The Sinking PetroDollar - abandon ship!
November 4, 2004 11:28 AM   Subscribe

Is Hugo Chavez Frias a marked man? What about Gerhard Schroeder or Pooty-Poot? We know that Saddam got Euros for oil. October 31, 2000 The United Nations Sanctions Committee approves an Iraqi request to be paid in Euros, rather than United States dollars, for oil exported under the "oil for food" program, which is part of the sanctions regime stemming from Iraq's 1990 invasion of Kuwait.

Iran has interest in changing to either the new gold dinar or the nifty Euro. Implementation would be in 2005. If you belive Rense.com about The Sunburn (and keep in mind Iran hasn't had over a decade of sanctions to keep its military in check), the float of the PetroDollar may stop once the lighter than water part leaves the Dollar - and the invasion trick won't float (for long) this time.
Anyone scared yet?
posted by rough ashlar (24 comments total)

 
Um, Rense.com also has articles about "Flouride: The Battle of Darkness and Light" and how "Zionists Made a Deal With the Devil" and how the "Reptilians" are "Obsessed with Bloodline and Ritual". So I tend not to pay much attention to what they say over there.

On the other hand, even the stopped clock is right twice a day.
posted by Sidhedevil at 11:51 AM on November 4, 2004


I have a buddy that claims that the invasion had something to do with Iraq switching to the euro, but have yet to find anyone who can explain why the heck that should matter...

Anyone wanna give it a shot?

By the way, if you're using Rense.com as a source of news, then something is really wrong with you...
posted by ph00dz at 11:57 AM on November 4, 2004


Anyone wanna give it a shot?


What does America Export (that others might want to buy?) Come up with your own list...now add to that list The US Dollar.

Why would other countries care about accumulating Dollars? To buy oil.

Now, what happens if Dollars are no good to buy Oil? (Hint: Ouch!)


Rense.com as a source of news,

But if you look at the Rense.com link, you'll note the 3M-82 Moskit/SS-N-22 Sunburn and SS-NX-26 Yakhonts reference. And you can note the tatical idea - Iran could stop tankers from entering/leaving the gulf. So disreguard the link at your own peril.
posted by rough ashlar at 12:25 PM on November 4, 2004


I can often get a very clear vision of the US as the next imperial power, reshaping the world to turn it into a set of US markets and US manufacturing sources, much as the English did in the 19th C. That seems to be the whole point of all that "New American century" nonsense, when you strip away the pretty language about democracy. So Europe acting to take away the primacy of the dollar has a big impact on a plan like that -- pretty much foils it, in fact, beyond a time horizon of a few years.

As for Rense.com and the "Sunburn": Big weapons like warships and tanks are always deployed into a cost:benefit spiral; in times of rapid technology development, the spiral can get pretty vicious. So, for example, in one afternoon on March 8, 1862, the CSS Virginia -- a sluggish, brutish vessel with poor fire control, that would have gone down like a rock in moderate seas -- proceeded to handily obselesce the entire US Navy. The next day, though, the US Navy caught up with a vengeance.

Similarly, in October 1973 the Egyptian army was able to score unprecented success against the much-vaunted Israeli armored corps through the heavy use of not better tanks, but relatively cheap wire-guided missiles. (Luckily for the Israelis, their reputation was based at least as much on skill as hardware: They quickly figured out how to counter the threat by capitalizing on the fact that tank shells were faster than anti-tank missiles. I saw a picture once of an Israeli tank with several guidance wires draped across the turret, where they'd caught after the rockets flew wild with a dead hand on the joystick...)

Point being, the Sunburn is real, but it's not really shocking -- it's just a reflection of the constant brutal race of military technologies against one another. It both supports and qualifies Rumsfeld's "Transformation" doctrine: Supports it inasmuch as it argues against the development of very large, fragile, complex systems; and qualifies it by establishing that if you're going to go with a strategy of having lots of small, survivable systems, you've got to actually have lots of them. ("Quantity has a quality all its own," to quote Lenin.)

Also, we tend to demonize the Iranians, but it's important to remember that they are very, very not-stupid. They have ambitions to be treated as equals on the world stage, and the fact that they bother to do things like switch the basis of their currency argue strongly that they're not really interested in scorched earth. Yes, if we were foolish enough to attack them, we might find a few American aircraft carriers testing their RAM system against Iranian Sunburns -- but we'd have to be stupid enough to attack them in the first place. And we wouldn't be that stupid.

Right?

Right?
posted by lodurr at 12:35 PM on November 4, 2004


Iran's next. We already have hundreds of thousands of troops right next door, and are building massive permanent bases. Bush is obviously bored with Iraq--it's ours now, and needs a new shiny (deadly) thing .
posted by amberglow at 12:40 PM on November 4, 2004


Anyone wanna give it a shot?
From an economic perspective, the fact that the world's oil trade is conducted mostly in dollars creates a demand for dollars. Currently, if Denmark wants to buy oil with its Euros, it first has to buy dollars with the Euros, and then buy oil with the dollars.

If the oil could be purchased with either dollars or Euros, then the demand for dollars would probably drop, and the value of the dollar would drop with it.

Given how large our trade deficit is, the drop could be quite large. Because we tend to buy foreign goods with dollars, the trade deficit would translate directly into an oversupply of dollars.
posted by Slothrup at 12:43 PM on November 4, 2004



And we wouldn't be that stupid.

Right?


Alas. America may not attack, but Isreal might. Or perhaps America's leadership would command the military to go after one of the axles of eeeeevil. *sigh* The oil from the various axles of eeeeeevil keep the world economy well greased, and it being constrained does not make for happy days.

Consider these two reports:
http://www.fe.doe.gov/programs/reserves/spr/spr_loan_summ_101204.pdf
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/current/txt/wpsr.txt

How can the SPR levels be constant in report #2, but report #1 says there is a loan of 5.5 million barrels?

*sticks fingers in ears*
La la la la la
Nothing bad going on
la la la la la
posted by rough ashlar at 12:47 PM on November 4, 2004


amberglow, I can't believe that will happen. Yes, I'm sure it's a recurring Vulcan/Neo-Con wet dream, but I just can't believe we'd go through with it. It's a lot harder to sell the idea of freeing a populace from oppression when there's no Saddam Hussein to demonize, and that populace is doing a reasonably good job (by anything but hyper-accelerated modern standards) of slowly but surely freeing itself.

And please, we don't really need to go down the obvious path, here...we both know what's there...my story has a nicer ending, anyway, and things have been depressing enough for the past few days.
posted by lodurr at 12:58 PM on November 4, 2004


Seems Russia has been pricing oil in euros for a year or so.
posted by poodlemouthe at 12:59 PM on November 4, 2004


Seems Russia has been pricing oil in euros for a year or so.

And Bush did 'jawbone' OPEC into not breaking Bretton Woods a few months ago.
posted by rough ashlar at 1:05 PM on November 4, 2004


I was just reading a paper on this subject.

It's from early 2003, but I found it very interesting:

A Macroeconomic and Geostrategic Analysis of the Unspoken Truth by William Clark.

There is also this shorter paper by Geoffrey Heard:

The War on Iraq: US and Europe clash for World Economic Dominance
posted by tsuki777 at 1:57 PM on November 4, 2004


Feel free to think you have the key to ruining the dollar. The dollar is strong because http://metafilter.com/index.mefi?delcookie=yes
logoutwe have the largest, most healthy economy in the world. And in comparison, the rest of the world doesn't come close to comparing.
posted by ParisParamus at 2:09 PM on November 4, 2004


Why do some people beg to be told they're wrong?
posted by lodurr at 2:31 PM on November 4, 2004


Moreover, in December 2002 ten additional countries were approved for full membership into the E.U. In 2004 this will result in an aggregate GDP of $9.6 trillion and 450 million people, directly competing with the U.S. economy ($10.5 trillion GDP, 280 million people).

Guess 9.6 VS 10.5 trillion isn't close, or PrimusParis is uninformed when it posts the rest of the world doesn't come close to comparing.

Which is if? Are you ignorant or is .9 trillion "not come close"
posted by rough ashlar at 2:37 PM on November 4, 2004


Pooty-Poot? It that a term of endearment?
posted by ParisParamus at 2:57 PM on November 4, 2004


Pooty-Poot? It that a term of endearment?

Ask GW Bush. He's the one who is alledged to call the leader of a nuclear superpower that. Oh, and I noticed your lack of response to the direct question: Are you ignorant or is .9 trillion "not come close"
posted by rough ashlar at 3:04 PM on November 4, 2004


Oh, PP, one would think you'd recognize Bush's pet name for Putin! You need to catch up on the memos or you'll lose your decoder ring!
posted by solistrato at 3:08 PM on November 4, 2004


The dollar is strong because we have the largest, most healthy economy in the world.

No doubt that's a contributing factor. But currency obeys the laws of supply and demand just like any other commodity. Having the largest and most healthy economy doesn't make (for instance) our auto industry strong automatically either.

But don't just take my word for it. Every other issue of The Economist says basically the same thing.
posted by Slothrup at 3:16 PM on November 4, 2004


The dollar is strong because http://metafilter.com/index.mefi?delcookie=yes
logout


i couldn't have said it better myself. in comparison, there's no comparing the two. obviously.
posted by mrgrimm at 4:50 PM on November 4, 2004


Why gosh. Why wouldn't we attack Iran? We've certainly stabilized Iraq with our military, after all.

Which is if? Are you ignorant or is .9 trillion "not come close"

Our friend ParisParamus is an example of one of them there Bush supporters. Please don't bring fact into the argument. It annoys them.
posted by fold_and_mutilate at 6:16 PM on November 4, 2004


Our friend ParisParamus

With friends like that, who needs enemies?
You need to pick a better set of friends.
Friends are God's way of apologizing to us for our families.
We know our friends by their defects rather than by their merits.
The most deadly fruit is borne by the hatred which one grafts on an extinguished friendship.
I've always said that in politics, your enemies can't hurt you, but your friends will kill you.

So which friend is ParisParamus?
posted by rough ashlar at 6:44 PM on November 4, 2004


And Bush did 'jawbone' OPEC into not breaking Bretton Woods a few months ago.

rough ashlar, I hate to break it to you, but Bretton Woods collapsed in 1971. What we've been operating under since then is generally termed post-Bretton-Woods, or the IMF era, if anything.

It's easy to find articles discussing the currency-switch theory of the Iraq war -- but they're almost exclusively from the rabble-rousing left, or worse, high tinfoil-hat-quotient sites like rense.com. I'll start worrying about this approximately the time that, say, The Economist, or perhaps Brad DeLong, writes about it. Until then, a contrarian viewpoint that looks forward to a multi-polar, multi-currency world (they posit the dollar, the euro, and a pan-Asian unit). Billmon also had an excellent discussion on the current economic challenges we face (one commenter references the controversy) and Robert Kuttner presents a mainstream critique of the Bush administration's weak dollar policies and its risks. Certainly the current state of the dollar has just as much, if not more, to do with trading partners such as China protecting their own selling capability here and hedging against future uncertainty in regional markets.
posted by dhartung at 7:45 PM on November 4, 2004


did you vote for kerry (rubin) dhartung? im suprised you didn't link to any krugman articles.
posted by specialk420 at 11:36 PM on November 4, 2004


specialk420: I voted for Kerry, and I guess Rubin too.

I don't have every link at my fingertip, but since you asked: Krugman: Don't Worry About the Euro. And in the course of googling I found Reserve Currency, a blog which focuses on the more general problems surrounding this issue.
posted by dhartung at 10:48 PM on November 5, 2004


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