It's Not About Iran's Nukes - It's About the Oil Bourse & Fall of Dollar->

[Dr. Jones]

Worse than an Iranian nuclear attack?

Weaned off the almighty commodity, the US dollar can have a deeper impact on the US economy than a direct nuclear attack by Iran. The permanent demand for dollar-denominated paper stems substantially from the fact that until now almost all resources of the world are quoted in it. While this led to the eurodollar (US dollar-denominated deposits at foreign banks or foreign branches of American banks) market in the 1970s, the new terms of trade could ring in the demise of the dollar as the premier reserve currency...

Iran holds a strong hand as the No 2 producer of crude behind Saudi Arabia, pumping 5% of the world's oil demand. Politicians there will also keep in mind that dollar deposits might become a burden in the future, if the US steps up its current war of words to the level of economic sanctions in the attempt to halt construction of Iran's nuclear power plants. Money in the bank does not help when you have no access to it. Substituting Iran's domestic oil demand partly with nuclear power will place the country in a win-win situation. Cheaper nuclear energy and increases in oil exports from the current level of roughly 2.5 million barrels a day will result in a profitable equation for Iran.

Only one major actor stands to lose from a change in the current status quo: the US, which with less than 5% of the global population, consumes roughly one third of global oil production. Oil in euros would benefit millions more in the EU and its trading partners, though. And it would loosen the grip the US has on OPEC members. Thinking of the rapid growth of hostilities between the US and Arab nations in recent years, a renunciation of the dollar appears to be more than just an Arab daydream.

As this development poses a very real danger to the superior status of the greenback and the interests of the US, the "president of war" can be expected to take a strong line against the winds blowing from the Middle East. One may be reminded that Saddam Hussein had entered into discreet talks with the EU, proposing to sell his oil for euros. That was in the year before the first oil war of this century.

Source: http://www.atimes.com/atimes/Global_Economy/GH26Dj01.html

[RufusEarl]

1. Totally agree!

This was supposed to happen last month, but has been pushed to June this year. When we went into Iraq it was for the same reason IMHO, Saddam was going to start trading Iraqi oil in Euros.

The greenback can't survive without oil trade, and if Iran goes ahead with it's plan for Euro oil Bourse the war will happen.

[EVDebs]

2. A dollar in 'freefall' effectively ends 'globalization, a GOOD THING

all those outsourced jobs will have to come back to the US. Manufacturing will return home and it will be cheaper to do 'call centers' from the US rather than elsewhere, increasing US IT security.

[Vincardog]

4. Right we can have the hyperinflation that Argentina enjoyed. The World

Bank can insist on austerity measures like cutting SSI and education while they seize any assets that we have left. Maybe we can issue issue "new" revalued dollars with GW's bat shit crazzzzy face on them.

[formercia]

7. Like the Germans did during the Depression

1 Billion Marks for a loaf of Bread.

But just think, you can pay off your credit cards in no time....:evilgrin:

[EVDebs]

10. This has gotta be that wag from the ol' Kerry website ! Loved your posts

then as now !

[formercia]

12. Dots me

jus doin my yob, mang. :)

Good to hear from you again. :)

[Dr. Jones]

5. Awesome!

Maybe America can go back to the way it was - what made our country great. A strong middle class with jobs going to American workers rather than all this insourcing/outsourcing that's been killing us.

However, I do fear turmoil in the meanwhile...
:scared:

[stop the bleeding]

8. yep a much weaker dollar would bring back foreign investment to US

which would be good for the US and it's economy also the Fed does a pretty good job with keeping the interests rates in check so I don't think hyperinflation would be an issue, in fact with a weak/revitalized dollar our economy would be able to stay under hyper-inflation.


Markets and trading is a hobby of mine

[Vincardog]

11. With a weak dollar what do you think a gallon of gas will be? How about

the price of all those drugs we import? When China floats the yen what do you think the price will be on everything al WalMart? The BushBots will have seceded in turning the USA into a third world country populated by the 'ignorant unwashed' and ruled by their 'elite betters".

[Toucano]

3. I'm beginning to think this bourse is a myth.

Other oil producing nations would have join. Their leadership is dominated by US controlled puppets.

I seriously doubt it will ever happen.

[formercia]

6. I agree

and if we attack Iran, we can forget tankers making it past the straits of Hormuz for the near future.

[Coastie for Truth]

9. Have to wait till I get the "Official Word" from my Econ Guru

PAUL KRUGMAN

<>

[muriel_volestrangler]

14. He's not convinced - see a reply of his to a reader

talked about in this GD thread: http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=364&topic_id=908486

[enid602]

13. Iran

Given this reality, summitry (with re: to both the dollar's role and the Iran situation) might prove wiser than a nuke attack.