NEWSFLASH! The U.S. GDP is $12,000 Billion per year.
$43.5 Billion is therefor only .003625% of America's annual production.
Lets keep our eye focused on the larger side of the pie, shall we...
Posted on 10/17/2003 8:35:58 AM PDT by the_greatest_country_ever
The Poisoned Well By FOUAD AJAMI
It was not so much the guns of Oct. 6, 1973, and the assault of the Egyptian and Syrian armies against Israel, that changed contemporary history and remade our world. It was the use 11 days later of the "oil weapon," and the price increases that followed, which tipped the scales of history. By the time OPEC unsheathed the oil weapon, 30 years ago today, the tide of battle had turned. Israel had regained the initiative: its soldiers had crossed to the western side of the Suez Canal, and were within striking distance of Damascus as well.
It was then, on the edge of yet another Arab calamity, that the Saudi monarch, King Faisal, broke with his American protectors and began what turned into a frontal assault on the very bases of the post-World War II international order.
On Oct. 17, 1973, the Organization of Petroleum Exporting Countries raised the price of oil to more than $5 a barrel from $3 a barrel; a day later it cut production by 5 percent a month; three days later, it imposed an embargo on petroleum exports to the United States. Then the shah of Iran struck with a rebellion of his own.
In Tehran, just before Christmas, he secured the consent of the other oil-producing nations for yet another price increase, to $11.65 a barrel.
In the "Thousand and One Nights," the recurring theme is of the beggar becoming king and the king a beggar. So it was when OPEC imposed its embargo. It was an attempt to turn the stuff of fantasy into reality, to make the largest transfer of wealth in the annals of nations.
Secretary of State Henry A. Kissinger was among those who realized this. "Never before in history," he wrote in his memoirs, "has a group of such relatively weak nations been able to impose with so little protest such a dramatic change in the way of life of the overwhelming majority of the rest of mankind."
No tears were shed, though, for the old order of things in those countries rich with oil, or in the large stretches of the Arab-Muslim world on their periphery. The peoples of those lands had long dreamt of just such a moment. They hadn't quite foreseen how the dream would play out.
Still, the modern nationalisms of the Arabs and the Iranians had always revolved around the use of oil; the grievances of these nationalisms were tales of how Western prospectors and explorers, and their powerful world-spanning companies, had worked their way on the politics of the Arab Middle East and brought about its subjugation.
These lands, it seemed, were now done with that history. Everywhere in the Arab world there was a palpable sense of excitement, of defeats avenged. Nothing was out of reach.
New wealth would bring the latest technology and training and secure the withdrawal of Israel from the lands it occupied in 1967. Modern history itself could be short-circuited; poor, unskilled societies would be able to join the era of technology and industry.
For a historically minded people, this new wealth signaled the return of history, the bestowing of a second baraka (blessing) on the Arabian Peninsula. The first, of course, had been the rise of Islam in the first half of the seventh century. But Islam's power, and its center of gravity, then shifted to other lands — to Damascus, Baghdad, Córdoba, Cairo, Istanbul.
When the balance of power tilted back to the Arabian Peninsula, it was said to be piety's vindication. Lands hitherto left to pestilence and anarchy — in the desert domains, locusts were a common source of protein before the age of oil made possible more lavish meals — were given a sign of divine favor and its material rewards.
In the days of scarcity, Kuwaitis had led a harsh, simple existence: they were pearl divers and fishermen who sailed their dhows to ports in India and the Arabian Sea. They had known hunger and need.
Now the world came calling on Kuwait. The cities of the Levant and the Fertile Crescent, which had brokered the meeting of the civilization of the West with their own, were reduced to begging for a share of the new wealth.
There was a diminishment of Beirut, Damascus, Cairo, Tunis, and a new ascendancy of the oil states. Hucksters and peddlers of every kind and contraption descended on the oil states.
The wealth worked its way into these societies with astounding velocity. A world that had been whole, where people had little but shared more, was bulldozed. The social balance was ruptured.
A fault line opened between those who fell into riches and those left behind. The ditch was even deeper if measured by cultural pretensions; there were those who succumbed to the ways of the glamorous foreign world and those who watched and lamented as their world and its verities spun out of control.
This second group soon fell back on an aggrieved nativism. The new wealth had a new nemesis: Americanization was overtaken by a fierce anti-Americanism, a mighty wind of wrath and resentment.
A Pied Piper rose in Iran: a turbaned mullah, Ayatollah Ruhollah Khomeini, who summoned his people back to the safety of tradition. A middle class created by the oil wealth, educated men and women who would live to regret their new religious zeal, rallied to him.
The shah of Iran, Muhammad Reza Pahlavi, had been one of the chief architects of OPEC's policy; he had wanted to turn his country into an Asian Germany, to extirpate the role of the religious class and to herd his people into the modern age. He was the first victim of oil's curse. A bare five years after he engineered the big price hike, he gathered a handful of soil, left his country, and started roaming the world in search of a place of exile.
From the distance of three decades, we can see oil's curse — and its ambiguous gift.
It wasn't just Iran that was undone by sudden wealth. On the shores of the Mediterranean, Algeria succumbed to barbarous slaughter; a war erupted between that country's rulers and insurgents who draped their wrath, and the fury of their dispossession, in Islam's banners: Hezbollah (the Party of God) on one side, Hizb Fransa (the Party of France) on the other. For nearly 15 years, the slaughter went on in the cities of the country, while the work of oil continued uninterrupted in the Sahara.
The killer squads of the regime and the merciless insurgents both fought for oil's bounty.
In Iraq, the ruin had a different story line: here oil was tethered to state terrorism, and a displaced peasant thug from the town of Tikrit, fired up by the dreams of money and oil, set out to wreck his country and to plunge the world into endless discord.
We are still in the grip of that historical moment. That wayward son of Arabia, Osama bin Laden, is a child of the oil revolution. He came of age amid the new wealth; it was petromoney that he took to the impoverished mountainous land of Afghanistan.
And it was petromoney that brought about the demographic explosion that has swamped and unsettled Arabia. Thirty years ago, less than 7 million people lived in Saudi Arabia; today the estimate is about 17 million. For every member of the lucky generation that came into its own in the years of plenty, there are several more younger claimants now choking on failure and disappointment.
The mind plays tricks here: as the wealth of 1973 was evidence of divine favor, so the retrenchment is a sign of divine disfavor, and a call on the faithful to rectify the course of history. Belligerent piety now fills the void, gives order and meaning to the capricious cycle of history, its boom and bust.
Men and women are not given the gift of foresight. If they were, would the crowds that thrilled to what October 1973 represented have been so triumphant, knowing the heartbreak and ruin that lay in store for them, and for us all?
Fouad Ajami, professor of Middle Eastern studies at Johns Hopkins University, is author of "Dream Palace of the Arabs: A Generation's Odyssey."
NEWSFLASH! The U.S. GDP is $12,000 Billion per year.
$43.5 Billion is therefor only .003625% of America's annual production.
Lets keep our eye focused on the larger side of the pie, shall we...
The Nation's international deficit in goods and services decreased to $39.2 billion in August, from $40.0 billion (revised) in July, as imports decreased more than exports.
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Tell it to the hourly workers, auto workers, IT workers, progammmers, textile workers, and a host of others who are losing jobs to overseas workforces.
The economy and jobs are just as big of bombs for Dubya in 2004 as they were for his dad in 1991.
My very sincere apologies to you! (believe me, when I intend to offend (rarely), there will be no doubt in your mind!).
Do please note that in my response there was absolutely no ad hominem comment, except if you choose to consider that ''you're two administrations too late'' is somehow, mysteriously, ad hominem.
No politician's stated estimate of what ANY programme will cost is even worth reading and, (ad hominem for the first time) certainly not believing for a nanosecond, and, if you haven't got that far in your political/economic views yet, you're too bloody dumb to breathe, let alone vote.
That's my whole point of Post #41. The import/export imbalance ($39 Billion per month now) is such a tiny fragment of our overall economy ($12 Trillion per year) that it hardly factors in.
Stop looking at the tree in front of you and begin to comprehend that there are thousands of forests all around you!
Don't look now, but unemployment is already falling below 6% (the level at which has always been historically considered "full employment"), and should the Dollar drop further, so too will our unemployment.
It's not just Europe. In the past two yearsthe US dollar has dropped ~20% against the Canadian dollar and over 10% against the Yen. As far as that being good for US made goods, the drops in the dollar over the past two years has not stopped the loss in the number US manufactured goods. We do produce a hell of a lot of grain, but that has been more than offset by manufactureres closing up shop in the US and moving that capacity out of the country. All a weakening dollar is going to do is increase prices for consumers in the US. It may help the agricultural sector, but it's not going to spur demand for US manufactured goods because the US is not a friendly environment for manufactureres.
Lets keep our eye focused on the larger side of the pie, shall we...
You're comparing annual GDP to a monthly ballance of trade figure. Right now our annaul balance of trade deficit is approaching 6% of GDP. No country can operate with that kind of deficit for very long without serious economic consequences.
The Dollar has dropped more than 20% against the Euro and other currencies in the last few months, yet we haven't seen U.S. prices of homes and cars and aircraft and boats and clothes go up 20% in those same few months.
Why not?
Well, for starters, the U.S. Dollar has only dropped in value against other foreign currencies, not against itself (i.e. inflation).
Going on a European vacation might cost you a bit more right now, but vacationing in the U.S. still costs about the same, for instance.
Likewise, oil exporters, who get paid for their oil in U.S. Dollars, can still buy the same amount of American goods, services, stocks, and bonds...at least, they can do so inside America herself.
Their Dollars are still just as good here as before since inflation hasn't set in.
And why hasn't inflation set in? Higher productivity here in the U.S., for one thing. For another thing, the foreign exchange value of the Dollar is only a very small part of the overall economic equation. Imports are only 9% of our economy, for example, and they are offset by about 6% of our GDP that comprises our own exports.
And the difference between our imports and exports, what people call our trade imbalance, is the percentage of our GDP that is affected by fluctuations in the foreign exchange value of our Dollar...and that 3+% of our annual GDP is the small piece of the pie compared to the 97% of the rest of our economy.
In short, the foreign exchange drop in the value of the Dollar affects only a minor portion of our economy (and that impact is positive for our manufacturers, btw).
Sadly, there are others (not you) who either deliberately or ignorantly confuse "inflation" with the entirely different thing known as foreign "Exchange Value" as if they were one in the same...as if whenever the Dollar drops in foreign exchange value that you would get the same amount of domestic inflation here. Some of those people are even degreed economists.
But anyone who can see that we haven't had 20% inflation even though the Dollar has dropped 20% against the Euro...will surely see through such confusion.
Let's do the basic math.
Our most recent monthly trade imbalance is $39 Billion. Extrapolated over 12 months would yield an imbalance of $468 Billion.
Divided by our $12 Trillion annual economy would give us 3.9%.
So the most recent government data that we have shows a current trade imbalance of less than 4% per year. Interestingly enough, our overall economy is growing somewhere between 3.3% and 6.5% per year...hardly a trend that is dangerous to us.
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