Posted on 02/25/2006 1:55:39 AM PST by albyjimc2
I was hoping someone with a firm grasp on economics could help me with a lack of knowledge on the subject of selling oil in dollars to euros. Is this certain to happen and what would the reason be? Any help would be greatly appreciated. Thanks.
reasons would be 2 major ones
1) fiscal & trade policies of the US erode confidence in the dollar as a reserve currency.
2) political, some countries (iran, Venezuela) want to do it just because of who the currency is issued by.
ON THE NET...
http://www.google.com
http://www.google.com/search?hl=en&q=%22oil+in+euros%22&btnG=Google+Search
http://news.google.com/news?hl=en&ned=us&q=%22oil+in+Euros%22&ie=UTF-8&scoring=d
Pray that it doesnt happen, for it is does, the worlds economy will tank like never before. This issue alone is worth going to war with iran over.
http://www.antimullah.com/
The author of this blog is the first person I read on the subject.
It is not a sure thing, but Iran is pushing it. So was Saddam. Some believe it was the final straw in deciding to invade to ensure the Dollar was prominent in the world economy.
fyi
The reasons to switch to Euros are purely political. The future of that currency whether it is used for oil trading or not is not bright, and its history not long.
With European countries considering the abandonment of the Euro and a return to their sovreign curencies, trading in Euros is not a great idea unless you are going short.
Oh, horse-fudge. FUD hawking and nothing more.
The mother of all tanks? Sorry! I couldn't resist..
A lot depends on how swift or gradual it were. If it were swift, it would be very ugly for everyone involved, which is why it won't be. The Europeans don't want it to be swift any more than anyone else.
Now, if it were gradual, that's a whole nother matter. The most plausible scenario I think for a transition would be using both for a time, with a steady switch over to euros. In that case, the biggest *long term* effect would be that the United States would need to seriously reduce its deficit spending. In short, it would become a more 'ordinary' economy.
There would be other effects too, but that would be the most crucial. It's worth keeping in mind that Japan and Europe have highly developed economies without the support of the oil dollar benchmark.
Here in reality, while there is considerable grumbling about aspects of the euro transition, there is no European country that is even remotely considering the abandonment of the euro in any serious way whatsoever.
Italy
Oh horse fudge huh? Let me see, there is how many trillions of dollars floating around the globe? I mean not in the USA. Now tell me what happens to those dollars when they are no longer needed? Yes, thats right, they return to the USA, dont they? You can figure out the rest, or maybe you cant, i dunno.
Reducing the deficet would of course have to be done. Now just imagine the USA with no deficet? Just imagine what crashing the USA economy would do to all of the worlds economies? Not a pretty sight at all. On a side note, who would buy all that chinese garbage?
"Here in reality, while there is considerable grumbling about aspects of the euro transition, there is no European country that is even remotely considering the abandonment of the euro in any serious way whatsoever"
There's also no serious move to transition to petroeuros aside from in a handful of nations whose move would do little to impact the dollar's position as a reserve currency.
As for Caesar's comments, we've been over this topic repeatedly in the past, but it doesn't seem to dissuade people from making the same arguments over, and over, and over, regardless of the facts. Economics is a topic rife with ignorance in mainstream discussion, and people play off that ignorance for their own political gain.
Unless I'm sorely mistaken, in Italy there was one minister from one of the junior partners in the coalition (the Northern League iirc) that talked about it. That is not a serious move to revert to the lira.
Have you checked the current state of being of the EU economy. Rush says that "OUR" First Quarter GDP estimates have the 2006 1st quarter coming in with growth higher that 6%. Second quarter estimates are even higher. The dollar is steadily gaining on the euro, and if these figures hold up, two things are certain:
1) euro's will not be replacing Dollars
2) the dims lies about our economy will be put to death once and for all.
2a) willie green will be sad... very sad!
This is a GROSS oversimplification, and assumes so much that has nowhere been in evidence.
First of all, who says that these dollars are "no longer needed". They are needed everywhere, and for hundreds of thousands of international transactions aevery day that demand liquidity and stability. Can another currency serve as well? many can. If you recall, there was a time that the Swiss Franc was the alternative international currency of choice. So, now its the Euro. Big deal. Dollars aren't going to going out of favor any time soon.
And what if they do go out of favor? "The dollars are going to come home!" This has been the twig shaken at the elephant for the past fifty years. All those dollars stuck in matteress all over eastern Europe were going to come out and come home. Petro-dollars, Euro-dollars, you name it, they were all at one time or another going to "come home", to the FUD of all the clacking chickens. Well, they aren't coming home for free, that's for sure. The only way they are coming home is if people want to sell them for some other currency. As this happens, the value of the Dollar will indeed decline - wor a while. This has already happened, making the US Dollar the best monetary buy in the world. Far from fearing a Dollar decline, I expect a long term appreciation of the greenback over the next two to three years. We'll see the Euro back beneath parity so soon you'll be amazed. The covers of Newsweek and time will feature the dollar sign and trumpet "The Rise of the Greenback"! Meanwhile, watch what happens to those countries that experiment with the Euro. Governments will fall over the shakeout flowing from this stupidity.
Interesting, educational topic. Thanks. Thanks to all linkers/contributors.
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