Which one would you take?
Kuwait’s central bank has unpegged the dinar from the tumbling US dollar, throwing plans for currency union with other Gulf countries into disarray.
The bank, which battled speculators for weeks to defend the peg, said the dinar will now be linked to a basket of currencies.
It said the dollar’s fall against other currencies had forced it to break ranks with fellow Gulf states to contain inflation from the rising cost of some imports.
A fair number of folks – especially those with experience on the inside of oil ventures outside the U.S. – consider Saddam Hussein’s conversion of Iraq’s oil exports to PetroEuros instead of PetroDollars as the consummate reason for the Cheney-Bush decision to invade.
It is now obvious the invasion of Iraq had less to do with any threat from Saddam’s long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining control over Iraq’s hydrocarbon reserves and in doing so maintaining the U.S. dollar as the monopoly currency for the critical international oil market.
Indeed, the neoconservative strategy of installing a pro-U.S. government in Baghdad along with multiple U.S. military bases was partly designed to thwart further momentum within OPEC towards a “petroeuro.” However, subsequent events show this strategy to be fundamentally flawed, with Iran moving forward towards a petroeuro system for international oil trades, while Russia discusses this option.
I wonder if this will now add Kuwait to the “Axis of Evil”?
Another hack story. I remember when the propaganda on this blog was interesting.
But PMitchell says our economy is the best that its ever been, and he must know cause he’s running for Congress! What do you say now fool. Seems you’ll fit right in with the dullards.
Someone do me a favor, run through the economic effects of this move.
Off the top of my head, oil imports become more expensive. This would cause the U.S. to consume less, helping to slow global warming, give more incentives to invest in alternative fuels, and shale oil from Canada would shift to becoming a profitable enterprise. PPI & CPI would rise in the short-term but long-term the country would probably be better off.
Their currency should be pegged anyway, that’s just inefficient. So hooray for a free market move, can’t say it is a sign of a pending economic crisis for the U.S.
#1 I’m waiting for the “Fishy Meter,” or is it “Believability Meter,” to be replaced with the “Propaganda Meter.” This scores a solid 8.
Maybe our PetroDollars spent too much time in the microwave?
What are you guys talking about..losing international control of the monetary system to Europe would ruin the US economy. With zero demand for the dollar it will slide to oblivion.
take a look at this (one line url)
[edited: bad link – pls use tinyurl]
This is no surprise Kuwait wants to stab the U.S. in the back. A while back I heard from an Arab college that Kuwaities think that they alone liberated their country from Saddam. Like it didn’t take the US and a bunch of other countries to help. What a bunch of ungrateful TURDS…
The Feds should just withdraw dollars from the economy and the dollar value will be fine. They have been spewing out too many dollars over the years.
The U.S. dollar is going to slide into oblivion no matter what happens.
Think about it. The U.S. is printing money like crazy and spreading it around the world. That’s fine for now, even though the U.S. is trillions of dollars in debt and getting deeper all the time. All the debt is being exported, so there’s no big deal.
What happens when China, which owns about 20 percent of the debt, wants to cash in? What happens when the Arab states and other countries want to cash in? Being in debt means you don’t own things, you’re just ‘sort of’ renting them.
I’m not an economist but I know when all the bill collectors come looking for me and I don’t have anything to give them – or not enough to give them – I go bankrupt.
I’m not an economist but surely there are some economists on DU who can explain what’s going to happen one of these days?
How does not using the dollar bring about a war? This is just an excuse that some lefties like to throw out. Really just conspiracy theorists in general. The existing storylines aren’t good enough, not he real reason for the war is …
Michael Moore did the same thing with his movie. Instead of just talking about WMD lies for the Iraq war, he decides to say the war in AFGHANISTAN was to build a pipeline there for Texaco.
The dollar switch to Euro causing wars is easy to explain. The countries involved see the hostility coming, and decide it’s better to switch away from the enemies’ currency. Kind of like how having a gun at home causes gun violence. You’re more likely to have a gun if you live in a violent place.
The UK survived a global switch away from their currency and so shall we. There will be some painful adjustments for sure but our bubble economy is in desperate need of a good cleansing anyway.
[edit: duplicate]
#9 wrote
“I’m not an economist but I know when all the bill collectors come looking for me and I don’t have anything to give them – or not enough to give them – I go bankrupt.”
So do the bill collectors.
For those doubters, Ron Paul predicted this stuff over a year ago http://tinyurl.com/7nuzh
#6
Brilliant !
Why doesn’t the us convert to EuroDolllars? Except that we wouldn’t qualify because of our deficit and hatred of the US
The petroEuro plan has been a flop. Iran tried to do it, and it didn’t work. Saudi Arabia has so much invested in the U.S., they have as much to lose as anyone if the U.S. dollar flops.
The entire world has been running away from the dollar and given its decline in value with good reason. Former treasury Sect. Paul O’Neill mentioned the U.S. was going to a weak dollar policy, and he got verbally berated for doing so. But make no mistake ths has always been a part of the Bushies plan.
When you devalue a currency, the very rich, who have assets, get richer. And the very rich are Bushie’s biggest fans.
When a Democrat wins in 2008, the tax cuts will not be renewed. There will also be a pullout of Iraq with substantial savings. And with these events, the budget will be miraculously balanced and the dollar will become stronger.
In the meantime, for the next two years, anyone keeping his money in dollars or pegging their currency to the dollar is a fool. It is a guaranteed way to lose money.
Bush has spent like a drunken sailor and printed money with such abandon, the number used to follow money supply, M3, is no longer published. The greatest threat to the American dollar is our own printing presses. It never has been and never will be oil producing countries.
#5 , 9 – “Confessions of an Economic Hitman” has made you too cynical towards international currency markets and trade. I don’t see the dollar collapsing simply because it is not in the world’s best interest. Collapsing the U.S. economy certainly would cause another global depression, and that is not good for business. China, hypothetically, could liquidate its T-Bonds, but it won’t because the opportunity cost is too high. The U.S. could just as easily default on the loans to China causing their bond market to implode, setting the country back 10 years in economic growth and development. Quite Sinister! but this won’t happen either, because it would cost too much. The Petro-Dollar could become the Petro-Euro, but not overnight, because it would cost too much. OPEC has been very, very careful to keep prices at an optimum level, where there is high profit today and high profit tomorrow. The trade deficit which is often the woes of many, is no big deal. In terms of dollars, I run a trade deficit with my local grocer, surely I give him more money, than he gives me. Indiana may run a trade deficit with Texas, why is that not headline news?
#9 and everyone, if you go to econtalk.org check out the episode with Greg Mankiw, Robert Lucas, Bourdeaux, or Barrow. They all do a great job explaining some of these issues in practial everyday ideas, the one with Bourdeaux is hillarious…for an econ podcast.
By the way, Confessions… wasn’t that bad, but I’m surprised it was the recommended book of TwiT.
#6 ‘s link tinyurl’ed:
http://tinyurl.com/ez92b
(just because I was praising a dead link @ #15…)
Repealing Bush’s tax cuts won’t raise more revenue. We’ve gotten higher revenues after they passed, and their repeal would likely lower revenues somewhat.
Well, since the one on the right is worth 130USD, I’d prefer that one.
#19
thanks Joao
#22 – yup, yup, let’s go invade a few more countries. There’s never a shortage of reasons to please those who believe military “solutions” are the appropriate political solutions.
Yeah, and according to the post, switching to Euros causes an invasion. So Where’s the Venezuelan invasion?
There are advantages to the US dollar being the world’s reserve currency, but a falling dollar is not an unmitigated disaster. There are other macroeconomic problems the US ought to worry about more, like public and private debt (which a falling dollar helps to erode), the current account imbalance (which a falling dollar helps by making US goods cheaper), and long-term deficits in pensions/entitlements (a problem that Europe is more exposed to than us because of demographic trends and more generous benefits).
27. It just seems that way, its the whole litre to gallon conversion thingy.
#28
Well… a gallon is 3.79 liters, so price per liter here is around 1.3 euros.
and the Euro is 1.3 Dollars, that’s like a Gallon costs here in dollars:
$6.40 USD a gallon.
And more than half of it is taxes.
Still think it’s a conversion thing?
The past the peak oil world begins…
It’s tawdry having to wander through this blog tidying up lies, misstatements and absurd stretches of logic for folks who apparently studied political economy under Walt Disney; but – #22 is palming off a reference in the Post as if it was a quote. Specious. #25 then quotes #22 as if politics and war follow day-by-day schedules. Phew! Then #22 returns as #27 and wants a 2-line explanation of how benefits accrue to the population of the leading imperial country on Earth.
They always have. Sometimes that population still may have a conscience and ethics beyond greed.
OK, kids. Back to WOW on your own time.