Russia ends de facto dollar peg and moves to align rouble with euro

[mulethree]

Financial Times - Feb 5 2005
http://news.ft.com/cms/s/cb1cd3e0-771b-11d9-b897-00000e2511c8.html

Russia said yesterday it had abandoned efforts to tie the rouble's movement closely to the dollar and switched to shadowing both the euro and the US currency.

The move heightened expectations that other countries operating de facto dollar pegs, such as China, could follow suit.
-
Russia had announced its intention to introduce a basket arrangement last April but did not set a firm date for the change. The Bank of Russia, the central bank, has been building its euro reserves in readiness, with some 30 per cent of its reserves now estimated to be in euros, against just 5 per cent in 2000. Traders said it appeared Russia had begun to loosen its peg to the dollar in October, when the rouble began to strengthen against the dollar while the US currency fell strongly against the euro
-
The Bank of Russia said it has been using a basket consisting of 0.1 euro and 0.9 dollars to target exchange rate policy since February 1. With the euro trading near $1.30, this currently gives the euro a 13 per cent weighting in the basket.

http://news.ft.com/cms/s/cb1cd3e0-771b-11d9-b897-00000e2511c8.html

[shrike]

1. So what does this mean?

It sounds bad to me, but I'm no economist.

[Just Me]

3. GULP!!! Indeed. What DOES this mean?

:shrug:

Will the value of the dollar fall even further?

:scared:

Where's our STOCK MARKET WATCH gurus?

[Ezlivin]

7. It means you pay for your health care in rubles (Dr. Zhivago)

[Blower]

28. Was Friday a "last gasp" rally?

[VegasWolf]

53. No, just a bear trap getting new suckers into the system. n/t

[Demeter]

22. It Means Old Europe and Red China Win

and GWB maintains his unbroken record of failure, the longest in history (most other intentional, deliberate failures have died, been murdered, or had the decency to off themselves to spare their families embarrassment by now).

[maxrandb]

58. God Damn Clinton

He really fucked this country up didn't he?

Sorry, just trying to say in advance what the right-wingers and freakers will be saying.

[MADem]

38. Expect oil prices (gas, heating oil, plastics, etc) to rise

If they are putting their oil eggs in the euro basket, it is only a matter of time before those prices at the pump start going up. The weecowboy will need to secure a few more oil fields to keep us in the pink....

[shrike]

45. Lovely

I figured that's what it meant.

Is there anything that man can't f*ck up?

[Spazito]

2. Wow, very interesting!

I knew it was only a matter of time but didn't expect it quite this soon. Add the comments from China with regard to their expected move from the US greenback to a 'basket arrangement' as well, with the euro being the predominant currency in that basket, and one has to wonder how the US is going to react to this.

Another question arises from this: How long will it be before the sale of oil will be based on the euro as opposed to the current US greenback and what will be the effect of that on the US economy and deficit?

[VegasWolf]

6. OPEC is already increasing its bias in euros, last year alone by a

whopping and unprecedented 18% to nearly 50%. Europe
by itself is not doing well economically enough to justify
the increase of value in the euro, it is rising basically
because foreign investors are losing faith in the USD and
moving their money elsewhere. Meanwhile, bush fiddles with
a weak dollar while Rome burns. Bush is right, he will
go down in history!

[stopbush]

9. And as our deficits grow, they will flee the dollar at even greater

rates.

I think the major players in the global market are through with us. They've given bushco the benefit of the doubt on deficits and he's laughed at them. "Deficits don't matter," sez Cheney. Yes, they don't - to ignorant Americans who buy your BS, but such sophistry doesn't work on serious financiers. The deficits will only grow. How much US debt are we willing to let China and the others buy? From bushco's policies, I'd say, all of it.

Let's see what happens when * decides to invade Iran and China puts the kibosh on it. Maybe they'll even call in the loans...or dump their US holdings into the world market to cut their losses. Hello, depression! Could get interesting.

[ozone_man]

30. Or Venezuela.

China just made recent oil deals with Venezuela, so I doubt they would look the other way if another U.S. sponsored coup d'etat were to happen.

[LiviaOlivia]

50. from AP story "Central Bankers Warn U.S. Over Deficits"

Feb 04, 2005

~snip~

The Bush administration has pledged to halve the budget deficit by 2009, but also intends to argue that trade partners concerned about the deficits should be speeding up their own growth and relying less on exports to America.

~snip~

http://www.nytimes.com/aponline/business/AP-Britain-G-7.html

Well we know he won't reverse his tax cuts so he will default on SS trust fund bonds and cut or abolish domestic programs.

[candu]

70. original message

The crash is just beginning. Investors said that when the SS T-bills are not honored that is the time to bail out of general American T-bills. Meaning this Administration has no desire to repay its debts thus it is stupid to invest in America.

[stopbush]

4. Hey, it's their money!

Fucking bush. The USA will never recover from this asshole. Our only strong suit is the business end of a gun barrel.

We're doomed.

[leesa]

12. And if you can't afford the ammo and the oil to fuel the bombers....?

It had to happen. All of this was so entirely predictable. Idiotic neocons and Republicans thinking military might was the answer.

[cthrumatrix]

5. if the US / others can't have a "controlled slide in the $$" it could get

ugly.

If the dollar falls too fast ...interest rates would rise faster than perhaps our country could handle.

[stopbush]

8. Greenspan expects this. That's why he was advising the suckers

to switch their fixed-rate mortgages to ARMS last year. Can you imagine what will happen to those who have their debt loads tied to ever-rising interest rates? How much service is one able to manage in this time of stagnant wages and piss-poor job creation?

Bush has set the country on the road to disaster. That it is happening so much sooner than many anticipated speaks to our imperialistic and isolationist blindness.

It takes decades to build a well-constructed economic house. An idiot with a match and criminal intent can burn it all down in economic seconds...

[leesa]

14. Of course THEY will remain rich...for a while anyway.

Middle class houses will go back to the banks (rich people)and their debt will sink them but the rich will get richer...for a while.

[fedsron2us]

18. Until the people finally decide to place their 'Bourbon' aristocracy

in the tumbrils and send them to the guillotine.

[tabasco]

44. Exactly right.

Working class idiots that support Shrub need to find out the hard way that the Boy Prince is not one of them but an effete monarch wannabe. I'm sure the diehards will find a way to blame it on Clinton or the terra-ists.

[Lydia Leftcoast]

54. Who'd be stupid enough to go for an ARM when rates are low?

:shrug:

[NYC]

55. I hope nobody,

but Greenspan recommended it.

[VegasWolf]

66. a Free Republic clown? n/t

[aquart]

15. I expect George to default. I always have.

He is unable to see the consequences of an action. George will default on America's treasury obligations and destroy us.

[Eloriel]

65. What would make you think it would be inadvertent on his part?

He is unable to see the consequences of an action.

:shrug:

[aquart]

76. He doesn't see the possibility of America losing its position

in the world. He doesn't see that all the PNAC cleverness has led to the rise of greater powers. And at the moment we need to have the greatest competitive non-military strength, he has crippled us with debt.

He doesn't get that at all.

[proudbluestater]

72. Amen, Aquart, Poppy and Bar have always bailed him out in the past.

He has yet to experience a REAL consequence in his charmed faux cowboy life.

We are screwed.

I'm getting panicky myself with my IRA!

[Occulus]

10. And this makes TWO large nations, powers in their own right,

who have publicly stated their lack of faith in the dollar.

This is NOT good news at all.

[ConcernedCanuk]

11. well well, well - it's about time

.
.
.

I remember a quote in the original "Die Hard" movie by the Japanese Businessman that was in the occupied building - sumthing like "Well, we couldn't get you with bombs and bullets, so we did it with transistor radios" - indeed, the Japanese "invaded" the west with their high quality electronics, and competitive prices.

So, how to "get" the US, who's real "power" lies in it's massive arms and it's willingness to use them whenever, wherever they see fit?

Destroy their economy of course!

I've said it many times before, and I'll continue to say it until the day I die,

History ALWAYS reads, "the Rise and Fall of . . . . "

The USA hit it's apogee as it pursued terrorism in Afghanistan.

It began it's downward journey the day it bombed Baghdad - and descending things tend to accelerate. Murikan voters put the pedal to the metal the day they put Junior back in for 4 more years.

Without an internal revolution in the United States - the US will continue to spiral downward as much of the world will watch with glee

Damm, I SO much wanted to retire to sunny California, specifically in the SanDee area, but now will never cross our southern border again of my own free will

(sigh)

[Strelnikov_]

35. Catch-22

"America is the strongest and most prosperous nation on earth," Nately informed him with lofty fervor and dignity. "And the American fighting man is second to none."

"Exactly," agreed the man pleasantly, with a hint of taunting amusement. "Italy, on the other hand, is one of the least prosperous nations on earth. And the Italian fighting man is probably second to all. And that’s exactly why my country is doing so well in this war while your nation is doing so poorly."

"The Germans are being driven out, and we are still here. In a few years you will be gone, too, and we will still be here. You see, Italy is really a very poor and weak country, and that’s what makes us so strong. Italian soldiers are not dying any more. But American and German solders are. I call that doing extremely well. Yes, I am quite certain that Italy will survive this war and still be in existence long after your own country has been destroyed."

"America is not going to be destroyed!" Nately shouted.

Never?" prodded the old man softly.

"Well. . " Nately faltered.

The old man laughed indulgently, "Rome was destroyed, Greece was destroyed, Persia was destroyed, Spain was destroyed. All great countries are destroyed. Why not yours? How much longer do you think your own country will last? Forever?"

From: "Catch-22" by Joseph Heller

[MADem]

37. Hell, you'll be OK

And you'll probably be able to snap up some property at a good price, once the shit hits the fan, and have those sunny, smiling subservient Americans (almost as cheerful as those sombrero wearing Mexicans, or those friendly Jamaicans, who will probably be coming here for cheap vacations in a total service economy!!!) to wait on you, cook for you, watch your kids, tend your garden, and clean your house...ah, those Americans, they're cheerful, but a bit lazy, ya know, gotta watch 'em--but hey, they come cheap...do you believe those poor people don't even have HEALTH CARE???? And you can live like a king on a few euros a day!

Just unload your Canadian $$$, keep your savings in a euro account, and you'll do just fine!

(To anyone who doesn't get it, I'm being sarcastic, but it very well could come to that if we don't get our shit together, and quick!)

[ConcernedCanuk]

59. Gee, thot I was getting flamed there for a minute -

.
.
.

The States was my dream retirement place since I spent 14 months in and around San Diego in 79-80. I found the people friendly, and I was almost overwhelmed at how welcome they all made me feel, genuinely interested to hear me talk about Canada, or maybe they just liked my accent?

I lived in National City, La Mesa, Chula Vista, Bonita, and hmmm, is it Mission Valley, Village? I furget, it was a very active life for me there, and came back to Canada to arrange permanent residence in the States, but alas, I did not fit into the categories that were acceptable to immigration - if'n I'd hung on, I could have stayed on that "amnesty" thing in '84, - sorry to say, I am now glad I didn't. That Patriot Act of yours scares me to death, even from this side of the border.

I genuinely extend my sympathies to those who desperately prayed that Bush would lose, too bad Kerry had not been a wee bit more aggressive, no?

And ur right, the US should be thinking let's "get our shit together, and quick!" The world is past just being tired of the US government's bullying tactics, and either are or will be doing something about it.

Canada for example is already seeking markets for the products that the US has been dicking around with since we refused to participate in it's illegal invasion. China is eagerly pursuing our governments offers re beef, steel, lumber, and (shhhh) o-i-l. THAT's a market of 5 BILLION people, just a wee bit more than the States .3 million - hmm, that be 15 times the US - heck we should be OK then!

So yup my southern neighbors, "getting your shit together" is pretty much a necessity if'n you want to remain a world player in the markets, not just a pain in the ass for other countries.

Other than a Civil war, I don't see a solution at this time. I hope my pessimism for the welfare of the good PEOPLE in the US is misplaced . . .

(sigh)

[proudbluestater]

73. Concerned Canuck, I appreciate you sharing your thoughts and

hanging in there for the demise of our country. Not many "neighbors" would stand beside their friends in another country when the rest of the world detests us.

Thanks for the sympathy for the Kerry voters. He could, indeed, have been more aggressive. Some things were left unsaid that should have definitely been addressed.

Thanks for being there with us, all of our Canadian friends. I, for one, do not blame any country for turning their backs on this country. But I'm glad most remember that not all of us voted for this regime. In fact, I'm not sure a majority of us voted for this regime, either time.

Thanks for the good wishes. It helps to know we're not totally alone in this world.

[LiviaOlivia]

75. Be careful CC Bushco might go for a Canadian land grab

He who laughs.....

No he will just enslave you via corporations....like you already are.

[MADem]

78. Me? Flame a Canadian? NEVER!!!!

I absolutely adore Canadians. We see many of them on Cape Cod in the summer months. Love 'em all, french-speaking, english-speaking, you name it. Nice folk with good hearts. In fact, I am looking into buying a house in PEI, if you have any info on the place that might help me, please put your two cents in at my plea for info over in the Canada country forum!!!! http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=190x2837

But I am dead serious about America sliding into that place where the UK found itself post WW2--where once the sun never set on the British empire, the sun barely came up there for a time. When I lived in the UK, half of my neighbors were on the dole, and there was brisk trade in things that fell off the back of trucks. I felt like I was in a parallel universe full of Tony Sopranos with "lower class" accents on the one hand, and obscenely rich people who looked down on the little people, on the other! The rich were rich, the poor were scraping--you could smell the malaise, if you know what I mean....it's gotten better over there now, but for a time it was quite ugly.

[aquart]

13. Now we know why Condi is warning them about "democracy."

[FreakinDJ]

16. This will mark the fall of the USA

[Zenlitened]

17. For Joe and Jane Workingstiff, it means...

.. get serious about paying down your credit card debt!

Let's face it, much of the world of high finance is just beyond us. But if soaring interest rates are a real possibility, as some in this thread have suggested, there are some practical things we can do to protect ourselves.

We can start by being a bit more frugal, and making sure we're not in a position to get slaughtered by the credit card companies. Pay off every cent you charge every month. And if you're carrying a balance -- any balance at all -- do everything you can to pay it down.

Believe me, what you gain in peace of mind is priceless. :)

[mulethree]

20. Then what?

I am debt free, and frugal. But money in the bank doesn't feel safe, not to mention interest rates on a savings account are below inflation rates.

The price on a bond would plummet if rates go up - you'd be stuck with a bond paying sub-inflation rates.

The stock market would suffer from money moving to newer higher-priced quality debt securities?

Gold, foreign currencies and real estate are so high already.

Perhaps invest in some dollar-tied currency thats expected to relax it's dollar ties and move upwards?

Or coal-mining stocks? An actual - physical stockpile of beans?

not knocking you, I consider it very unlikely that rates will stabilize at 2.5% as government economists predict.

But there are risks of currency devaluation, inflation, and wider-spread symptoms of higher rates. Any ideas on broader-spectrum protection?

[Robbien]

26. Usually people are not saying what to do

other than to get as debt free as possible. Many sites are pushing metals (ie. gold/silver) as a place to put your cash. Others are talking mining stocks.

I read an article the other week which had some advice which sounds worth a consideration. Remember, this is not a recommendation, just an article which could give you some clues on some things you could start thinking about:


Since both your job and likely your house, are priced in US dollars - your investments shouldn't be. In general I'd go to Euro and Swiss Franc denominated investments with a relatively short duration so you don't get locked in if there is a period of high inflation. Keep rolling them over. Europe may be likely to make out better than the US or East Asia - but that doesn't mean its' going to make out well. Investment analysts spend a lot of time telling everyone they should invest in stocks always because over the long run you'll make out well.

But the long run can be a long time. If you had held a typical portfolion in 1929, with companies like Union Carbide (which went tits up, which is why you can't use indices as proxies in crashes and why indices are effectively lying when these stock arguments are made), well - it can be a very long time. Like 15 years or so. Move to short term cash-like instruments, index to inflation as much as you can, and when everything goes to hell, buy after the crash when prices are low. Now this piece of advice is the most controversial - and practically every investment professional in the world has been trained to tell you I'm wrong. So consider it carefully before following.

But as one of my favourite analysts likes to say, "there's always another opportunity, lost money is gone forever." The first rule of making money is not to lose money and the downside is currently much larger than the upside. Be wary.

Concluding Thoughts Maybe I'm full of it, and maybe this is awful advice - so take it with salt. But honestly, if I had assets, I would put my money where my mouth is. Economists are having trouble predicting what will happen because this is an unusual scenario. Any other country in the world, running the sort of government, trade and capital flow deficits that the US is running would have already had an Argentina style meltdown. But a hegemonic economic power which is a reserve currency doesn't go easy into the long dark - which will make the final meltdown more horrible: the longer it takes to happen, the worse it will be, because the more productive assets which will have been strip mined and the greater the debt which will have to be paid off.

There's nothing that you can do to stop it, and the people who could stop it have signalled clearly that they won't, so all you can do is protect yourself and your loved ones. I strongly reccomend, even if you don't take the specific advice above, that you think about how you would survive an economic meltdown. Because the odds are strong there's going to be one.

[Yavin4]

49. Look Into Buying Euro-Denominated Savings Accounts

and stay frugal.

[Wright Patman]

51. Peter Schiff has a lot of good ideas

He thinks the dollar is toast, but he puts his clients into conservative investments (REITs, utilities, oil and gas trusts, etc.) paying high dividends in stable countries with stable or appreciating currencies.

Check out his site:

http://www.europac.net

[Dogmudgeon]

19. It's starting.

China also announced that it would be "un-pegging" the Yuan. Soon. On its own timetable. These are small indications, but they're highly significant.

So it's starting.

The US Dollar is the world's "reserve currency". It is how the USA became able to ride out recessions and depressions with very little damage done to anything but the working people. But now, we face a future where we won't have the ability to exploit "The Float" of money in transit.

Uncoupling from this source over time would not be a big deal, but that's not the way things work in the Real World. If this turn from the US Dollar speeds up, the USA turns into Mexico del Norte.

When OPEC moves away from the Dollar, we've got about three weeks notice to buy out the local grocery stores and pay off the credit cards.

This isn't good. But then, as a result of Bush's relentless, arrogant, Jesus-simple stupidity, we're on borrowed time as it is.

--p!

[Rainscents]

21. This might be democrats win back seats for 2006!

[stopbush]

24. Won't happen. Rove will tie progressives to "the furriners who are

wrecking the USA's economy." Isolationist rednecks from all walks of 'MURK-in life will flock to the simple bromides of the idiot-in-chief. By the time the US economy crashes, they'll gladly send their children off to die in some rich-man's oil war, beating their chests with patriotic pride that their god-incarnate leader was "faithful til the end."

And, if they turn on him, bush will just have the military mow 'em down Schwarzenegger-style under the PATRIOT Act.

[NewJeffCT]

63. you are correct

They will blame it on those European leftists who hate America, the godless Commies in China, George Soros, Michael Moore and Osama bin Laden, who all had several lengthy meetings with Saddam Hussein in his spider-hole.

[Robbien]

34. The economy is in the toilet, a loaf of bread costs $750.00 and

your only comment is about someone winning seats in a diebold election?

I expect you will be a bit busy with other matters.

[Dogmudgeon]

40. Depends on timing

Most of us won't be too concerned about elections at that point. We'll be panicking over the prospect of losing everything we've got, including our jobs, as unemployment skyrockets.

This rosy economic picture is independent of any other financial chuckholes we step into.

A slow conversion will be painful, but not ruinous. A Magic Fix would be nice, but the only thing I expect Bush to pull out of his hat is his own ass.

This could be moderately unpleasant for a couple of years, or it could be absolute hell on earth as early as this Summer. I'd expect the Powers That Be to try to postpone it until after the 2006 elections, but a lot of that incentive is gone. We've never been so much at their mercy.

--p!

[VegasWolf]

61. No, No, gay marriage and abortion are much more important than

the devil's money!!!

[MADem]

36. The end of the world as we know it

Kinda like the Brits after WW2.

We'll really feel it after W. Oh, well, it was a good run while it lasted.

[murray hill farm]

46. and isn't China, in effect...

dumping dollars..buying oil companies and refinery's in the gulf and in Canada with us dollars?

[loudsue]

23. This is just the tip of the iceberg....

Iran is set to open an oil trading market on March 25, trading oil contracts based on the Euro. This is one of the big reasons we've been hearing about Iran's attempts to make WMD's. The bush mafia has to go to war against any country that changes their oil purchases from the dollar to the euro (just what Saddam did in 2000). When this market opens in Iran, you can bet that many, if not most, OPEC countries will start trading oil through the new market.

What does this mean to consumers in the U.S.? Well, we pay, let's say, $45 for a barrel of oil (based on dollars). The Euro is worth $1.30. So, in Euros, a barrel of oil will cost us $58.50... a 30% increase. So, if gas in the U.S. is currently $2.00/gallon at the pump, just add 30% to that, and we'll be paying $2.60/gallon at the pump.

Woe be to the Humvee owners, and all those who bought those 6,000 lb. vehicles that became the bush tax credit du juor for business owners.

Once oil starts trading in Euros through the new market in Iran, it will signal to even more and more countries every day that they need to divest themselves of their dollars, and invest in Euros. In other words, it marks the beginning of the end of U.S. dollar dominance in the world.

Other countries aren't going to totally crash the dollar immediately, because it would send the world economy into a tailspin that would hurt everyone. So they will act, like Russia, China and Venezuela are doing now, slowly and deliberately to change dominant currency from the dollar to the Euro, and then America is in deep doodoo.

Since America now imports more of our food than we export, this will affect food prices, as well....plus everything else we import. We'll essentially be paying 30% more. But as the dollar sinks and the Euro goes up in value, we'll be paying an even greater premium.

For instance, once the Euro is worth $1.50 American dollars, that means we'll pay a 50% premium, and so on. George Soros and Bill Gates, and others of course, are going to make a quick 30% or 50% return, since they've been buying Euros for a while now.

It's sure going to wake up some sleeping American freepsters! That Kool Aid isn't going to be tasting quite as fine as it was supposed to. Once all those right wing churches start seeing their income drop, they might not be quite so happy with their chimp in chief.

:kick::kick::kick:

[stopbush]

25. Very good analysis...well written.

When will people desert the chimp? Depends on how long they drink the we-helped-rebuild-Europe/China/whoever-and-now-at-the-first-sign-of-trouble-they've-turned-on-us Kool-Ade. That may give bush the room he needs to finish his term and move to...England!

The wrong assumption is that bushco doesn't realize the consequences of their actions. They do. They don't care because they're all so filthy rich that they believe nothing will impact them. Their goal is to get even richer.

When the food wars begin, they'll be on an island sipping piña coladas, leaving the rabble to kill each other over a saltine or two. And the fundies will all rejoice because they finally had a leader in * who exposed the evil nature of mankind and the senselessness of pursuing happiness in the corporeal world.

Yep, we're doomed.

[Blower]

29. MAY I POST YOUR ANALYSIS ON MY WEB SITE????

www.libertywhistle.us

[loudsue]

79. Of course....

You're more than welcome to do that.

Sorry it took me so long to reply....I've been at a "super bowl" party all day and out to dinner last night!

Whew!

:kick:

[Blower]

31. How did Iowa vote for Bush?

I noticed this too. The other big gainer of ag imports is coffee and sugar.

I noticed that farm prices are at multi-year lows, even with a weak dollar.

"Since America now imports more of our food than we export, this will affect food prices, as well....plus everything else we import. We'll essentially be paying 30% more. But as the dollar sinks and the Euro goes up in value, we'll be paying an even greater premium."

[mulethree]

42. Bush budget cutting AG subsidies as well

Cutting the max from like $350K to $250K.
plus attrition - subsidies reduced because prices have risen.

[mulethree]

39. european oil cost ?

"we pay, let's say, $45 for a barrel of oil (based on dollars). The Euro is worth $1.30. So, in Euros, a barrel of oil will cost us $58.50"

$45 per barrel and the euro being $1.30 would mean the Europeans are currently paying 34.6 euro per barrel - plus some foreign-exchange premium to buy dollars to use in the purchase - say 35 euros per barrel. I don't think the price would suddenly become 45 euros per barrel. Certainly the Europeans wouldn't cooperate with a 29% raise in their cost of fuel.

I think the shrinkage in use of petro-dollars and increased use of Euros would pressure the Euro upward and the Dollar downward so the Euro-countries end up with slightly cheaper oil and U.S. paying more. All dollar-tied-currency-countries as well adding more pressure to move away from dollar pegging.

But the Europeans are already bitching that the Dollar is too weak and the Euro too strong. Perhaps they would object less with fewer currencies strongly dollar-tied, and use a Euro oil market as an excuse to print Euros to keep their currency from rising too much.

Exciting to see the ruble starting it. They are the worlds 2nd largest oil exporter and perhaps the hardest to threaten militarily.

[muriel_volestrangler]

48. There wouldn't be an immediate 30% jump

If Iran started wanting payment in euros, it wouldn't mean that they demand exactly the same number of euros as they currently want for dollars. If they did that, they would be undercut by other suppliers, and no-one would buy from them. There's nothing sacred about the numerical amount of currency they want for their oil.

It would have an effect when they start making new contracts for future oil. In that case, they and their customers will agree a price in euros. That price will stay the same, in euros, for whenever the contract is actually due. This means the price in dollars will become less stable, since the exchange rates could alter it in the period up until the contract is due. American oil companies, if they wish to keep their costs predictable, will have to start paying a little premium in their currency transactions to insure them against adverse price movements. Since most OPEC countries get more of their imports from the euro zone than economoies tied to the dollar, they currently have to do this themselves (or take their chances in the currency markets). Some think that a small bit of the price rise we have already seen has been because they want to keep the effective price in euros more stable, and have been negotiating their prices to have that effect, since they saw the dollar dropping in value. Switching to an euro denominated price makes it 'official'.

The main thing determining the market price of oil is still the total world supply and demand.

[fedsron2us]

52. The real issue is the end of the dollar as a reserve currency.

If major oil transactions are carried out in Euros then people do not need to hold US dollars to trade. This means that the US is no longer the monopoly supplier of the worlds premier means of exchange. It is going to make it a lot harder for the US government and US corporations to issue debt. As demand for dollars to carry out trading transactions declines then its value will plummet. The only way to attract buyers to debt auctions will be to raise the rate of interest on offer. This is going to cripple consumers and business who are surviving on borrowed money. Once the economy starts to fail the whole thing could spiral out of control. It is as big a threat to the future of the US as a great power as all the foreign militaries combined. By comparison the terrorist danger is irrelevant. I believe that the US government will go to almost any length to try and maintain the current dollar status quo.

[kineneb]

68. lacking any assets except the house

which we only owe $25K on, and two cars, I am investing in my garden. Raised beds and fruit trees are my hedge against the coming crash.
We are already living on income below 200% of poverty. Can't get blood from turnips like us.

[proudbluestater]

74. Loudsue! Whoa! Awesome post! I had no clue of these goings on

"Iran is set to open an oil trading market on March 25, trading oil contracts based on the Euro. This is one of the big reasons we've been hearing about Iran's attempts to make WMD's. The bush mafia has to go to war against any country that changes their oil purchases from the dollar to the euro (just what Saddam did in 2000). When this market opens in Iran, you can bet that many, if not most, OPEC countries will start trading oil through the new market."

I am just astounded to read this! Not meaning at ALL to question you, but where have you read this before that I have managed to miss this? I don't want a link or anything, but this is just something I've never considered and it makes perfect sense, but as you know, we have NO media here in the states. Could you just mention where you've gained your knowledge? Because wherever you're getting it, I want to link up to it somehow!

Fantastic post. I am most grateful. It now makes PERFECT sense. During the run up to the war in Iraq, I sat here for days on end scratching my head, going "wha? wha? wha?" As Wolf Blitzer took the regime's word about the sudden development of WMDs in Iraq as if it were the freaking gospel with no questions asked. I have been scratching my head ever since, trying to make sense of it all. Of course, I've heard it all, war profiteering, ratings for the news shows, war for oil, but none of it made as much sense as what you just posted.

Thanks!!

[loudsue]

80. This linked article states March 21, 2005.....

I had read in an earlier article that it was March 25.... at any rate, it's NEXT MONTH ( !!!! ) sometime, according to the plans!

I haven't found any of the earlier articles yet, but I'll provide them when I do.

http://www.globalecho.org/view_article.php?aid=2009

:kick::kick::kick:

[Blower]

27. This is SIGNIFICANT, in the FT no less

But with little or no chance of the US reversing the trade deficit, nor generating jobs, this is no suprise.

I was skeptical about a dollar crash, and thougt Gates et. al were trying to cause a dollar short squeeze. Maybe not...

[MADem]

41. Feel the wind blow, it's blowing jobs our way...

Wait--that's not really a WIND, it's just a DRAFT.

One way to get your economy bouncing--war. I swear it is in their game plan.

[VegasWolf]

32. Funny, when little georgie first came into office, the US dollar was

considered a good thing.

[Lorien]

33. Must be why Rice is "warning" Russia on Democracy

:eyes:

[mulethree]

43. off topic - what breed is your Oberon cat? love the ear tufts n/t

[Massacure]

47. TIMBER!!!

[Lydia Leftcoast]

56. I am SO glad that most of my customers are Japanese and pay me in yen

It was a bad deal when the yen was 130 to the dollar, but now that it's trading between 105-100 to the dollar, it's a much better deal.

[IronLionZion]

57. Why don't we align with the Euro as well?

everyone else is doing it :eyes: goddamnit

[VegasWolf]

62. Ha. Best joke today, I like it! n/t

[lovuian]

60. This is Economic WORLD WAR III

but this countries do underestimate the power of America thats for sure!!!

[mulethree]

64. MORE - 50/50 perhaps within months - Reuters

Hmm its in asia and europe Yahoo but not in the US

http://asia.news.yahoo.com/050204/3/1vsde.html

"The main purpose is to get away from the rouble-dollar peg. The central bank feel they are forced to intervene on a daily basis and over time that is just not sustainable,"
-
Central bankers have said they want to shift to a 50-50 dollar-euro basket, and Deutsche Bank emerging markets economist Jens Nystedt said that level could be reached within months.

"The low weighting of the euro is surprisingly cautious," he said. "They could go as high as two thirds euro and one third dollar -- roughly the same as the trade weightings."
-
The central bank has said its forex reserves are 70 percent in dollars, 25 percent euros and 5 percent other currencies.

http://asia.news.yahoo.com/050204/3/1vsde.html

[IronLionZion]

67. Ze Germans have been trying to take over the world for a long time now

They'll do it yet those smart efficient bastards aaaahhhhhh!!!!

[poe]

69. Other factors related to energy trade will also weaken dollar

it seems nary a day goes by but another trade agreement for oil and/or liquified natural gas comes to pass with uncle sam left sitting on the sidelines. venezuela which provides 15% of US oil is looking for better deals and has already signed pacts w/china and other more complicated arrangements w/china-iran-india. iran is set to peg their oil to the euro in march though it is a bit more complicated as it works through a boursing system.
add to this the boycott of american products that is occuring woldwide and....

[proudbluestater]

71. Another nail in the US coffin and STILL Greenspan does squat

[Vidar]

77. Rats always desert a sinking ship--in this case the USA.