Decline of the dollar: How long term and whassit mean?
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A Dashing Blade
Takes horses to water but can't make donkeys drink
ymu said:
That's your considered response?
So that's a resounding no then, you can't demonstrate show me where I implied I was implying that . . .
ymu said:
Ergo you are stooping to the kneee-jerk bullshit politics of "just because you disdagree with me, you must agree with them". FFS, you a "Question Time" audience reject or summat?
david dissadent
New Member
A summary of the arguments can be found here.
http://en.wikipedia.org/wiki/Petrodollar_warfare
The crux of the argument is that denominating an oil bench mark in a currency other than dollars would other nations to hold more of that currency (usualy the euro) and less dollars. This would make the dollar weaker and mean the US could no longer afford such exhorbitant trade deficits. It is not wildley popular in mainstream economic press like the FT or the Economist.
http://en.wikipedia.org/wiki/Petrodollar_warfare
The crux of the argument is that denominating an oil bench mark in a currency other than dollars would other nations to hold more of that currency (usualy the euro) and less dollars. This would make the dollar weaker and mean the US could no longer afford such exhorbitant trade deficits. It is not wildley popular in mainstream economic press like the FT or the Economist.
ymu
Niall Ferguson's deep-cover sock-puppet
Actually no, I mistook you for Zoltan returning to defend the point I had responded to. If you did not intend to defend his point, what was your point? As I've already said, the oil bourse is not the point - dollar hegemony is. So what was the point you intended to make? I missed it, so you'll need to explain it or we'll just go round in circles.A Dashing Blade said:That's your considered response?
So that's a resounding no then, you can't demonstrate show me where I implied I was implying that . . .
Ergo you are stooping to the kneee-jerk bullshit politics of "just because you disdagree with me, you must agree with them". FFS, you a "Question Time" audience reject or summat?
A Dashing Blade
Takes horses to water but can't make donkeys drink
Fair enough.ymu said:
david dissadent
New Member
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3j1ILNmtQrA&refer=home
The world is fighting against the markets to try to keep the dollar high vs there own currencies. It has shades of the old begger thy neighbor exchange rate policies Bretton Woods was meant to end. (no where on that scale though). It seems almost everyone likes a strong dollar except Adam Smiths mythical guiding hand.
The world is fighting against the markets to try to keep the dollar high vs there own currencies. It has shades of the old begger thy neighbor exchange rate policies Bretton Woods was meant to end. (no where on that scale though). It seems almost everyone likes a strong dollar except Adam Smiths mythical guiding hand.
Backatcha Bandit
is not taking your calls
ymu said:
*Ahem* I wonder where he got the idea to do that?
http://www.urban75.net/vbulletin/showthread.php?p=6628591#post6628591
(Hint: I did it first, my graph is better and I include the data sources.
)
AnnO'Neemus
Is so vanilla
Reuters are reporting that UAE is facing mounting domestic pressure to drop the dollar peg.
Backatcha Bandit
is not taking your calls
david dissadent
New Member
One thing to bear in mind the US owes increadible debts to the world, its federal debt is growing towards $10 trillion. If it cannot grow fast enough to pay of its debts it can always inflate its way out of debt. This is a high risk low return strategy but at 5% inflation rate they effectively cancel out the interest on there repayments. It is not a good idea but it may be there only choise that they can swallow in the short term.
A Dashing Blade
Takes horses to water but can't make donkeys drink
Another idea would be to allow foreign holders to swap debt for assets, there's too much protectionism in the US atm (thinking in terms of that Dubai (?) mob who were banned from buying something -an airport?- in the US recently).david dissadent said:
A Dashing Blade said:
Yes that was Dubai Ports and the UAE from last year. FT. March 9 2006
Protectionism and competitive devaluation risks war in my honest opinion.
david dissadent
New Member
The US state does not own those assets so that it would not be a direct swap. P&O owned a group of ports in the US and Dubai Ports World was looking to buy them out that would have given an Arab company control of US ports. The deal was squelched largley on racism. However this is something of a valid argument about soveirgn wealth funds owning strategicaly important companies, as these funds are in effect controlled by foriegn states. They are not free market entities.A Dashing Blade said:
The other famous example was the Chinese attempts to buy Unocal, an oil company that was also stopped.
But in principle I agree that the US should allow foriegn ownership of far more of its assets this would repatriate dollars changing worthless paper for real assets, reballancing world trade and helping to reduce the current crisis.*
Direct swapping of debt for assets would be difficult as after years of privitisations the US have precsious few assets. Most likely the only thing it could still swap would be gold for debt. (but they only hold about $163 billions worth of gold vs about $8000 billion of debt).
That is the bugger about living beyond your means. When it catches up with you its a real sting in the wallet.
*edited to add it would also restore confidence in what ultimately amounts to the fungibility of dollars. If China and Saudi start believing they are being lumped with trillions of dollars that they cannot buy anything other than Lexus' and F-22s with they may start looking for a currency they can buy with. The other side of the argument is they could always plough the billions and trillions into developing themselves as world centers of bussiness excellence and development.
ymu
Niall Ferguson's deep-cover sock-puppet
But they're stuck with loads of devaluing dollars - so they either have to do this by buying things they can buy with dollars (like, I guess, huge US corporations that can be relocated to China, or US-based assets that will churn over a steady profit for the state coffers) or they have to convert dollars into a more useful currency for internal development. Neither is terribly good news for the US.david dissadent said:
Fizz_gig
I want sun!!!!
No one seems to have pointed out that the dollar has been falling fairly steadily again the Euro and the £ for the last three years. This latest fall is nothing compared to 2003-4 when £1=$1.50 to being £1=$1.85 (approx) This most recent fall is not a big surprise. Most likely means that there is a continued lack of confidence in the American markets, as has been the case over the last few years anyway.
Lolz
Rapper Jay-Z dissing the dollar - and using euros instead ...
http://news.bbc.co.uk/1/hi/business/7097736.stm
Rapper Jay-Z dissing the dollar - and using euros instead ...
http://news.bbc.co.uk/1/hi/business/7097736.stm
A Dashing Blade
Takes horses to water but can't make donkeys drink
I don't understand how you think that could be correct.warren said:
Why don't you start out attempting to justify that logic . . .
david dissadent
New Member
The Euro probibly deservse a thread of its own. It is a currency of highly diverse nations and this is one of its first real tests. Just how the Spanish, Italians and French get along with the Germans on agreeing interest rates and so forth will be enlightening.chymaera said:
Backatcha Bandit
is not taking your calls
TAE said:
See post #41 above for video.
Buried in the FT's front page story today from the OPEC meeting Riyadh was the Saudis saying behind closed doors that if OPEC so much as mentions there has been pressure to switch to euros, or been debating the weakness of the dollar, the dollar will collapse.
Unfortunately for him, the mics were still on....
I'll find a link.
But way FT downplayed it suggests earlier comment about it being true but FT and Economist hushing it up 'cos too scary rings true.
Unfortunately for him, the mics were still on....
I'll find a link.
But way FT downplayed it suggests earlier comment about it being true but FT and Economist hushing it up 'cos too scary rings true.
Here we go
http://www.ft.com/cms/s/0/0a747e70-9641-11dc-b7ec-0000779fd2ac.html
It's quite hard to find on the website and no way does that headline reflect the top line of the story.
http://www.ft.com/cms/s/0/0a747e70-9641-11dc-b7ec-0000779fd2ac.html
It's quite hard to find on the website and no way does that headline reflect the top line of the story.
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Opec economies to study effects of falling dollar
By Ed Crooks and Javier Blas in Riyadh
Published: November 19 2007 02:00 | Last updated: November 19 2007 02:00
Opec is to study further the effect of the falling US dollar on its economies following calls for it to price oil in currencies other than the greenback.
The move, which emerged at the summit of cartel leaders in Riyadh, was an attempt to bridge the divide within the group over how to respond to the dollar's decline. Iran and Venezuela had pushed for Opec to move away from the dollar in the face of strong opposition from the summit's host, Saudi Arabia.
Mahmoud Ahmadi-Nejad, Iran's president, said after the leaders' meeting that the falling dollar meant oil producers were subsidising the US government and people.
"They get our oil and give us a worthless piece of paper," he said. "We all know that the US dollar has no economic value."
The dollar has dropped 16 per cent this year against a basket of major currencies, and 44 per cent against the euro since the last Opec summit in Caracas, Venezuela, in 2000. Iranian officials have said that the average price of a barrel of their oil so far this year is, at $63, only $2 higher than for the same period of 2006. Priced in euros, oil has been cheaper this year than last year.
Finance and foreign ministers from Opec countries are to meet in Abu Dhabi in the next few weeks to discuss the effect of the dollar, a move hinted at in an oblique reference in the summit's closing declaration.
On Friday, Prince Saud Al-Faisal, Saudi Arabia's foreign minister, warned that the dollar could "collapse" if the US currency was mentioned in the declaration.
His remarks - made in what was supposed to be a closed ministerial meeting - were accidentally broadcast to reporters.
After the summit, Prince Saud played down the significance of the ministers' further examination of the dollar problem, saying it did not have any "hidden implications" and reflected Opec members' duty "to maximise the return from their resources".
He added: "Everybody is very anxious in the international community . . . Hopefully we can find a way to safeguard our economies in these uncertain times."
Saudi Arabia has large dollar-denominated reserves and suffers from any fall in the US currency.
Iran has been pressing the group to look at the option of pricing Opec's oil with reference to a basket of currencies, rather than the dollar. Such a move would not necessarily drive the dollar down. Iran notionally prices most of the oil it sells in euros, but in practice receives a dollar price in world markets.
But a move by Opec to drop the dollar would be taken in financial markets as a signal that member countries would shift their holdings of foreign exchange reserves away from the US currency.
The dispute over the dollar reflected the differences between leaders who are united by little other than their oil reserves.
Hugo Chávez, Venezuela's left-wing president, gave a speech calling for a "revolutionary Opec" that contrasted sharply with King Abdullah of Saudi Arabia's promises of support for the world economy.
The declaration focuses on the issues on which the leaders could agree: principally the need to secure the long-term place of oil in the world economy by assuring consumer countries that supplies will be available to meet their needs, and addressing the effects of oil and other fossil fuels on climate change.
Opec economies to study effects of falling dollar
By Ed Crooks and Javier Blas in Riyadh
Published: November 19 2007 02:00 | Last updated: November 19 2007 02:00
Opec is to study further the effect of the falling US dollar on its economies following calls for it to price oil in currencies other than the greenback.
The move, which emerged at the summit of cartel leaders in Riyadh, was an attempt to bridge the divide within the group over how to respond to the dollar's decline. Iran and Venezuela had pushed for Opec to move away from the dollar in the face of strong opposition from the summit's host, Saudi Arabia.
Mahmoud Ahmadi-Nejad, Iran's president, said after the leaders' meeting that the falling dollar meant oil producers were subsidising the US government and people.
"They get our oil and give us a worthless piece of paper," he said. "We all know that the US dollar has no economic value."
The dollar has dropped 16 per cent this year against a basket of major currencies, and 44 per cent against the euro since the last Opec summit in Caracas, Venezuela, in 2000. Iranian officials have said that the average price of a barrel of their oil so far this year is, at $63, only $2 higher than for the same period of 2006. Priced in euros, oil has been cheaper this year than last year.
Finance and foreign ministers from Opec countries are to meet in Abu Dhabi in the next few weeks to discuss the effect of the dollar, a move hinted at in an oblique reference in the summit's closing declaration.
On Friday, Prince Saud Al-Faisal, Saudi Arabia's foreign minister, warned that the dollar could "collapse" if the US currency was mentioned in the declaration.
His remarks - made in what was supposed to be a closed ministerial meeting - were accidentally broadcast to reporters.
After the summit, Prince Saud played down the significance of the ministers' further examination of the dollar problem, saying it did not have any "hidden implications" and reflected Opec members' duty "to maximise the return from their resources".
He added: "Everybody is very anxious in the international community . . . Hopefully we can find a way to safeguard our economies in these uncertain times."
Saudi Arabia has large dollar-denominated reserves and suffers from any fall in the US currency.
Iran has been pressing the group to look at the option of pricing Opec's oil with reference to a basket of currencies, rather than the dollar. Such a move would not necessarily drive the dollar down. Iran notionally prices most of the oil it sells in euros, but in practice receives a dollar price in world markets.
But a move by Opec to drop the dollar would be taken in financial markets as a signal that member countries would shift their holdings of foreign exchange reserves away from the US currency.
The dispute over the dollar reflected the differences between leaders who are united by little other than their oil reserves.
Hugo Chávez, Venezuela's left-wing president, gave a speech calling for a "revolutionary Opec" that contrasted sharply with King Abdullah of Saudi Arabia's promises of support for the world economy.
The declaration focuses on the issues on which the leaders could agree: principally the need to secure the long-term place of oil in the world economy by assuring consumer countries that supplies will be available to meet their needs, and addressing the effects of oil and other fossil fuels on climate change.
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