the US is an understatement. Nevertheless, according to the same article, from a purely monetary and trade perspective this Russian switch appears logical. Obviously the US government would prefer that Russia sell its oil in dollars or a dual currency arrangement, as opposed to a single currency, petroeuro oil-trading system.
Posted: Tue Sep 27, 2005 3:32 pm Post subject: Re: World Dollar crash?
Quote:
Further evidence that Russia is gravitating toward a petroeuro system was provided by Lukoil vice president Leonid Fedun, who stated that the transaction cost for the switch would be minimal at just 0.08 percent. Fedun said, ‘There is no problem .... If the state decides to do this, then we will support this initiative. From the point of view of the [Russian] economy, there’s no difference.’
This Moscow Times article included comments from Yevgeny Gavrilenkov, chief economist at Troika Dialog, stating that debate is growing on a move toward the euro as Russia mulls siding with the EU: “Such an idea is really possible. Why not? More than half of Russia’s oil trade is with Europe. But there will be great opposition to this from the United States.”
And I agree with Mr. Fedun at Lukoil. It makes no difference whether you price oil in dollars or euros as the transaction currency. As I mentioned, Gazprom already prices nat gas contracts to W. Europe in euros. Of course, as Lukoil's balance sheet is expressed in dollars, it creates foreign exchange risk for them, but they can hedge their FX exposure using forwards, so really it is just a footnote in their annual report. It just passes the FX risk from European customers to Lukoil. The risk is the same. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Tue Sep 27, 2005 3:41 pm Post subject: Re: World Dollar crash?
Quote:
… looking at the statistics of crude oil exports, one notes that the Euro-zone is an even larger importer of oil and petroleum products than the US.
From the EU’s point of view, it is clear that Europe would prefer to see payments for oil shift from the dollar to the euro, which effectively removed the currency risk.
I think that is quite rational. We all try to identify, reduce, mitigate and hedge our underlying interest rate, currency, settlement, counterpart and other risks if we can.
However, I find it interesting that you advocate not selling oil in dollars to America, but you support selling oil to Europeans in euros. Does the ECB not control the printing presses in the EU? Would it not be better for the Saudis to simply sell oil in riyals and remove their FX risk?
And, Iran could sell oil in rials. Of course, then they would have to make it convertible. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Tue Sep 27, 2005 4:05 pm Post subject: Re: World Dollar crash?
This article also uses some very flawed logic, along with a false dilemma by equating an oil currency switch to an "Arab oil embargo," but this honest, if somewhat right-wing individual, makes some interesting points about the dollar's demand/liqudity value in a petroeuro enviroment ...
Oil, the Dollar, and US Prosperity
August 11, 2003
Richard Benson is president of Specialty Finance Group, LLC , offering diversified investment banking services.
Like many Americans, I greatly enjoy air conditioning in the summer, heat in the winter, and gas for my sport utility vehicle. I also happen to enjoy traveling to those civilized lands that take modern conveniences for granted - such prosperity takes a lot of energy.
In the United States, we stopped being energy independent many years ago. The rest of the world, including Europe and Asia, also come up empty in the energy department. Russia has enough oil to export for a few years until their economy develops; Japan has zilch, and China and India can never, on their own, meet the need for oil to accommodate over 2 billion drivers.
If you take the time to examine a simple map of where the Oil Reserves are in the world, you’ll notice that two-thirds of the reserves sit in the Middle East, with a massive concentration in Iraq, Kuwait, and Saudi Arabia.
The Dollar has grown to be the world currency for settling debts, and, with around 75% of foreign central banks holding their currency in reserves, the Dollar is still the World Reserve Currency. Only recently has the Euro come into existence as a possible viable alternative as a financial asset, that can be used to settle accounts, and store value.
The level of prosperity in the United States has, in no small measure, been helped by the fact that we have run massive deficits with the rest of the world. The US has been able to run up over $3 Trillion in debts to purchase goods and services from abroad that have yet to be paid for really. The world has been willing to accept dollar assets as investments and Asia remains delighted to have their Central banks buy Treasury and Agency securities because the United States is sending Asia our manufacturing jobs. However, at some point, the day will come when foreign dollar asset holders will want to spend their dollar reserves on something of value. There is only one thing that has universal value to all modern economies – OIL!
In the real world (which is a long way from Hollywood and the Liberal Media), the one factor underpinning American prosperity is keeping the dollar the World Reserve Currency. This can only be done if the oil producing states keep oil priced in dollars, and all their currency reserves in dollar assets. If anything put the final nail in Saddam Hussein’s coffin, it was his move to start selling oil for Euros.
The US is the sole super power and we control and dictate to the Middle East oil producers. America has the power to change rulers if they can’t follow the “straight line” the US dictates. America’s prosperity depends on this. Moreover, Europe wants to be warm in the winter and we don’t want to go down a road that leads to conflict with Asia over oil. It remains in our interest, as well as the rest of the world’s, that the US insures that oil is available to all, at a reasonable price.
Removing a bloody tyrant in Iraq is certainly better for the world than seeing what might happen in Japan and China if they started freezing in the winter. Real wars are fought over oil. Germany invaded Russia for the oil in the Caucasus.
Japan bombed Pearl Harbor because the US cut off their oil. Those were real wars because the national interest, and the right to survive, were at stake (the Vietnam War was a disaster because there was no real national interest served by slaughtering peasants and American troops). The war in Iraq is a sideshow by comparison but it offers huge national interest.
At present, we notice that many US citizens are exercising their “freedom of screech” to politicize the fact that the current President miss-stated the case for immediate war with Iraq. Perhaps the President should be praised for “doing what was right” for America’s interests, even though the Administration could be faulted for the “way it was done”. I, for one, would not want to bring back an Arab oil embargo and long lines at the gas pump.
Governments have secrets. If politicians always told the truth, there wouldn’t be any secrets. So, if governments are to keep secrets, how can you fault a politician for not telling the whole truth? We would assert that the President failed to present the real case for Iraq, which is: 1) prosperity for America based on controlling Middle East oil, and on maintaining the Dollar as the World Reserve Currency, and 2) peace and stability, which the guaranteed access to oil brings to the world.
We believe that the US Treasury deficit, and the US Trade deficits, are massive stock and credit bubbles, courtesy of the Federal Reserve. These deficits will cause significant disruption to the value of the Dollar and to US prosperity, all on their own. We do not need to give up de facto control over Middle East Oil, which in turn underpins the Dollar as the World Reserve Currency. Such action, which may be welcomed by the Liberal Media, would quickly end America’s role as an economic super power and lead to the sudden and permanent demise of our prosperity.
If foreign central banks could no longer believe that holding Dollars guarantees access to oil, there would be no real reason to hold Dollars. With the US running deficits of 5% for budget and trade, in the real world the Dollar would collapse, along with our bond market, stock market, real estate market, and economic way of life.
We believe, like George Soros believes, that the dollar will weaken on fundamental grounds. Unlike Mr. Soros, we do not wish to see a catastrophic “dollar crash” (his motives should be questioned after having made $1 Billion after having helped crash the Pound). If the dollar cratered, even a “limousine liberal” could only afford a Kia.
###
...{For the record, I advocate the dollar and euro be placed in a trading band with 1:1 parity valuation, and a dual-OPEC oil transaction currency arrangement. That should reduce further petrodollar warfare, and of course, the RNB will likely need to become a third oil transaction currency at some point in the future, but the immediate issue is b/t the US and EU...}
Posted: Tue Sep 27, 2005 4:29 pm Post subject: Re: World Dollar crash?
Quote:
...{For the record, I advocate the dollar and euro be placed in a trading band with 1:1 parity valuation, and a dual-OPEC oil transaction currency arrangement. That should reduce further petrodollar warfare, and of course, the RNB will likely need to become a third oil transaction currency at some point in the future, but the immediate issue is b/t the US and EU...}
For the record, I acknowledge the global financial imbalances in the world and the US' twin deficits, which are reason enough to sell the dollar. I have started a new thread under Economics call A survey of the world economy.
For the record, the euro and the dollar cannot be maintained at par for any length of time. Different governments, different interest rate policies, different levels of indebtedness, different rates of growth, different levels of productivity, different period. Coordinated central bank intervention only is effective when the underlying fundamentals support it. If not, it is an easy way for speculators to make money at the central banks' expense. Just ask George Soros. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Tue Sep 27, 2005 4:38 pm Post subject: Re: World Dollar crash?
Any comments on the bolded sentences in Mr. Benson's article regarding the dollar's role as the World's Reserve currency, underpinned by petrodollar recycling?
Posted: Tue Sep 27, 2005 4:50 pm Post subject: Re: World Dollar crash?
Quote:
Any comments on the bolded sentences in Mr. Benson's article regarding the dollar's role as the World's Reserve currency, underpinned by petrodollar recycling?
Sorry there were quite a few. I will have to go back and review them.
Just for your guide, at 1.2000 I have been converting USD into EUR, as well as holding GBP and CAD, but I would not only own EUR. Also, there is a case to be made to own JPY or CNY, but the problem is what to invest in Yen? And, how do you execute a CNY trade? It is not so easy.
The best hedge against peak oil is just to buy oil & gas futures & options. Easy. Set-up a margin account and buy with 8% down if you are bullish on the price of oil. If you're not, then all other arguments are quite academic. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Wed Sep 28, 2005 12:22 am Post subject: Re: World Dollar crash?
Quote:
If foreign central banks could no longer believe that holding Dollars guarantees access to oil, there would be no real reason to hold Dollars. With the US running deficits of 5% for budget and trade, in the real world the Dollar would collapse, along with our bond market, stock market, real estate market, and economic way of life
I am not so sure about all of his comments. I am not too into conspiracy theories. Yes, it is the job of the US government to look out for the US' interests of which sustaining the American way of life is one of them. Voters are not yet ready to accept that their present reality is based on cheap oil and even cheaper money.
France is not hesitant about defending its own interests. You will not find China or Russia voting against their own economic & political interests in the Security Council either. Oil security is a legitimate concern. Because as we all recognize there are no alternatives to oil at the moment and we deperately need to buy time until such a time as there is. Oil wars? Sure wars have been fought over salt and fresh water, why not oil, too?
Has the US run a strong dollar policy? I would argue not. The US has lost 40% of its value in the past 25-years alone against a wide basket of currencies. More against individual currencies. That does not sound like a strong dollar policy to me. And anyone who converted foreign currency to buy US debt has been short changed. I don't really have a problem arguing that either.
I think the issue of owning USD assets comes down to this. Do you believe that the US has a $10 trillion vibrant economy that is growing between 3.5-4.0% per year or do you believe this is a lie perpetuated by your own government? And that investors are not smart enough to learn the truth, so they continue to buy US treasuries in what appears a very deep and liquid market, but it isn't? Do you believe that foreign fund managers, maybe a French investment banker who does not even like America, isn't smart enough to see through the smoke & mirrors and vote with his wallet - shorting US securities and buying euro denominated assets? He has every incentive to make as much money as possible and give America a black eye at the same time. Why wouldn't he?
I guess two people can look at the same set of facts and draw different conclusions. Neither is wrong in their interpretation of the facts, but one or both may be very wrong if they extrapolate existing trends into the future.
For me, if I was 99% certain that oil was going to $100 before $50 I could make a lot of money. However, I am not even sure whether we'll see $60 before we see $70 again. Is the dollar going into a free fall? Not today. I don't see any change to the status quo until at least 2008 and by that time, new refining capacity should be nearing completion and the fruits of today's exploration and pipeline building will come to market. Will that solve peak oil? No, but it will stave off any collapse in the world economic order.
I think Fed funds at 4.00% is approaching neutral for the time being and high energy prices are dampening consumer demand, so perhaps will act to curtail inflationary pressures in the economy. At these levels we are seeing demand destruction not just in America but in many oil importing countries. But, if there are no tax raises and no budgetary cuts to pay for katerina, rita, iraq and the energy and highways bills then I can only assume higher interest rates and a lower dollar in 2006. That will likely mean higher nominal oil prices as measured in dollars, too. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Wed Sep 28, 2005 12:58 am Post subject: Re: World Dollar crash?
Quote:
What do you think about oil companies? Most of the integrateds have a barrel of oil behind every $12-$25 of market cap along with refining capacity. Admittedly, the oil will get delivered over the course of 20 years and extraction costs will make the reserves more akin to options than futures, but it seems like a good deal for someone who just wants to hedge their energy needs?
Also, have you figured out how to buy any Yuan? Is it some insider secret?
Sorry, trouble posting last night and some posts seem out of sequence? Hmmm, CIA trying to keep Peak Oil out of the limelight? That's my theory.
Big Oil. I personally think big oil is in trouble. They are having a hard time either getting new reserves on their books or partnering with companies that have reserves. They are being locked out of new markets by national oil companies (NOCs) and the smaller, independents are doing a better job of running the small oil fields. I see this as disturbing, not because I am in love with big oil, but they have good exertise, and as most of the low hanging fruit has been harvested, the search for oil & gas takes us offshore, deeper and into tougher operating environments for geo-political reasons. I think BP made an excellent move partnering with TNK in Russia, as did PhillipsConoco's move to buy 10% of Lukoil early this year. Hats off to ExxonMobil who completely misread the Yukos scenario and thought they were going to buy into Russian oil without the blessing of the Kremlin.
Another reason I find this disturbing is that you may not like big oil but at least they are accountable to the market and their shareholders. NOCs are not very efficient and they are not very transparent. You may applaud Chavez' socialist instincts (I don't), but the fact is he cannot raise production to even where it was because he does not have the expertise and he fired anyone that did. Ditto for Pemex. The Mexican government is starving it of investment, taking 60% of every dollar in revenue, and leaving no money for maintenance of existing infrastructure or the search for new reserves, especially offshore. They have recently announced a plan to allocate more money to infrastructure and have partnered with Brazil to look for offshore oil, but the amounts are small, and as far as I know, cooperating with Brazil runs contra to Mexico's constitution barring all foreign investment in Mexico's oil industry.
So, yes, big oil is in trouble (at the time being) and I favor smaller producers and the oil service companies that can offer their expertise to NOCs without being threatening to them. Ahead of a crisis you might expect hoarding and that is what NOCs are doing. They know the value of proven reserves outweighs any technical expertise. If you have oil you can buy expertise.
You may want to buy oil companies as an investment, but let's face it, 1999 would have been a better time to start buying. Most of the assets are quite fairly valued now. I would hedge my fuel needs with futures & options in oil & gas through a margin account. I would be a buyer on dips with small positions and wide stop losses using moving averages. You want to participate on the move up, but not get killed during the corrections. Therefore, keep it small so you can take a lot of pain and hope for a trending market. Moving averages will be expensive in sideways markets. However, it comes down to your conviction. If you think peak oil is around the corner. YOu cannot afford not to buy oil at $60-65 if you think it is headed towards $200-300?
RE CNY investments. It is no secret just very hard to execute. Asian mutual funds? China funds? The Chinese stock market is one of the worst performing markets. Russia has done much better. Direct investment? Hard to execute as a private investor, plus you would need a Chinese partner, and then we get into all the corruption issues. No thanks. Confusious says, 'When a rich man meets a smart man, the rich man is neither smarter or richer'
Buy the CNY? Well, that is partially why China's foreign reserves have swelled to $700-800 billion because the central bank is sterilizing the incoming 'hot money' betting on a further appreciation of the CNY. Also, as an individual you would have to pay a money manager or invest in a money market fund. If I like EUR, JPY, CAD, GBP etc. I can just buy it. No fuss, no muss. China is just a harder play for individual investors. That is the reason that many buy the yen as a proxy for China. In my mind that is like dating a good looking girl's plain looking friend just to get close to her? _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Wed Sep 28, 2005 1:02 am Post subject: Re: World Dollar crash?
[quote="MrBill"]
Quote:
And that investors are not smart enough to learn the truth, so they continue to buy US treasuries in what appears a very deep and liquid market, but it isn't? Do you believe that foreign fund managers, maybe a French investment banker who does not even like America, isn't smart enough to see through the smoke & mirrors and vote with his wallet - shorting US securities and buying euro denominated assets? He has every incentive to make as much money as possible and give America a black eye at the same time. Why wouldn't he?
Bing-friggin'-o, Mr. Bill. Very well-written! Your observation can be applied to many of the financial discussions on here. I think the power of a well-functioning market is lost on the big-time doomers and is why I don't subscribe to the short-term doom n' gloom scenarios. It is also why I think that the energy markets will be able to signal the eventual arrival of PO. Maybe the speculative premium on Crude is already one indicator? How about the inelastic response to most Saudi claims these days? Even if that were the case, I would imagine that the premium would skyrocket prior to an impending PO-induced disaster. Note the qualifications: "impending" and "disaster."
My point is that there are tons of VERY intelligent, very informed individuals trading and analyzing commodities. I am sure that many of them have considered and analyzed the situation more than the lot of us on here. They have a tremendous amount of incentive to both "do their homework" and be as skeptical as possible.
Posted: Wed Sep 28, 2005 1:07 am Post subject: Re: World Dollar crash?
Question: I once read that one of the various reasons for holding Dollars in reserve is to hedge against sudden spikes in the price of oil. That would suggest that the Dollar has practically become a derivative of oil. Is this correct?
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Indeed, what I posted earlier is regarding the 1974-1975 agreements is a matter of historical fact, backed by US gov't docs. Again, here's the one of the few books that reveals the facts, and I strongly encourage anyone interested in these issues to read this fascinating book:
