UAE may convert holdings to euros

[n2doc]

UAE may convert holdings to euros
Says may switch up to 10% of $22.5 billion reserves

By Steve Goldstein, MarketWatch
Last Update: 10:23 AM ET Mar 13, 2006

LONDON (MarketWatch) -- The central bank governor of the United Arab Emirates suggested the country may switch up to 10% of its $22.5 billion in currency reserves into euros, in a sign of fallout from Congress' hostility to the acquisition of some U.S. ports by a Dubai-based firm.
The comments from UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi didn't have a huge impact on the euro, which rose about 0.2% at $1.1925.
Though Al Suwaidi didn't link the forex move to Dubai Ports World's acquisition of Peninsular & Oriental Steam Navigation, the market interpreted the comments in that way.
"The talk has clarified just how damaging the rejection of Dubai Ports proposed takeover of U.S. ports from P&O could be. The failed Dubai Ports deal has further damaged the reputation of President Bush with his approval rate falling to historic levels," said currency analysts from BNP Paribas.
On Friday, trade talks between the U.S. and the UAE were postponed.
Dubai Ports World has decided to sell operations at some U.S. ports to a domestic "entity" in a bid to end a political firestorm, Senate Armed Services Committee Chairman John Warner said on the Senate floor Thursday afternoon.



Ah, I see our "dear firends" are "supporting" us again....

[yurbud]

1. will weakening of dollar help or hurt average Americans?

I don't give a rat's ass about Dubai or any of our other "friends" over there, but does the dollar falling hurt us or just the wealthy?

[htuttle]

2. It hurts

Almost everything you can get in a store in the US nowdays has at least SOMETHING from overseas in it. A falling dollar causes the prices of all these things to go up.

[BootinUp]

5. Not saying I completely disagree

but there are positive components as well.

[htuttle]

7. I'm sure the 'investor class' will figure out a way to make money on it

Hell, they make out like bandits on any disaster -- 9/11, Iraq, Katrina, etc...

But most of us are just going to end up paying more at the store.

[BootinUp]

9. So goods manufactured

here will be more competitive then.

[htuttle]

10. And those would be?

on edit:
I'd note that by that same logic, falling wages and a falling standard of living in the US is also 'good' in the same way (makes so-called 'US companies' more competitive).

[BootinUp]

15. lol.

Look, I am justing pointing out some additional facts. I didn't say it would be a boon for the average American.

[htuttle]

16. Point taken

[Media_Lies_Daily]

88. "Average American"? Do you mean the bottom 99%?

[populistdriven]

21. quarter pounders & big macs

[auagroach]

78. Brazil...

is the main source of McRat burgers if I'm not mistaken and Brazil has got their own currency thank you having increased in value by 30% or so against the gagging greenback over the last year.

[NYC]

48. On the other hand, if prices from abroad skyrocket,

there may come a point where it is cheaper to manufacture it here.

(I know. That probably won't happen until wages fall, etc. But, maybe it would happen bit by bit before then. Ignore this. I'm just hopeful because I see no other way out. I keep thinking that all that cheap Chinese stuff can't keep costing a dollar because of transportation costs alone. I want this exporting of jobs to be reversed.)

[Syncronaut Seven]

32. The investor class is already diversified

It's no secret that the dollar will be worthless soon. Look who backs it, a despotic fascist regime.

Pay attention to the serial numbers on all those $20 bills, they'll tell you what the fed is now afraid to.

[i miss america]

36. Please elaborate about the significance of the serial numbers

Thanks in advance.

[htuttle]

37. They're incrementing faster

...Meaning that they are running the printing presses over at the mint(s).

[Toots]

72. They need to print a thousand hundred dollar bills a second to accout for

how much our National Debt is currently rising. A hundred thousand dollars a second it is rising. We are also paying over a half million a minute just in Interest on Debt. That figure also is rapidly rising. Republicans sure do know about economical issues... Remember every single one of them stood up there and said Clinton's budget would absolutely destroy America. America went on to experience the greatest economic expansion in history. Americans are so dumb they don't remember any of this...

[Syncronaut Seven]

38. Every time you get crisp new $20 bills at the bank

Which is nearly every time now, write down the (nearly always sequential)serial numbers. Do the same thing next month, and the month after that.

It will give you a rough estimate of how fast they're printing new money. The fed abruptly stopped providing figures, without explanation, very recently.

This is why it's becoming really obvious to most, that we're trying to print our way out of debt. Hardly sound fiscal policy.

Greenspan is out, did you notice that? He was the throttle.

[catmandu57]

40. Write IMPEACH BUSH

on every one of those new twenties, get the word out.

[i miss america]

41. Thank you, Syncronaut Seven and htuttle. And yes, catmandu57

I saw the wonderful suggestion someone posted on DU last week about the currency enhancement and have been doing my part in recent days as a result.

:patriot:

[NYC]

50. An amateur's guide to preparing an M3.

Excellent idea. We should all keep track of new money's serial numbers. We can't replicate the M3, but maybe we'll get some idea.

[warrens]

71. It also causes our exports to be cheaper

Bringing us more jobs. A weak dollar is not necessarily bad. It also wipes out a huge part of our foreign debt because we're paying back in inflated dollars. This is no big deal anyway. If China converts to the Euro...but it would kill them to do it. UAE has about $15 billion in U.S. debt; a drop in the bucket.

[Media_Lies_Daily]

87. What "exports"? What "new jobs"?

[BootinUp]

4. Falling dollar

would result in higher interest rates to attract more investment.

Trade deficit would be impacted in a positive way.

[depakid]

18. Investment in what?

That's the conventional wisdom, but it doesn't apply in the present circumastances that investment would triclke down to the middle class- or that it would even happen at all. In fact, considering the growing budget and current accounts deficit- along with other factors, such as American's negative rate of savings, I'd question whether any substantial investment would occur at all.

[BootinUp]

20. Sorry

investment in dollars.

I am not an economist, I admit I know probably just enough to be dangerous. Thanks.

[davekriss]

79. A rapidly devaluing dollar...

...would result in the same thing we saw after James Baker engineered the Plaza Accord in 1985 -- a massive firesale of American assets, everything from buildings to companies. In 1985, at the time of the Plaza Accord, we owned 3.7x more of the rest of the world than the world owned of us; by the end of the GHWB administration in 1992, the rest of the world owned 0.4x more of us than we of them. That's quite a sea change, quite an abdication of sizeable slice of self-control. Bad as that was, hang on to your hates, as GWB is basically Reagan+GHWB squared when it comes to fiscal irresponsibiliity. Just make sure you have a sturdy wheelbarrow when you go to buy bread.

In essence, our over-indebtedness and a loss of dollar hegemony (petrodollar/reserve status) would see a collapse in consumption (read>depression) and a loss of a high degree of soveriegnty. If half the manufacturing plant, plus a third of the services sector, etc., are foreign owned, our future local representatives will have to take the interests of these foreign owners into account when making law, otherwise they could pull up their tent pegs and go home, leaving us in severe straights.

[Syncronaut Seven]

33. On the trade deficit:

There has been speculation for quite some time that we will de-value our currency to wipe out our foreign debt.

The Chinese know this, The UAE knows this, even the Japanese are trying to dump dollars.

Should we be worried?

[BootinUp]

35. I'm in a constant state of worry

Maybe you should wait for some other responses.

But I tend to think that we will not make any drastic moves that would piss off the wealthy, whether they are here or over there.

[grahamhgreen]

24. It will make the it cheaper for them to buy a Senator, President, or

Congressperson.

[Syncronaut Seven]

34. You cynic! Money's never been an issue before!

I prefer to think of our president and his republican congress as professional crack whores.

No insult meant to actual crack whores.

[The Stranger]

3. After they were demonized by the bigoted Corporate Media, how could you

Ah, I see our "dear firends" are "supporting" us again....

blame them? If someone called lied repeatedly and called you a terrorist, would you invest in them?

Didn't think so. Unfortunately, it would appear that the sickness continues here.

[redqueen]

8. Demonized?

Interesting word choice.

[ECH1969]

12. The poster is totally correct

The UAE is not a terrorist state, but on Fox and CNN they were being portayed as worse then Iran and possibly in cahoots with Bin Laden over 911. It was sickening.

[redqueen]

14. Oh I see...

I don't watch cable "news".

[stepnw1f]

23. Yeah... It's Not Like They Supported Terrorists or Anything

Poor UAE...

[MetaTrope]

28. Well, when the Emir of Dubai (and DPW owner) parties with Osama bin Laden

some suspicion seems called for.

[killbotfactory]

31. We invaded Iraq for less

[TheBaldyMan]

82. we invaded Iraq for a non-existant WMD stockpile.

It seems we invaded Iraq for less than most things. If the UAE allegations are true then the Bush regime continued to do business with that valued and honoured ally after 9/11 up to the present day. Double-standards do seem to be the order of the day with most of what laughingly passes for foreign policy today.

[mac56]

56. Really?

Two of the 9/11 terrorists came from there. The money to pay the terrorists came through there. They refused to help the US trace bin Laden's money trail after 9/11. They're one of the only two countries to recognize the Taliban as the legitimate government of Afghanistan.

"Sickening"?! Again I say, waah fuckin' waah.

[sattahipdeep]

60. True enough.

Taliban Phenomena was itself a creation of US CIA/ISI Business Conglomerate....

Bonnieleezza-UAE



:hi:

[auagroach]

77. Excuse the pullup but...

FBI Director Mueller acknowledged in 2002 there was no “legal proof to prove the identities of the hijackers". Could you tell us how you know?

[n2doc]

13. Well, aside from the spelling mistake

Which I take responsibility for, It does seem to me that they are being pretty thin skinned. Major retaliation for what is , in the grand scheme of things, a minor part of a business deal? I thought that the UAE was supposed to be a "staunch" ally. Seems like a pretty weak one, in reality.

[mac56]

55. Demonized?!

Waah fuckin' waah.

[Strawman]

6. If John Q. Xenophobe only knew how dependent the dollar is on furr'uners

[Mithras61]

11. Ah, yes...

Our "friends and valuable allies in the war on terra" have shown their true colors. They are not now and never have been interested in the ports deal as anything more than a vehicle to manipulate us. We refused to play ball, and now they are stomping their feet and throwing a temper tantrum. If it was REALLY about the business, they would have simply invested in OTHER functions that didn't impact port security, or simply followed the rules as they apply to other foreign inverstors (set up a shell company and keep the records here, etc.).


I'm almost PLEASED that this has happened, because it helps highlight the VERY REAL threat we face, which is NOT terrorism, but rather the fact that the dollar is actually very weak, except for the fact that the world trades for oil in dollars. If and when the world decides that they no longer want to trade for oil in dollars or OPEC deides to stop accepting dollars and demands Euros (for example) instead, our economy will likely be toast. Expect a devaluation of 30% to 60% when that happens.

[no_hypocrisy]

17. Nowwwwwwwwwwwwwwww, we've "done it". Why wait for March 20?

Iran will now be in the middle of the parade away from the U.S. dollar.

[Barrett808]

44. You'd think the IOB would have an online presence by now, w/ a week to go

Does anybody know of an IOB portal?

[NoodleyAppendage]

19. Prima Facie Evidence of UAE NOT BEING A GOOD PARTNER.

This hostile move only CEMENTS the opinion that UAE does not have America's interests at heart. Fuck 'em.

J

[David__77]

22. Any responsible government would do the same thing as UAE.

What are they supposed to do? So a different standard is applied to them than to Canada or Britain, and they're supposed to simply do nothing? That would be the worst example of submissiveness. Countries retaliate in trade matters every day, and it's part and parcel of doing business.

[Mithras61]

25. Actually, they could have proposed that they...

get the ports deal with the same restictions that are placed on any other foreign government that wants to control a security sensitive (as in National Security) business - they could have proposed a shell corporation that would be U.S.-based, with U.S. stakeholders and with records kept in the USA. The fact that they specifically negotiated to eliminate this as part of their takeover tells me that they knew this was the most likely outcome of the deal if the public found out about it. A different standard has NOT been applied to them in this case. They specifically negotiated a different arrangement than most other stakeholders.

Aside from all of that, though, how many foreign governments control business3es in this country where our national security is a function of what they do? Do any of those countries enjoy the privileges that the UAE has required in this ports deal?

It is most definitely NOT an equal deal to anything that the British or French governments have, I assure you...

[MrMonk]

42. They could have held on for 45 days,

instead, they bugged out.

[mac56]

62. I agree.

So let them do it. Let them leave. The further away they are from our system in every way, the better.

[NYC]

52. Why would they have America's interests at heart?

I don't believe any country does. The terms "friend" and "ally" are relative. No friend or ally would put the U.S. ahead of its own self interests. In that respect, there are no friends or allies.

The U.S. would not put another country ahead of its own self interests. I honestly believe that people take the words "friend" and "ally" too seriously. A friend in one venture will not be a friend in all ventures. The friend will be a friend when it is beneficial to him.

That's why the U.S. Government is supposed to look after the U.S. interests. Nobody else will.

[TheBaldyMan]

83. actually quite a lot of countries want the US to do OK

because unlike the Bush regime they know for a fact that no one country can go it alone. That particular lesson is a lot easier to comprehend if you aren't the remaining superpower. Even the US needs a majority of major countries to make its foreign policy a success. If only the simpleton in the WH wasn't so simple he might have saved everybody a lot of pain.

[mom cat]

26. Drip, drip, drip:

10% here, 10 % there ... it is starting to chew away at the dominance of the dollar.

[Carla in Ca]

81. Isn't China thinking of doing the same thing?

What happens when our investors switch to the Euro? Somebody explain what this could mean. I'm really confused about this.

[lovuian]

27. Let them maybe this will get rid of their influence over our

government!!!

[anotherdrew]

29. $2.25 billion, thats nothing n/t

[high density]

64. That's what I thought!

Why is this even an issue?

Who cares that they do with $2.5 billion.

[The Backlash Cometh]

30. This is the threat that we need to deal with and put behind us.

We will never be free of the 1%ers in this country, until our country is free from investments that make is overly sensitive to the extortion from our ally nations.

[High Plains]

39. Are you advocating no foreign investment in the US?

And would the corollary be no US investment outside of the US?

[The Backlash Cometh]

46. Oh, for crying out loud.

I believe what we're seeing in the way of threats from the UAE, is what the 1%ers dealt with on a daily business basis. We were just not aware of it, and the 1%ers lived with it, quite happily, mind you, as long as they profitted from the deals.

The only difference now is that we're aware of those threats. How do we deal with them from this point on?

I don't advocate no foreign investments, but I certainly don't advocate being blackmailed into giving up the ports just because they're going to convert to Euros. Perhaps the problem would solve itself if the US started research in energy alternatives and was the first one to come up with something marketable? Then we would actually have something to sell and people would be willing to buy it in dollars. Now that would be the creative way to go,

[Child_Of_Isis]

43. Link please? eom

[RazzleDazzle]

49. I second that request

[JCMach1]

45. USA needs UAE far more than vice versa

This is just another sign of it...

This is just a test for the 'basket' currency for oil transactions.

The Dirham (AED) is still pegged to the dollar @ 3.67 and there is no attempt to change that.

Because of high growth here (8% GDP growth this year... trust me this is REAL growth-- not the imaginary US kind) there would be too much inflationary pressure on a free-floating dirham.

[NYC]

47. Is 10% really so significant?

If they wanted to take revenge, wouldn't they convert more? Also, don't they have other US$ investments that they don't want to damage for themselves?

Just wondering.

[RazzleDazzle]

51. BTW, this PROVES why having infrastructure in foreign hands

is a really, really bad idea, bad for National Security, which the economy definitely affects.

If they can get miffed about this and do harm to us, or threaten to do harm, in this way or some other way, then it is a HUGE NATIONAL SECURITY vulnerability.

[mac56]

61. Absolutely true.

If this is how they act when they get their panties in a bunch about something, why should we trust them with something as critical as our national security?!

[keopeli]

53. This is what happens when you get caught sleeping with the enemy

[sattahipdeep]

58. Bonnieleezza-UAE

:hi:

[Karmakaze]

54. Good on them...

The US screw them, they screw the US. Fair is fair.

[daleo]

57. Ten percent of 22.5 billion is two billion

The U.S. spends that much in Iraq in a week or so. This is just symbolic.

[truth2power]

59. I think we spend that much in a day. eom

[daleo]

63. I started to write that at first

Then I thought, maybe I would err on the side of a low number, just in case. But I think you're right.

[truth2power]

75. It doesn't matter anyway. We'll just print more. *sarcasm*

[IndianaGreen]

80. Until oil is priced in euros according to Persian Gulf prices

rather than in dollars at North Sea crude prices.

Let's see what happens with the Iranian oil burse.

[PaulaFarrell]

65. Arab central banks move assets out of dollar

Middle Eastern anger over the decision by the US to block a Dubai company from buying five of its ports hit the dollar yesterday as a number of central banks said they were considering switching reserves into euros.

The United Arab Emirates, which includes Dubai, said it was looking to move one-tenth of its dollar reserves into euros, while the governor of the Saudi Arabian central bank condemned the US move as "discrimination".

Separately, Syria responded to US sanctions against two of its banks by confirming plans to use euros instead of dollars for its external transactions.

The remarks combined to knock the dollar, which fell against the euro, pound and yen yesterday as analysts warned other central banks might follow suit.

http://news.independent.co.uk/business/news/article351127.ece

[BooScout]

66. What many people don't realize......

....is that central banks from foreign countries are propping up the dollar. And those foreign banks have been looking very seriously at switching to Euros for quite some time.

It irritates the hell out of me when I see so many posts essentially saying "fuck em...we don't need em".......when the actual case is oh yes we do. Very much. Liberals especially need to get a grip and realize that it's a global economy and the US cannot sustain itself without the help of others...others the US is doing it's damnedest to alienate.

[sendero]

68. Ya know what?

We are eventually going to have to deal with our currency issues. Giving unfriendly country access to run our ports in order to curry temporary favor in currency transactions is not a winning strategy.

Fact is, lots of countries with dollars are going to be moving away from them. This has a lot less to do with any political concerns than it does with the FACT that our government has been digging us into a monetary hole that they plan to use printing presses to get us out of.

That has never worked in the past (without consequences) and it won't work now. The dollar is is trouble, and it is going to BE in trouble for a very long time, and the UAE is barely the tip of the iceberg of the whole problem.

Yes, fuck the UAE.

[Laughing Mirror]

73. Since when is the UAE an "unfriendly country" to the USA?

And may I ask: What have they ever done to you?

[sendero]

74. They've done nothing..

.... but since George Bush has whipped the country into an anti-Arab furor to justify his unjustifiable war, I'm not willing to say "nevermind" at this point.

UAE has had Al-Quaida bases, has permitted rampant money laundering by terror-related parties, but by most accounts has been reasonably diligent in trying to do better since 9-11.

Their temper tantrum response to the fears (some justifiable IMHO) of Americans is very telling, and basically since their attitude seems to be one of "our way or fuck you", I'll simply extend my middle finger in their general direction.

[BooScout]

84. Let's keep doing that........

Let's see......how many countries have we told to fuck off in the past few years???.........oh yea...the whole world.
:sarcasm:

The point is the world is slowly but surely going to dump dollars for Euros and then the US is not going to be able to afford that "fuck off" attitude it seems to love.

[sendero]

86. You know....

... I am as unhappy as you are about our general foreign policy of telling our real friends to pack sand when they are critical of our unilateral actions.

The UAE are not our real friends, just like the Saudis are not our real friends. They are a trading partner, nothing more, nothing less.

All of these faux friends need us as much as we need them for the time being, although I would agree that over the longer term access to oil might be hindered. Personally, I'm tired of the country selling it's soul for "access to oil".

If you cannot see why Americans are not too keen to allow such a country to run our ports, that is your myopia. And comparing this to our long ties to "Old Europe" or other countries that really are (were) our allies is ludicrous.

[Eurobabe]

70. So glad my husband is being paid in Euros

and we're fucking outta here in June. This country is a disaster waiting to happen. I do promise to mobilize overseas voters for 2008 and get political, we need as many Democratic votes as possible, or 2008 may be the US's Titanic moment, if Asshat & DeadEye Dick don't put us under before then...

[onehandle]

67. Quick, smirk. Apologize. Pretend they're Chinese.

On your knees before our masters.

[Jawja]

69. In other words,

blackmail. :scared:

[BooScout]

85. Oh yes just like our funds promised to the Palestinians right? n/t

[Jawja]

90. Yes.

We are only for "democracy" if it suits our agenda. The * cabal brought this UAE deal upon us.

[leesa]

76. Good.

[Vinca]

89. This shouldn't be a shocker.

If I had "holdings," I'd be converting them to Euros, too. One day, in the not too distant future, Bush's "booming" economy is going to go down fast. Sadly, we'll be on the deck when it happens. Bush has borrowed us into bankruptcy and sent our jobs overseas. Soon he'll have an emigration problem, not an immigration problem.