Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: Cicero
What makes this issue more important than most people seem to think is this . . .

The Middle Eastern countries -- like many of our trading partners -- generate large trade surpluses with the U.S. due to their oil wealth. The U.S. buys oil from the Middle East, and pays them dollars in exchange. These people can't eat dollars, so the U.S. currency doesn't do them any good except insofar as they can use these dollars to buy other things. So they purchase U.S. Treasury bills, U.S. real estate, race horses, expensive cars, and other such things. One thing they also like to do is acquire reputable global corporations like P&O Ports in those lines of business that these countries value highly (global shipping, in the case of the UAE -- for some fascinating reasons that I could describe in detail if anyone wants to get my take on it).

If these countries start running up against bureaucratic opposition in the U.S. to these financial deals, they have a huge disincentive to sell their oil for U.S. dollars. With the euro now competing with the U.S. dollar as the preferred currency for international trade, the last thing the U.S. wants to do is provide them with any kind of incentive to start pricing their commodities (primarily oil, in the case of the Middle East) in something other than dollars.

118 posted on 02/21/2006 7:31:40 PM PST by Alberta's Child (Leave a message with the rain . . . you can find me where the wind blows.)
[ Post Reply | Private Reply | To 48 | View Replies ]


To: Alberta's Child
With the euro now competing with the U.S. dollar as the preferred currency for international trade, the last thing the U.S. wants to do is provide them with any kind of incentive to start pricing their commodities (primarily oil, in the case of the Middle East) in something other than dollars.

I don't think that is a serious concern. The European economies are practically on life support compared to ours and the arabs are intelligent enough to know that the Euro is simply not a strong long-term bet.
126 posted on 02/21/2006 7:35:10 PM PST by BubbaTheRocketScientist
[ Post Reply | Private Reply | To 118 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson