[cia-drugs] The Dollar Collapse's Oil Ramifications
http://www.resourceinvestor.com/pebble.asp?relid=34222 The Dollar Collapse's Oil Ramifications By Stephen Clayson 25 Jul 2007 at 12:55 PM GMT-04:00 LONDON (ResourceInvestor.com) -- Oil is a commodity traded almost universally in U.S. dollars, but for how long? For decades, the motley band of petrostates that comprises the Middle East has, with few exceptions, dined out on dollar revenues from the sale of the black stuff. With the run-up in the oil price, times have been better than ever for most Middle Eastern countries. Today's oil prices have made them far more important internationally, and far wealthier, particularly in the cases of the governing elites, than they otherwise would be. So much so that OPEC, which is dominated by Middle Eastern countries, has shown itself as willing to manage the oil it supplies onto the world market in order to keep prices up around current levels. However it was intriguing that a recent report from OPEC suggested that the average price of oil, adjusted for inflation and currency fluctuations, in June of this year was $43.60 a barrel versus $44.30 barrel in June of last year. This is despite oil's present, unadjusted position close to record levels in the high $70s a barrel. So as the dollar has depreciated and the euro has appreciated, the real value of a barrel of oil has slipped, albeit not by much. But that isn't all. An economist from U.S. investment bank Morgan Stanley was recently quoted estimating that a 10% drop in the value of the U.S. dollar against major currencies cuts Middle Eastern purchasing power by about 5%. It is also germane that the euro, and to a lesser extent the pound, have appreciated significantly against the dollar, because Middle Eastern countries import much more from Europe than from the U.S. For example, according to Deutsche Bank, Germany's largest bank, Saudi Arabia sources approximately 26.5% of its total imports from the eurozone, 12.2% from the U.S, nearly 7% from Japan and approximately 5% from the U.K. The drop in Middle Eastern spending power that has resulted from the simultaneous appreciation of the euro with the pound and the weakness of the dollar is increasingly being cited, not unreasonably, as a reason why OPEC is reluctant to pump more oil, as its most influential members wish to keep prices high in order to mitigate the erosion of their purchasing muscle. But what happens when, as is inevitable, the dollar starts to fall in an even more substantial way? The obvious solution for the Middle Eastern petrostates is to stop pricing the oil they sell in dollars and start pricing it in euros. Pricing oil in dollars might have made sense when there was a paucity of other relatively stable currencies, when U.S. demand was more significant as a proportion of world demand than it is today, and when the Middle East imported more from the U.S. - but not any more. However, the extra demand for the dollar created by its use as the currency of global oil trading is a significant prop for the currency. Take that away, and another round of depreciation is likely. One would expect that the U.S. government to exert considerable diplomatic pressure to maintain the dollar's position, but with a changed diplomatic environment and the emergence of very real geopolitical rivals to the U.S., such as China, success can certainly not be guaranteed. It is also worth noting that China is on trend to be largest consumer of oil before long. So maybe one day, oil will be priced in renminbi. But for now, the euro looks like the way to go - to the detriment of the dollar.
[cia-drugs] The Dollar
The following is what I posted on my blog this morning: Dear friends, I don't have to cut and paste anything into this post for you today because this is from my pen. The international bankers are deliberately and with mallice determined to destroy the United States of America. They are doing this by controlling the dollar, and I, for one, am sick of it. Today, in the country in which I reside, the dollar has dropped in value below anything I have ever seen it in the nearly two years that I have lived here. Now, the Congress wants to abolish the Federal Reserve Bank, which is a bank that was instituted in fraud and which is not federal and has NO reserves whatsoever. In fact when a bank in the United States loans money to people to buy a home or any of the other myriad of reasons why people need to borrow money, it creates the loan out of thin air. Loans are not made based on the amount of money any given bank possesses from depositors; they are simply written into a ledger. Then, borrowers have to pay back their loan with interest; that money is clear profit for the bank, while Americans struggle to make their payments, the international bankers are laughing at the people all the way to the bank. Please contact your Congressman or woman and tell him/her to initiate legislation to abolish the Federal Reserve Bank, and ask every one of your friends and family to do the same. One of these days the dollar will be worth NOTHING, and then you'll lose everything you have. This is why it is so important to tell your Congress person to initiate this legislation. Thank you. Peace, Arlene Johnson Publisher/Author http://www.truedemocracy.net To access my e-zine where you would be able to read the article on the Federal Reserve Bank by Eustace Mullins, click on the icon that says Magazine. Password for 2006 editions: message No password is needed to access any other edition.
[cia-drugs] The dollar may fall this March
http://english.pravda.ru/world/20/91/368/16741_dollar.html The dollar may fall this March 01/14/2006 16:41 America's foreign debt currently standing at $8,184 trillion will hit the debt ceiling as early as February-March 2006 The United States is heading to financial crisis at top speed. That is correct, America will default on its foreign debt sooner or later if the actual trends remain unchanged. Consequently, the whole dollar-based world (including savings in U.S. currency) may crumble. In actuality, the public have grown tired of numerous forecasts regarding an imminent collapse of the U.S. economy. The picture looks pretty grim this time around. Several factors will have an extremely detrimental effect on the dollar, according to U.S. Secretary of the Treasury John Snow who forwarded a letter full of ominous predictions to 21 members of U.S. Congress. The letter was made public after the markets had been closed for Christmas and New Year's holidays - a rather appropriate precautionary move in terms of the international foreign exchange market, which is extremely sensitive to any sound produced by U.S. bureaucrats. In his letter, Snow predicts a crisis in February this year. Citing U.S. government forecasts, Snow believes that America's foreign debt currently standing at $8,184 trillion will hit the debt ceiling as early as February-March 2006. For decades the White House has been borrowing money to cover expenditures that exceeded the real economic growth rates. As a result, the U.S. public debt currently totals to $8.1 trillion, a huge figure compared to the U.S. GDP that is slightly above $11 trillion. U.S. Congress sets a debt ceiling which U.S. government must not exceed in borrowing. Exceeding the ceiling brings about the so-called technical default i.e. U.S. fails to pay its foreign debt in full at the right time. However, the government has been continuously raising the foreign debt limits over the last 50 years. The United States has been on the verge of default for several times in the past. The recent pre-crisis situations occurred in 2002 and 2003. In the former case (the war in Afghanistan started in 2002), the then Secretary of the Treasury Paul O'Neil demanded to increase the limits a mere 10 days before the estimated expiry of foreign debt ceiling (about $6 trillion at the time). President George W. Bush had to step in to resolve the situation. The new Secretary of the Treasury John Snow raised the issue again in 2003, the year of U.S.-led invasion to Iraq. The situation looks the same these days. An additional minimum amount of $171 billion in foreign loans over the limit is required to satisfy the needs of the U.S. economy (though growth rates are far from being spectacular), otherwise the U.S. will face the first foreign debt default in its history. "We will run out of funds for financing the government operations by mid-March at the latest even if the U.S. Department of the Treasury takes all possible legal measures to keep the foreign debt ceiling from going up," says Snow. Under his scenario, the government will have to take "emergency measures" to pay the bills. The measures mostly boil down to cutting the spending in all areas from social sector to national security. We should not forget that the United States is normally reluctant when it comes to taking steps that could lack popularity with the public and power bloc. By and large, the United States is not good at fighting its ever-growing appetites that result in technical default. The default will lead to a sharp drop of the dollar with respect to all world currencies on the international foreign exchange market. The dollar reserves and debt securities of all countries will depreciate. Time will show how bad things can get under the circumstances. The upcoming default will undoubtedly have an impact on the world economy. Still, it is difficult to say how much damage the default will cause to the United States. Meanwhile, experts point out that America is definitely getting ready for default. The thing is, a number of events are due take place in March. The events look very alarming to the world of the dollar. First, Iran is to officially switch into the euro in its foreign trade operations including oil exports. Second, China is hinting at a potential increase of the euro share in its Central Bank basket of currencies. The dollar share currently holds 70% of the basket. The dollar w
