we were about to fight a war with Iran and it had little to do with their nuclear program?





While this bourse has been "delayed", it is not dead at all....


http://www.iranian.ws/iran_news/publish/article_20982.shtml

http://www.globalresearch.ca/articles/CLA410A.html


Iran wants to start a Euro-dominated oil bourse to trade oil in Euros. If they do, they will be hit, I predict. Indeed, that may be what the troop "surge" is all about. The US cannot afford the currency deflation if oil trading moves away from Dollars to Euros

This is a very, very high stakes game. Very scary, indeed.


1) Was the Iraq war really about Saddam's accepting Euros for Iraqi oil, contributing to US dollar devaluation and starting an alarming global trend?


2) If Iran goes through with this Euro Oil Bourse, will the US destroy Iran to stop this bourse that could continue the run from the dollar to the Euro in oil trading, ruining the value of the dollar?

[Edited to correct links]

1) Was the Iraq war really about Saddam's accepting Euros for Iraqi oil, contributing to US dollar devaluation and starting an alarming global trend?
A completely unsupported and ludicrous allegation. Why was Iraq developing nukes – to counter Iran or to hit Israel – or both.

2) If Iran goes through with this Euro Oil Bourse, will the US destroy Iran to stop this bourse that could continue the run from the dollar to the Euro in oil trading, ruining the value of the dollar?


What “run from the dollar” is that. I read the WSJ every day and must have missed it. One link here is NG and the other leads to nothing coherent. The Iranians obviously hate us and dealing in Euros is their way of expressing this along with their actions in Iraq. Who cares – it will not hurt us and the dollar is just fine thank you.

The Strength of the Dollarby Hans F. Sennholz

“To the surprise and wonder of many economists the U.S. dollar continues to be rather strong in international money markets despite ever growing American trade deficits.. Despite the soaring debt, the U.S. dollar rose some 14 percent relative to the euro and even more relative to the Japanese yen. It lost a fraction toward the Chinese renminbi after the Chinese central bank raised its dollar rate by 0.4 percent. Yet, the dollar seems to be the rock on which most countries rest their currencies.
The financial world apparently is ignoring the trade deficits and the rapidly rising American indebtedness. Being accustomed to deficit financing, American officials seem to handle them with ease. Even long-term interest rates are remaining exceptionally low. But many politicians and media spokesmen like to complain about China, especially about its refusal to allow its currency to find a free market rate and thus allow the money market to function freely. They like to look abroad and find fault with foreign demeanor rather than reflect on their own conduct.

Former Federal Reserve chairman Alan Greenspan evidently does not agree with these critics. He has a ready explanation for American balance-of-payment deficits which constitute by far the biggest maladjustment of the global economy. He believes that such deficits merely are the byproduct of a long-term development facilitating the deficits and that they are the side effect of the ever increasing importance of the financial industry and its great flexibility. We do agree with the chairman that the world economy and especially world finance have expanded significantly ever since the disintegration of the Soviet Union and the dissolution of the Soviet bloc of countries. Many trade barriers have come down and capital markets have widened to include all but a few recalcitrants. But such an explanation of the size of the trade imbalance does not explain its very cause. In fact, central bankers rarely render accurate accounts of the consequences of the policies they conduct.

Ever since the world discarded gold as the standard medium of exchange the U.S. dollar has served in its stead. And just like gold or any other commodity, the dollar has been moving from places where its market value is low to places where it is higher. It is sent to all corners of the world, always guided by its purchasing power. And just as the gold producing countries usually experienced "unfavorable" balance of payment, that is, the exports of gold exceeded the imports, so does the United States suffer "unfavorable balances," that is, exports of dollars exceed their return. But while the quantity of gold mined and offered on the market was always rather small, the volume of Federal Reserve notes and deposits as well as the fiduciary credits resting thereon usually is much larger. It affects not only international money relations but also tends to give rise to worldwide business cycles.

http://www.safehaven.com/article-4614.htm

"The recent depreciation of the dollar versus the Euro could be a retreat to the mean, or could be reflective of the short & interemediate term interest rates being offered on Euro deposits versus dollar deposits between 2000 - 2005.

Insofar as exchange rates reflect the activities of the various central banks, and the perception of political and economic stability, it is possible that the random walk theory is on point. However, recognize that the dollar has lost 1/3rd of its value as measured by the Euro, and, pre-Katrina, had lost 40% of its value as measured by a barrel of oil, and has lost about 30% of its value as measured by a pound of steel, and has lost about one-third of its value as measured by a residence located any place in the US over the last five years."

http://www.econbrowser.com/archives/2005/1...er_the_dol.html

Dollar value is driven to a great degree by the need for nations to buy dollars to pay for oil; if the dollar no longer is the main medium of exchange for oil, then its value will fall significantly, and indeed has likely begun. Do a search for "Petrodollars" to understand the phenomenon, which was complained about by France's Charles de Gaulle as long ago as the 1960s. He claimed then he did not like the petrodollar "bounce" received by the US currency vis-a-vis other currencies.

We invaded Iraq that had little or no WMDs and little connection to al Qaeda. Are we that stupid, as some would have you believe, or are those reasons smokescreens? Not only is Iran talking war with us, but so has been Venezuela, whose pres has said repeatedly we would invade his nation. Why? He signed an oil barter deal with China about a year ago, bypassing the dollar as a medium for exchange. He saw what happened in Iraq....

This does not invalidate what I posted or make a point. As it says in your post - “The recent depreciation of the dollar versus the Euro could be a retreat to the mean”
The weaker dollar helps promote exports and lower the trade deficit. The dollar is fine and so is our 12 + Trillion $$$ economy.



Another ludicrous conspiracy rant? Come on, who in 2002 did not think Iraq has stockpiles of WMD?? Name someone. And did you ever see proof they were destroyed? Neither did I.


I miss you point. The vast right wing conspiracy theory mill seems to be running overtime here. The chance of the US attack Iran are slim and none IMO.

America as a nation is dependent on oil, like many other nations. This dependency gives oil a lot of power I would suggest. I don’t find it far fetched to think that on a regular basis much planning goes into oil from many different angles, be it political or militarily. Personally if America was sitting on the worlds only oil supply and everything else was the same, it would be similar to being the only drug dealer in a city of attics. Much drama would then ensue... Such as it does on a regular basis, but for some reason to simply state this draws a negative view, as such I can only understand because people do not want to view such "beastly" attributes attributed to human survival or being human period.

It better to generate other means to view such, as in saying maybe that oil is not that important, and lets just turn all the oil off tomorrow and see how Americans in general react, heck just raise price at the pump by two dollars a gallon and I am sure crime would jump if not having small to medium sized out breaks of civil disturbance or even riots.

Its a growing problem, more so giving the idea that oil supplies are finite, human need currently is not, and populations will continue to grow, and not every culture can get along it seems.

So like anything, be it guns, video games, the internet and even oil, we have passed such into the realm of the human mind, or experience for what its worth. Trying to go past subjectivity seems to always should that constant of a barrier and what can you say at the end of the day?

The realization of global warming at best is the most fit option I think to push for change on this issue. Talking to any one person on this board I doubt would yield the total dependency industrialized societies currently have on oil, for it basically touches everything we need or take for granted in day to day living.

Lastly to rap this up, the advent of nuclear weapons thankfully ended a glorious history of non stop total world wars and empires that come and go. It forced such into a more politically and economically orientated scene. I could find support for such views on how Iran would play its oil card, more so with Venezuela, or any energy resource holding nation for that matter, such as Russia. Its high time to stop thinking about unicorns and goblins, and start thinking about holes in the ozone layer, and ways to stop the madness.

1) No. This is one of those PNAC, Illuminati type conspiracy theories that sound good on paper but fall apart if you give them 2 minutes thought. There are far more effective ways, and less destructive to the infrastructure that we rely on, to deal with this sort of economic situation.

2) If oil were the only commodity that mattered this would be an effective way to "destroy" America. Oil is not the only commodity that matters. Wrecking the American economy, sexy as it sounds, is not something the real world wants.

1) Was the Iraq war really about Saddam's accepting Euros for Iraqi oil, contributing to US dollar devaluation and starting an alarming global trend?
Just like any other major international power-shifting course of actions there have been throughout history, there is more than one sole reason for the illegal US invasion of Iraq. Recall how that Perle fellow blurted out the truth that one time, when he said that "WMD was the pretense everyone could agree on". Interesting comment which went largely unnoticed in the press. Ultimately, the chief benefit for the US is the large oil reserve Iraq used to control. Now don't go thinking that the US is trying to control the world's oil because the oil is running out because that too is nothing more that a red-herring smokescreen the likes of global warming and the fabled holocaust deniers. The truth is that there is plenty of oil left but that's another argument.


2) If Iran goes through with this Euro Oil Bourse, will the US destroy Iran to stop this bourse that could continue the run from the dollar to the Euro in oil trading, ruining the value of the dollar?
The US dollar has lost its former lustre and the Euro is the dominant currency. I'm sure African pygmies and Australian aborigines had a pile of US currency hidden among the bushes and reeds in its heyday. Everyone wanted US dollars. The US government makes no serious effort to return the currency to its former glories, and even if they could, they wouldn't. The major economic forces on the planet use the Euro as their benchmark. Is that the only reason for attacking Iran? Hardly. Actually, I don't think the US led attack on Iran is going to happen. Not as we imagine it. The US would be decimated if they went it alone, and air power doesn't do anything on the ground except break things. Ideology bombs...

Come on do some research before making wild statements. Doesn’t it bother you to do that?

"Today over half of all dollar notes in circulation are held outside the borders of the US. Almost half of US Treasury securities are owned by foreigners, mainly held as reserves by foreign central banks. The dollar is the main currency in international capital flows, as well as the currency of invoice for commodities and for many manufactured goods and services. All countries that trade directly with the US invoice both imports and exports in US dollars. Eurodollars often trade without any involvement by US participants.

Advantages for the U.S.
With the dollar as the world standard, the US is free to conduct its monetary policy independent of exchange rate fluctuations. In this respect, other countries operate at a disadvantage. They are reluctant to see their own currencies depreciate against the dollar because of the domestic inflationary threat that presents. They are also reluctant to allow a substantial appreciation of their currency against the dollar for fear of losing competitiveness in world markets. Consequently they sometimes subordinate their domestic monetary

http://wfhummel.net/dollarstandard.html

This period of sharp dollar decline ended in the 1987 with the stock market crash but even that event did not stop the flow of foreign investment into the US. Even more to the point, the dollar continued to decline for another 8 years, albeit in a more orderly fashion, and that did not seem to have much impact on foreign investment in the US. Only the recession year of 1991 saw foreigners take money out of the US economy. The economic lesson here is clear, the lack of real growth, not trade imbalances or even the dollar’s value are what deter foreign investment.
Over the past three years, as the dollar declined, foreigners continued to put money into the US economy. Foreign investment slowed through 2004 but in recent months is showing signs of picking up.
Foreign investors can always sell, but at the end of the day, the US economy is far and away out performing other developed country economies and that is what drives foreign investment more than anything else. No other country has the combination of pro-business tax, labor and environmental climate coupled with a highly educated and mobile work force. Although foreign banks have dropped hints that they would like to reduce their holdings of dollar assets that is not something that they are likely to announce before doing. What is more likely is that they are trying to talk down the dollar so as to get a better price for future dollar investments.

http://www.deloitte.com/dtt/article/0,1002...3D77470,00.html

1) Was the Iraq war really about Saddam's accepting Euros for Iraqi oil, contributing to US dollar devaluation and starting an alarming global trend?


Considered as a singular reason no, but as a contributing reason yes. The fear at the time was who would be the first of which many could follow. Now the chain reaction has begun.

Perhaps outlining the possible advantages such a move had for Saddam would be beneficial as well as outlining the role of treasuries and how reserve currency status can buoy up debt.

If Iran goes through with this Euro Oil Bourse, will the US destroy Iran to stop this bourse that could continue the run from the dollar to the Euro in oil trading, ruining the value of the dollar?

I posed the same question about a year ago. The responses were predictable. Those from outside the US viewed the dollar with pessimism while those inside the us had considerably more optimism. Furthermore, most of the bad data out there was quoted as gospel which of course came from the federal reserve.

Keep in mind there are several countries switching as we speak. I know Venezuela has, Russia is considering it, Iran obviously and a few more fence sitters that could go either way.

What is important (especially for the lay person) is that all OPEC countries have lessened dollar reserves over the 2006 timeframe. Of related relevance is the evolving Shanghai Cooperation Organization which will eventually function as a counterweight to nato. Furthermore they are pooling wealth together in the same way a central bank does. Should this trend continue, expect to see central asian nations switch dollar reserves as well.

Gee I am shocked – Chavez – that Commie creep is switching? And Iran too – I am crushed. Russia can do as they like and so can any of these countries but lets all remember we are THE big customer (as well as safe haven) for numerous products in the world – and we deal in dollars not euros. So countries can do as they like but when we buy we PAY in dollars and we buy a lot.

Again Ted I am forced to suggest that you learn something about the situation under debate at the moment before posting. If you actually understood what people were talking about, it would prevent you from making posts like the one above.

Nobody is talking about forcing the US to deal in Euros. When people buy goods from the US at the moment, they are not restricted by currency at all, but traditionally purchases from the US are done in US dollars. That is irrelevant.

What is being debated here is the standard unit of currency in international markets for commodities, which currently is the US dollar. If Vietnam wants to buy Oil or Gold or Tin on the world commodities market from, say Brazil, they do so in US dollars. That gives the US dollar artificial strength not linked to its actual national stability and value. Given the inexorable slide in value of the dollar against the Euro, it is making less and less economic sense for it to remain the international standard. Yes it is true most of the changes so far have been political in origin, but if Bush jr keeps emptying US treasury, and the value of the dollar keeps sliding, very soon it will start changing for economic reasons. That would be a disaster of the US, and would by the way be almost entirely the fault of the spendthrift ways of Bush jr. (read the economist article on the subject from last month).

Now this hasn't happened yet, and frankly, probably won't happen in the next couple years, primarily because commodity standard currancy required proven long-term stability, and while the US dollar is in an inexorable slide, the world knows that this is entirely because of one really bad president, and a good president in two years could well reverse the trend and stabilise the dollar.


A secondary, but related debate, is the standard use of the US dollar as an international reserve currency, another fact which is slowly being threatened by the growing Euro. The euro has gone from 17% of the world's reserve currency in 1999 to 26% today, still well below the US dollar, but growing rapidly. Again though, the US dollar's status as the standard is not likely to be threatened simply because the world knows Bush jr can only last another 2 years.

The debate has NOTHING to do with what currency the US accepts for its personal consumer goods purchases.

This was a helpful post, Vermillion. I, of course, am working from the premise that our dollar is artifically propped up in value because it is the medium of exchange for buying oil--without dollars, you cannot buy oil. You addressed it well above. But, the corrollary is that the new Iranian Bourse will provide the first and only, to date, oil marker not denominated in dollars. To date, there are three oil markers, all in dollars.

"To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ‘marker’ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the spring of 2003, Iran has required payments in the euro currency for its European and Asian/ACU exports - although the oil pricing for trades are still denominated in the dollar. [4]"

"The macroeconomic implications of a successful Iranian Bourse are noteworthy. Considering that Iran has switched to the euro for its oil payments from E.U. and ACU customers, it would be logical to assume the proposed Iranian Bourse will usher in a fourth crude oil marker – denominated in the euro currency. Such a development would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounts for 45% of imports into the Middle East (2002 data)."

If central banks are free to sell dollars in bulk for Euros and still have a currency with which to buy oil, driving way, way down the value of our dollar, then the pressure on the Euro will cause its value to go up quickly and artifically, as it will now have become a commodity in-and-of itself. Everyone will want to get out of dollars and into Euros before the bottom hits, creating a run from dollars and a run to Euros--a panic, if you will. While the world will suffer if we suffer, at least in the short term, our economy will be crushed if the price of wine from France, cars from Germany, and steel from Korea doubles or triples almost overnight.

As China replaces the US as the greatest consumer nation on earth (they are well on their way to being the greatest producer, and with the huge currency inflows they are experiencing, they wil have the money to buy lots of products), then our one remaining piece of global economic leverage--the buying power of our economy--will be severely reduced.

Outside of the usual personal attack would you like to address my post above and the points in it that cover the issue? You conveniently skipped it

You can find it above

Correcting your errors of fact is not a personal attack Ted, not by any stretch of the imagination. My other comment was a heartfelt and honest suggestion as to how you might avoid making quite so many errors of fact in the future. Take it as you will I suppose.

As to your invention regarding how I 'skipped your point', well, its nothing more than that. I addressed you at length in my post above, perhaps you might consider reading it? However, in the sake of good debate and not letting you close another thread, I shall repeat my responses, for your convenience.



As I pointed out this is both wrong (US companies routinely accept currency other then US dollars, all the time in fact) and irrelevant. (The issue of what currency the US makes its purchases is not the topic of debate, EVEN IF you were factually correct about it). The issue of the changing standard commodity currency is in NO WAY affected by your statement, even if it was true.




Thank you, glad to be helpful.

You are correct in theory, except that at the moment the Iranian market is largely a political move. Yes it will benefit the nations in the Euro-zone, but for other nations they will still face the choice in buying in a currency not their own: US dollar or Euro. barring a few nations who will vote for the Euro based on politics, the vast majority will still buy in Dollars, if for nothing else simply for the amount of oil available in the other markets. Also keep in mind that the US dollar's status as commodity standard is not just for oil, but for most basic commodities, including base metals and Gold. I suspect it will be a long time before the status of the dollar is genuinely threatened. If the US elects a Bush jr clone and he continues to tank the economy it is possible, but even then, still unlikely: really bad presidents are a short term problem, and the US dollar has been the most stable currency in the world since 1936.

The fact is (and you agree) that a change is not likely. IMO our large strong economy will always be the driver as compared to socialist leaning EU and euro.

Foreign investors can always sell, but at the end of the day, the US economy is far and away out performing other developed country economies and that is what drives foreign investment more than anything else. No other country has the combination of pro-business tax, labor and environmental climate coupled with a highly educated and mobile work force. Although foreign banks have dropped hints that they would like to reduce their holdings of dollar assets that is not something that they are likely to announce before doing. What is more likely is that they are trying to talk down the dollar so as to get a better price for future dollar investments.

http://www.deloitte.com/dtt/article/0,1002...3D77470,00.html

Can we stop posting such editorials on here; one guy's editorial naturaly leaves out some information and includes others to prove a point; that's what you have to do when you're writing a 700 word column and not a dissertaion. Because no NY times reader wants to see Tom Friedman write:


"The US dollar looks OK if you analyze our import/export rate, but you also have to figure in the average American's spending power, which was improved for the first two years of Bush' presidency, but is sub-par; unless you look at the spending power of the middle class, which has shrunk at an alarming rate. However, the tax cuts imrpoved our GNP thus encouraging the strength of our dollar. However, a fourth factor in analzying our currency's power is the rate of industrialization in Latin America which doubled last year. However, the dollar is also blah blah blah"

Like concise statistics, concise editorials make for questionable facts -- often because they are based on such statistics.

The US dollar is still the dominant reserve currency, the Euro only makes up about 25-27% although has been boosted by many oil producing nations switching from the US dollar to the Euro in order to counter the potential threats to effect their economies by the Bush administration.

China, being the prime US banker will not allow the US dollar to become to weakened and many other nations around the Globe also have a vested interest in protecting the possible collapse of the US dollar.

Ted, because the European nations do not subscribe to the US view of life does not necessarily make them socialist, but then most Americans do not really understand the true meaning of socialism. We here in the UK are regarded as having one of the most open markets in the World, far greater than the US, yet we are far from being a free and open society as the State controls a very large part of our daily lives, but a socialist state could not be said to prevail in the UK.

True but failed socialist policies, like socialized medicine in the UK do weaken the country and the currency. IMO the larger the government is as a % of economic activity the weaker the country. Certainly we have disasters in the US as well – such as Medicare. Socialism is a dream that will never come true.

I agree with your comments on the currency. The more China and other nations hold in US debt the less likely they are to attack our currency.

Ted, I tell you what the NHS has many faults and problems, but I would rather be taken ill here in the UK than have to rely on being able to afford private health care. In my case I contracted Colon Cancer, a very serious chat with Death and I was in and out of hospital for close on three years with two very major stomach operations and 8 months of Chemo and yes hopefully we won although I now face five years of regular checks. None of that cost me a penny, although I have of course paid into the NHS fund for well over 40 years.

I have a 93 year old mother in law who has had two recent bouts hospitalisation, one for a heart attack, yet they pulled her thru. Would Private Health Insurance even consider providing cover for a 93 year old?

I think you do not understand true Socialism, but Uncle Joe and Chairman Mao have much to say on the subject, where as our current UK social leaning government falls somewhere between Bush administration and your Right of Centre Democrats, you would be hard put to find a true socialist government in Europe today.

The NHS causing a depreciation or effect on Sterling really is moving into the realms of currency fantasy

I am afraid that Ted suffers from the delusion that somehow the US health system is better than the UK- which is laughable in the extreme. I would take the UK system in a new york minute over the US system. I am alot more likely to live to a ripe old age in that system vs the US system.

The Euro issue is a legit one- and truly free market may be what signals the end of the US as an economic superpower if the switch is done- but it won't be co-erced by politics- it will be capitalists switching thier investment strategies and buying strategies.

The dollar has been artificially propped up for some time by these interest free loans the rest of the world gives us by using our currency for trade.

I am not sure if it is enough to start a war over or not though.

Euro biz does quite well in the US, for all of thier "socialism" as decried by Ted. Considering that most of our Prudhoe bay oil is owned by UK and France right now, I find it downright funny - oh yea, and when I go get welding supplies- the #1 retailer in the world for those supplies are the - FRENCH LOL- Air liquide to be exact. Tires, home products etc- so many Euro products in American cabinents- not to mention pretty much every drug you take comes from a Euro pharma corp these days- Bayer, Squib etc etc etc.

Socialist indeed. Well, if so, I would wish that would could stop all those socialists from kicking our butts in so many markets so our capitalists could win one too.

Of course Ted bringing the UK into a discussion about Euros vs USD is odd because, of course, the UK doesn't use Euros.

As for your comment on UK vs US healthcare I'd suggest they both have advantages. The question is could you get the quality level of US healthcare (assuming you can afford it) in a UK style healthcare system.

Of course none of this has anything to do with the topic at hand.

Do you live there CR. Thought not. Hey from what I read and hear the system is a mess and a costly one at that but I am glad to have your opinion.
Gee and if it was so good why is private healthcare doing so well??

http://www.privatehealth.co.uk/

And from the stories I read you can keep it!

Some patients have had to wait nearly two years for hospital tests in North Staffordshire, according to a survey.

The Healthcare Commission awarded University Hospital the lowest possible grade for diagnostic tests.
Patients can wait between 10 weeks and nine months for a scan at two hospitals in Worcestershire, and nearly a year at University Hospital Birmingham.
The government target is a maximum 18-week wait from referral to treatment by 2008.
http://news.bbc.co.uk/1/hi/england/5284646.stm

The time people in England have to wait to get a hearing aid on the NHS has increased in more than a third of all hospitals, according to a new report published today.
And in the first ever nationwide investigation into how long it will take someone with an old-fashioned analogue hearing aid to get it upgraded to the latest digital instrument, waiting times of five years have been reported. Worse, at least one hospital says its lists are so long it has stopped taking referrals. At another there is no waiting list at all because the department has run out of money.

http://www.deafnessresearch.org.uk/Five+ye...g+aids+3184.twl



And like good bureaucrats we get stuff like this:
After years of Government targets pushing them to cut waiting lists, staff are now being warned against "over-performing" by treating patients too quickly. The Sunday Telegraph has learned that at least six trusts have imposed the minimum times.
In March, Patricia Hewitt, the Secretary of State for Health, offered her apparent blessing for the minimum waiting times by announcing they would be "appropriate" in some cases. Amid fears about £1.27 billion of NHS debts, she expressed concern that some hospitals were so productive "they actually got ahead of what the NHS could afford".

So when the money is low you wait and if you die ..... Oh well lower costs.
As I said CR - you can keep it.