The Petro Dollar - it's effect on foreign policy.

Very Interesting

http://www.youtube.com/watch?v=fzF_4W1AIEo
This video is very informative

Iraq was selling its oil in euros and would not sell it in dollars - soon after we attacked. I expect an attack on Iran soon.. You do not mess with the people that print the dollar = the Fed and central bankers. Paper money is what the wars are all about.


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Iran's Oil Bourse could Topple the Dollar Fragile Dollar Hegemony:


by Mike Whitney

Global Research, February 4, 2008


Two weeks ago George Bush was sent on a mission to the Middle East to deliver a horse's head. We all remember the disturbing scene in Francis Ford Coppola's ?The Godfather? where Lucca Brassi goes to Hollywood to convince a recalcitrant movie producer to use Don Corleone's nephew in his next film. The ?Big shot? producer is finally persuaded to hire the young actor after he wakes up in bed next to the severed head of his prize thoroughbred. I expect that Bush made a similar ?offer they could not refuse? to the various leaders of the Gulf States when he met with them earlier this month.

The media tried to portray Bush's trip to the Middle East as a "peace mission", but that just a smokescreen. In fact, three days after Bush left Jerusalem, Israel stepped-up its military operations in the occupied territories and resumed its merciless blockade of food, water, medicine and energy to the 1.5 million people of Gaza. Clearly, Bush had green-lighted the operations or Israel's aggression would have been seen as a slap in the face of the President of the United States.

So, what was the real purpose of Bush's trip? After all, he has no interest in peace or in honoring his commitment to resolve the Israeli-Palestinian crisis. So, why would he choose to visit the Middle East just as his second term as president is winding down and there is no chance of success?

Sometimes personal visits are important; especially when the nature of the information is so sensitive that the message has to be made face to face. In this case, Bush went to the trouble of traveling half-way around the world to tell the Saudis and their friends in the Gulf States that they were going to continue linking their oil to the dollar or they were going to ?sleep with the fishes?. For the last two months, various sheiks and finance ministers have been moaning and groaning about the falling dollar---threatening to break from the so-called ?dollar-peg? and covert to a basket of currencies. Bush's trip appears to have rekindled the spirit of brotherly cooperation. The grumbling has ceased and everyone is back "on board". The regional leaders now seem considerably less bothered by the fact that inflation is gobbling up their economies and driving labor, food, energy and housing through the roof. Reuters summed it up like this:

?After a flurry of public disagreements over currency reform last year, Gulf central bankers are trying to close ranks, talking up the pegs as a source of stability and playing down the dollar's weakness as a temporary phenomenon.?

Looks like Bush smoothed things over.

In the last two weeks, the Gulf leaders have watched nervously while the Federal Reserve has slashed rates by a whopping 125 basis points. The cuts are steadily eroding the $1 trillion of capital the sheiks have invested in US Treasuries and securities.

?Inflation is at 16-year highs in Saudi Arabia and Oman, a 19-year peak in the United Arab Emirates. Gulf policymakers are intervening directly in loans, property and commodity markets to offset rate cut.? (Reuters)

Property values have skyrocketed. Commercial property in the UAE has doubled since the beginning of 2007. The inflation-bomb has forced other Gulf states to provide food subsidies for their people and a ?70% wage rise for some Emirati federal government employees.?

Disgruntled migrant workers rioted in Dubai recently, demanding to be fairly compensated for the sharp increase in prices. The Saudi riyal has climbed to a 21-year peak.

Currency

 

This has been periodic "news" for years. Saddam Hussein's threat to to take oil payments in Euros instead of dollars has been cited as a reason for the Iraq war. The Iran thing has been off and on news for more than a year. It's all BS.

By itself, it's a non issue. My conclusion is that the global economy will make a long slow financial transition away from American monetary hegemony. In 50 years, Beijing could be the financial capital of the world. Eventually, monetary influence will shift to the country with the manufacturing power. The idea of post industrial economic hegemony is an illusion.

In the short-term, however, everyone is acting to shore up the dollar against the future. Everyone is almost equally bought into the global dollar regime. Absent a world war, no one can afford to let the dollar collapse: not the Arabs, not the Chinese, not the Europeans.

 

Absent a world war,

Well....

 

BlueJedi, your thoughts on it? That initial post only has 18 words by you.

 

Since this older article applies, I though I would post it too.

Iran's Oil Bourse: A Threat to the U.S. Economy?
Niusha Boghrati
Worldpress.org correspondent
April 11, 2006

http://www.worldpress.org/Mideast/2314.cfm

A new building under construction on Iran's Kish Island. The island's free trade zone is the alleged location for the up-coming Iranian oil bourse. (Photo: Webshots)


While Iran's nuclear program has become a major focus of the international media, there are many who strongly believe that the program is only a cover for the U.S. government's true motive in a possible attack against Iran.

What some analysts posit is the real concern for the United States is Iran's plan to open its own oil exchange ? the Iranian Oil Bourse (IOB) ? with the alleged goal of becoming the dominant center of the Middle East's oil trade.

What makes the IOB the subject of such interest by the American government? According to rumors, which first vaulted the issue into the spotlight, the financial exchange in the aforementioned bourse will trade for oil in euros instead of the U.S. dollar. The dollar has long been the dominant currency for international oil trade.

A Threat to the U.S. Economy?
The debate over the ultimate financial impact of trading oil in euros rather than dollars is a complex one, but according to some experts such a move could lead to a huge drop in value for the American currency, potentially putting the U.S. economy in its greatest crisis since the depression era of the 1930s.


The IOB has been on Iran's domestic agenda for quite some time and different dates have informally been announced for its opening, all which have been quietly disavowed as the deadline neared.

March 20, the most recent rumored date, was the first day of the Persian calendar year. The Iranian Oil Ministry's public relations department has denied that the date corresponded to the opening of the bourse, and has mostly remained silent about the existence of such a program.

Of course, the effectiveness of the IOB will depend on whether the big international oil trading companies decide to accept deals in euros or not. However, the potential financial impact on the U.S. economy remains more than just idle speculation.

"The weapon of oil in the hands of Iran's regime is more dangerous than any other weapon," said a recently published article in Italy's Panorama newsmagazine.

Iran's Deputy Oil Minister Mohammad Javad Assemipour, director of the IOB program, told Panorama that the oil trading center, due to open in a few months, will turn Iran into a major oil exchange point.

"Iran's oil exchange with the region's countries and also some of the East Asia states will take place in euros instead of U.S. dollars," said Assemipour.

Some of the major oil-producing countries such as Venezuela (which has boosted its economic ties to Iran) and a few of the larger oil consuming countries, most notably China and India, have already announced their support for the IOB. China and India, along with Russia, are powers that have at various times backed Iran's right to establish its own nuclear program.

There is speculation that the IOB represents Iran's plan to escape any possible future economic sanctions spearheaded by the U.S. However, some postulate that the plan could also endanger the continued existence of Iran's regime. William Clark, an American security expert, predicted that if Iran threatened the hegemony of the U.S. dollar in the international oil market, the White House would immediately order a military attack against it.

Some Insist Impact will be Negligible
A number of economists believe that establishing the bourse will prove to be an impossible task for Iran.

"More than 68 percent of the global international oil exchange is in U.S. dollars, and by abandoning dollars Iran will put its own economy in greater danger," said an unnamed Iranian professor of Economics in Paris.

Other experts believe that even if the IOB commences operations, there is not much harm it can do to the U.

 

I agree with the "dollar's in serious trouble" argument. But disengaging the dollar from the global economy is not going to be an easy task for anyone who might be inclined to undertake it...something on the order of cutting a pound of flesh from a man without spilling any of his blood. In the long term, of course, the world's financial epicenter will shift to countries that export and produce. We can't endure as the world's foremost parasite nation.

 

Not necessarily, Jabba.

America's strength, as pointed out by dizfactor in another thread, is in innovation and creativity. The future of the world's economy for first-world leaders like the US is not in a return to exporting, but to invention and innovation. You are correct in that manufacturing gives a nation great power, but it will make far more financial sense in the future for manufacturing to be done in countries like China than to maintain an "export-dominant" philosophy in the United States. The loss of manufacturing jobs in America needs to be accompanied by the retraining of those who held those jobs to help fit them in to the 21st century economy-not a return to the 1950s.

It remains to be seen if that can be accomplished as a national policy, but it would greatly benefit America in the long run, even if the world's manufacturing base shifts to east Asia.

Peace,

V-03