Re: RE: Re: Clash of Currencies and the Iraq War

[Kelley]

i don't know what to make of this explanation. thoughts?

Look at it this way:  the ownership of Iraq's oil reserves is about
to dramatically change hands.  This will be one of the largest financial
transactions in history.
Of course world oil production will remain relatively constant, and
the price, too.  People always say this when they wnat to pooh-pooh
the oil issue.  What they hide is that the ownership changes hands.
If the owner of a grocery store is shot dead, and the shooters
appear as the new proprietors of the store, but nothing else changes,
was it about the grocery store?
We need to identify the world cash flow picture:  at present this is
"surplus money" (since the US has nothing to export) is "invested"
(i.e. LOANED) in the US, in various forms from mortgages to credit
card debt bundles to government bills.  The loaners are Europeans
and Japs.   The money thus loaned is spent primarily on imported
finished goods from Japan and Asia.  These proceeds, again passed
largely through Europe and Japan, cycle back in loans.
When the US imports oil, more bux go to the oil producers, who buy
"stuff" from Europe...
This picture involves the US having to service a mountain of foreign
held debt.
How are foreign debts serviced?

        a) Default
        b) Inflation/Monetization
        c) Actually paying
Europe is presented with a choice:  should the US default on its
foreign debt?  (World-wide collapse in an hour), should the US
inflate its currency?  (hello, major trade war)  Or should the US
engage in a thinly-masked piracy against certain odious third parties?
Well, it depends what each European country stands to gain or lose.

France and Germany are about to lose *big time* due to their investments
in Iraq (and the next "evil" countries, Syria and Iran).  Russia will
lose *big time*, too.  These nations would probably prefer the US
to "actually pay" the debt without piracy, by handing over title to
tangibles in the US.  ("Daimler-Chrysler" redux).  At a second choice,
they will bite the bullet and take gradual inflation of the dollar --
they can pass the pain off to some third party like India and E. Europe
if they're sly about it.
The Euro countries that back us (such powerhouses as Estonia and Italy)
aren't invested in Iraq, Iran and Syria.  They do not benefit from
a "cash-long" middle east, it doesn't matter if the Americans own
the oil or some Arab.  OTOH, these countries are deathly afraid of
significant devaluation of the dollar.  So they are our good buddies.
At present they buy their oil from or through their scary-beary eastern
neighbor, Russia.  They wouldn't mind a second-source at all.
(See schemes for Turkish pipelines -- the idea is to pipe Azeri
(formerly Soviet) oil south to the Med.  Also to pipe Iranian
oil West through Turkey.  And now -- ta-da -- Iraqi oil North and
West.  This means cutting Russia out.  Hello, cold war II.
This is a very sketchy sketch, and I don't know enough about econ to
fill it out.  But this is a pretty good picture about what is going on.
It's NOT about "terrism" or "democracy for the Kurds".

All that stuff is just smoke.  It's "grab the oil" and "wipe our
ass" on human rights, at home and abroad.