Will Iran's 'petroeuro' threat lead to war?

World Net Daily ^ | Posted: February 3, 2006 | Jerome Corsi

[Pox]

China's GDP is roughly 1.8 trillion USD. Their exports are roughly 750 million USD. Their exports to the US are roughly 200 million USD. A quick breakdown of the countries they export to:

US 21.1%, Hong Kong 17%, Japan 12.4%, South Korea 4.7%, Germany 4% (2004).

It doesn't take an economic genius to understand that the bulk of their exports end up here in the US via the other 4 primary countries that China exports to. All of these economies are entwined now and a significant disruption to the primary driving engine of these 6 countries, the US, will significantly effect the others.

[Pox]

What economic suicide?

What do these other nations have to buy from us?

Just what do we sell that isn't made eslsewhere for cheaper prices in China and Taiwan or Japan or Malaysia or Indonesia?

Enlighten me. Because even Boeing went to China, and they dont even need to buy American planes at all...not new ones anyways, where do you think all our old 737's went? Davis-Monthan?

Are you ignorant or being pointedly obtuse? I'm voting for the latter although you seem determined to display the former!

Roughly %40 of China's current GDP is the result of EXPORTS. Exactly WHO are they going to sell those exports to when the primary driver of their export-driven economy, the $14 TRILLION GDP of the US, no longer can afford to consume those exports?

[Philistone]

That certainly makes it a better investment than, any other currency.

And certainly better than the Euro, which, given the recent set backs to European integration, debt problems, irresponsible spending and lack of real accountability may not be around all that long...

[Pox]

Do you see a pattern here? And just what is preventing European counteries from trading in Euros for oil?

Nothing at all, except perhaps it is simpler since the US is currently the primary importer of all that oil, not to mention the Euro is not nearly as attractive as it was when this propaganda was first starting to float up from the septic tank.

Imagine that: Europe trading in Euros for oil!

Imagine that the bulk of Americans could care less and most certainly would not support any military interventions to prevent such a thing from coming to pass.

[Alberta's Child]

More competition leads to lower prices, not war.

Maybe lower prices in real terms, but not necessarily lower prices in U.S. dollars.

The author has a very good point here. If you go back over the last 60 years, you'll find that behind almost every U.S. military campaign there was an attempt on the part of the "enemy" to nationalize/control a key sector of its economy.

[Alberta's Child]

Just more made up nonsense from the Tin Foil Hat crowd. It is IRRELEVENT to the US Economy if Oil is traded in Dollars or Euros. The people HOLDING the dollars have to be able to unload them on someone for something. That means either buying up American goods or assets. The Dollars will simply transfer from one holder to another. Gee do ANY of these wack jobs understand basic Econ?

Go back and do some serious research on the 1973 "Arab oil embargo," and you'll find that what you've posted here is absolute nonsense. What the Iranians are saying is that they don't want to sell their oil for U.S. dollars -- because they believe the euro will be a more stable currency from this point forward (at least for the foreseeable future). Buying U.S. treasury bills that pay 4% interest is a bad investment when you believe the U.S. is about to embark on a long-term campaign to inflate the U.S. dollar in order to meet this country's childish, delusional expectations for big-government entitlements.

[Alberta's Child]

I just went through a LONG time of repeated unemployment because of the loss of manufacturing in the northeast.

That's an excellent point, but not entirely related to the movement of jobs overseas. The "loss of manufacturing in the Northeast" began about 70 years ago, when FDR's New Deal helped build the transportation and energy infrastructure of the South to the point where that region's cheap labor and loose regulatory climate made it an attractive alternative to the old industrial cities of the Northeast.

I could even go back further than that, and point out that the demise of manufacturing in the Northeast actually began when the advent of Henry Ford's assembly-line process basically made every multi-story industrial building in the Northeast obsolete.

[Pox]

What the Iranians are saying is that they don't want to sell their oil for U.S. dollars -- because they believe the euro will be a more stable currency from this point forward (at least for the foreseeable future).

To believe this would be ridiculous in relation to the current and future tendencies of the EU vs the US economically.

Iran wants such an arrangement simply to attempt to "do harm" to the American economy out of simple spite, regardless of the fact that said attempt will be fruitless, IMO. Your version of the reason behind their desire does not mesh with economic realities in Europe and the US, not to mention the worlds economy as a whole, IMO.

[montag813]

This piece is idiotic. If the Iranians hoped to boost the Euro, they have failed miserably.

[guitfiddlist]

What I find interesting is that Iran is giving the US and Israel every incentive in the book to attack. It's almost as if Tehran is thinking "What can we do to FORCE America and/or Israel to attack?" If they just wanted to damage the dollar they could tone down the nuclear rhetoric and just declare that they have every right to act in a global free market by setting up an oil bourse. Why should they muddy the waters with inflammatory war rhetoric?

I think they want global jihad - and the return of the 12th Imam. True nutcases are operating here - not amenable to rational economic or political incentives. I imagine the plotters reasoning thusly "Open an oil bourse to threaten the dollar? Maybe - but not good enough to really hack people up, except the members of the Fed. What can we do to give the western man in the street a howling reason to attack? How about we actively and overtly announce that we're breaking our agreement concerning uranium enrichment, let loose rumors about a March nuclear test, then threaten to wipe out Israel, then test a missile that can reach Israel and a good bit of Europe to boot? Think that'll be enough to bring back the 12th Imam? How does March look for everybody? Good, mark it on your calendars."

The whole thing seems like a well-staged opera. All the players, both friends and enemies, seem to know their part and are marching hellbent for March.

Yeah, I know - tinfoil and all that. But who can explain Iran's moves from a rational perspective?

[Christopher Lincoln]

In writing "Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil," Craig Smith and I argued that the United States should seriously consider establishing a gold-backed international-trade dollar to preserve stability and value in the international oil market.

A "gold-backed" currency will not work because nobody will trust the governments to keep their promises (and rightly not). The alternative of actual gold (and/or silver) money is one that no government will accept until it has to.

[Pox]

Perhaps those who are inciting the Muslim world to a seething mass of uneducated yet devout followers (primarily the Islamic Fundamentalist nut-bars that have been running Iran the last few decades) understand that it is the only option they have from their point of view.

The modern world is rapidly, from a historical standpoint, rejecting their "way of life" and this is their only chance at long term Despotism, in their eyes.

Education is their nemesis, IMO.

[Paladin2]

We happened to get a tour of the Old Town Canoe factory in Maine one day. It was amazing in that it is in an old multi-story, brick factory building and that the movement of units through assembly was not mechanized. The molded kayaks were done in a "new" building that did have a fair amount of automation. The few wood and canvas canoes were definately being build "the old way". It did seem like the R&D dept had a good time as there was a stream not far from the factory and they were using CAD for design of new products.

[palmer]

There is still hundreds of millions of dollars in Iranian banks, they can just dump it on the market without any connection to oil at all, and that will affect us by devaluing the dollar, even for only a short period.

I think Soros already tried to manipulate the dollar for a short period and failed. The Iranians have a lot less clout than he does. The rest of your scenario is equally implausible in the short run. Why are all those people going to dump their dollars? Because they like losing money? Because they feel like it?

In the long run there is no question the dollar is dead just like every other fiat currency. But why would anyone in their right mind trade dollars for euros? They will be just as dead and sooner. The dollar won't die because the Iranians want it to, but keep repeating your prediction for each new country, Venezuala, etc and someday you will be right.

[palmer]

The author has a very good point here. If you go back over the last 60 years, you'll find that behind almost every U.S. military campaign there was an attempt on the part of the "enemy" to nationalize/control a key sector of its economy.

If you go back more than 60 years then "almost every" might be right. Or are you going to argue that we fought Germany because they tried to nationalize their economy. Are you going to argue that fighting the spread of communism was equivalent to fighting the spread of nationalized economies?

[Alberta's Child]

I'll ask a question and then make a statement for you to think about . . .

1. Why did we fight Germany?

2. I'm going to suggest that we never really "fought the spread of communism" at all.

[Pox]

I'm going to suggest that we never really "fought the spread of communism" at all.

That would be a surprise to the residents of Grenada, or did their overwhelming economic might overstep their bounds and draw the ire of Reagan?

Precisely what is the current cost of a tin-foil hat? :-)

[Paul_Denton]

Yeah there may be an economic disaster, but it is preferrable to letting that nut, Ahmadinejad getting nukes and using them against the west (nuclear detonations on major cities will also spell doom for the economy anyway).

[palmer]

I think the best answer to your question is that the British had better lobbyists. I don't think, as your question suggests, that we were fighting against economic nationalism. If anything by fighting Germany we helped spread Stalinism, one of the worst forms of economic nationalism. I guess I'll just have to think about your second point and not say anything.

[rebel_yell2]

If this is the kind of crap that the "Swift Boat" veterans are peddling today, then I want my donations back. I've read more reasoned discussions on DU, from where this misinformation might have come.

I have only one question: What trader would conduct business on an Iranian exchange?

The answer: None.