The Oil Patch Boys and their politician flunkys will be the last to admit it; but, this announcement sends an icy chill down their spineless backs. It hasn’t happened in the Middle East since some dude named Hussein did it a few years back.
The United Arab Emirates plans to convert 8 percent of its foreign-exchange reserves to euros from dollars before September, the latest sign of growing global disaffection with the weakening U.S. currency.
The U.A.E. has started, “in a limited way,” to sell part of its dollar reserves, the governor of the country’s central bank, Sultan Bin Nasser al-Suwaidi, said in an interview. “We will accumulate euros each time the market appears to dip” as part of a plan to expand the country’s holding of euros to 10 percent of the total from the current 2 percent.
The Gulf state is among oil producers, including Iran, Venezuela and Indonesia, looking to shift their currency reserves into euros or sell their oil, which is now priced in dollars, for euros. The total value of the reserves held by the U.A.E. is $24.9 billion, Suwaidi said.
Fears that the dollar’s level is unsustainable because of the heavy indebtedness of the United States to other countries is also behind the weakness this year, analysts said.
I wonder if converting Petrodollars to PetroEuros constitutes a Weapon of Massive Disruption?
Well, you can only sustain expensive foreign wars and a ever expanding entitlement systems for so long until the whole house of cards collapses. This is probably smart of them in the long run.
Mike – you do know that the war so far has roughly the same cost as 10-15 years of the same entitlements?
You say that as if you believe I view either more favorably than the other. Whether we go bankrupt from war or bankrupt from unsustainable entitlements, the end result will be the same. At least we could end the war with relatively little domestic impact; once those entitlement programs go broke, the rug will pulled out from the millions of Americans who have become dependent on the fool hearty promises of politicians.
Clearly, the dollars slide against the euro has made U.S. exports, if any, more attractive to foreign buyers. Those cagey Arab traders have unblocked this site, but why, and at what cost?
Hmm… They want the Euros in Spanish Euro bills only….
Seriously, this is just pure business. The U.S. dollar is no longer seen as a strong and stable currency, so they diversify and wait.
Maybe he USA can join the European Market? I bet we are tooo much in debt…
A strong dollar lead to its use as a world ‘reserve currency’, and it is this status that’s kept our indebted economy from tanking altogether. Basically, as long as people had confidence in the dollar, they would buy them – and our debt – allowing our producers to offshore higher paying jobs to cheap labor countries (with cheap currencies to boot) & our consumers to consume as if those good paying jobs were actually still here. As long that is the status of our economy, any large scale sell-off of dollars will collapse our teetering debt structure long before the competitive trade benefits are able to be realized.
When Hussien threatened to do the same thing, trade dollars for euros, he was suddenly possessor of WMD. And, of course, a lovely little war would further line the pockets of the two main drivers of industry in this country – energy and armaments. I’m sure it all seemed so logical at the time to remove him (prevents debt crisis AND creates massive short term profits … what could be better?)
Unfortunately, “… the best laid plans of mice and men …”, “… life is what happpens to you when you’re busy making other plans …”, “… man plans, and god laughs …”, and all that.
In other words, the corptocracy has been robbing Peter (regular citizens) in order to pay Paul (themselves) for decades, under the guise of either ‘globalism’ OR ‘national security’ (take your pick). And now somebody is going to have to ‘Pay the Piper’. How many guesses who that “somebody” is gonna be?
The Chinese predicted a war between the US and Europe over dollar hegemony.
I predict a war between China and everybody else over everything.
Bill
Why not turn NAFTA (US, Mexica and Canada) into the North American Union. Then we could change our dollars, pesos and Canadian dollars into Nauos. We would have three offical languages English, Spanish and French. We would open our common borders and not have to worry about illegal immigrants because we would all be in the NAU. Cheap labor and oil from Mexico. Oil, Natural resources and space from Canada (once Global warming melts the ice and permafrost, the US is one of the largest markets for consumer goods.
Once we get the NAU stable we could then expand into South America and become the AU (American Union) by adding Portuguese to the official language list.
This is beginning to sound like the start of a bad SciFi story 8
This really tells how much the Dollar is inflated…
Untill the value per dollor CAN buy more, it wont get fixed.
Untill the GAS price drop at LEAST $0.50, it wont get fixed.
Gold Coins anyone? Krugerrand,Eagle, Maple
Gold coins, hell. Convert your cash to euros. I wanted to last year, but didn’t; if I had, my savings would have grown by over 33 per cent.
Are we allowed to hold our cash in euros? I’m guessing some obscure law prevents us from holding money market accounts in euros.
Where is the GOP leadership?
Buying euros and getting ready to get richer, where do ya think?
Jeeze… what is the fuss? What is wrong with any entity diversifying their portfolio? If the USD is going down against the Euro, then why on earth would they NOT buy into the currency that is going up?
I think people are reading way too much into this. It is simply optimizing financial positions. They would be stupid if they were not doing it.
Also, propping up the US dollars against the Euro is not a good thing for the US. It usually means that the Euro is paying more interest. But that also means that the cost of borrowing Euros is more, which in the long run, will hurt the Euro based economies.
So relax. I see this is a good thing. It means that the US will be able to, in the long, grow our economy through growth rather than simply paying more for borrowing.
The U.E.A. tried to exchange those dollars for tangible assets in this country and the US Senate told them to pound sand. If they can’t spend their dollars in the US, then what good are they?
Did we really think there wouldn’t be any repercussions?
Will this be the end of the magic checkbook?
I’ve been doing the “Chicken Little” cry about this for years. Another reason not to piss off Arab countries while at the same time racking up massive debt to them is because they can easily screw America big-time — with no wars, not terrorism, nothing illegal or even dangerous.
All they have to do is switch from the petro-dollar to the petro-euro.
Bush and the neo-cons talk a good-line about “making America strong” but they have made us INCREDIBLY vulnerable through their insane fiscal irresponsibility.
fiscal irresponsibility??
Isnt that an oxymoron, when we deal with most Poly-ticks??
These are folks that NEVER had to scrounge. FEW ever had to wear hand me downs, and FEWER ever saw a farm, except outside the car as they went past.
Have you noticed that many Govenors and congress, and senators, MOVEd from the east coast to the west and got their positions??
The government as an entity is fighting for its life. It gave the voters all the money they wanted, to keep itself stable. Recently, it has been robbing from the people to save itself. The government, Democrat or Republican, is now the enemy of the American citizens.
Just try to get money out of the country without the U.S government demanding the bank account number so they can pull it all back for itself. Try to take green backs out of the country and it is considered “drug money” and confiscated. All used bills are “drug money” and that’s the only kind you can get from the teller. Try to take jewels or precious metals out of the country and, if caught, you will be accused of money laundering. Open an account in the Bahamas and you will find that little country will do anything for Uncle Sam. Switzerland fought hard to keep confidentiality, including rejecting American citizen attempts to open accounts, but they gave up and play along with the U.S. now.
We are already financial captives of the government.
Our land is not ours. We only own a “title”. The real deeds to the land are kept in state capitals. Only the Indians own land.
The internet branch of Everbank let’s you have deposits in various currencies, but you can’t draw on them outside the country. The main Everbank only allows you to have deposits in your local currency.
The government’s leash shows itself only if you try to save your assets. I know. I’ve rattled all the doors and tried all the windows.
The government is drowning and in its panic, it will take us down with it.
Who cares what they use to sell their oil? It’s like worrying about whether it’s measured in gallons or liters.