Posted on 02/25/2006 1:55:39 AM PST by albyjimc2
India, China, former Soviet nations, several Asian countries. Is that enough or do you need some more obvious education in cultures and mind sets other than your own?
European countries with anti-American governments too.
Firstly rational people would have no defenses against what will happen and are dealing with irrational perpetrators from neo-Iran.
Secondly, there would be no rebound. You still talk and evaluate as if it were business as usual in a world of the past.
Imagine that the neo_Iran Islamic regime suddenly had 1000 nuclear bombs and the ability to deliver these onto every capital of the world. How would the world survive? It wouldn't. The economical damage resembles this level of hurt expect in methodology.
It's not a market adjustment situation and playing the currencies or stocks and bonds. It is a total, utter destruction of ALL global economies, simply beginning with the dollar. Finally ending in only those who live off the land and can thus survive or have items they can use for barter to get things they need but cannot produce themselves.
Again: this has never happened because responsible, rational people have all always co-operated to prevent upsets - even smaller ones. Now there is a rogue nation hell bent on creating irrational, irresponsible misery, havoc and destruction.
Just as the foreign fighters, Al Qaeda and neo-Iran have escalated their death and destruction in Iraq with destroying the Samarra mosque and have for some time also been killing countless Iraqis in the name of freeing Iraq. Rational? No. Defensible with troops etc.? Yes. Problem is the global economy cannot be as easily defended. In fact it cannot be defended. Not because of neo-Iran's power but the abject, delicately balanced vulnerability to attack of the global economical structures and networks.
Does this shine a light on mindsets which you now face - along with all the rest of us? Including the PRIME factor that neo-Iran WELCOMES and whole-heartedly PROMOTES the crash or obliteration of Western civilization.
Put on their thinking caps to understand this. Yours no longer works correctly in this playing field.
Russia: Oil minister has already ruled out a switch to Euros.
India: Exports/Imports virtually identical between Europe/US (circa 25% each). They also know who is on their side in the war against Islam.
Other Asian countries: Like whom? Japan? No way.
Indonesia? Who cares.
Oil is a fungible commodity. It will be purchased at the lowest price where ever it is sold all things being equal. It's the all things being equal part which gives the edge to the NYMEX and the LCE.
Those too as part of the response - though in reality their currencies would soon be worthless too and they would have to barter for the oil with their industrial products. If they could still manufacture. The situation is mind-boggling and for the first time in my life I an truly frightened by what the NEAR future may bring.
Please STOP thinking EUROS. that is NOT the factor! NOr currencies, nor as you correctly say the Yuan is pegged to the dollar. None of this will matter an iota. It will not be the same world structure but you insist on applying the old structure to a totally different planet.
It's not like this was not foreseen considering the U.S. debt rate has been in the trillions for over twenty years.
Sorry, but barter is inherently inefficient which is why it hasn't been practiced since the dawn of recorded time (except in the rare instances of initial contacts with indiginous populations).
Barter requires you to trade something you have for something that someone else has that you want. Currency allows you to trade something you have and to purchase something you want from a third party.
So you are saying the Iran is single-handedly going to overturn 5000 years of traditional trading practice?
Not likely.
YES! ASOLUTELY. Why is this so hard to understand? We are faced with an incredible (I admit, hard to believe and for you apparently hard to fathom) but horrific scenario if we allow the neo-Iran of Ahmadi-Nejad to remain and play out their hand.
You dabble with details in your answers that have nothing to do with what we NOW face. You discuss the past and YOUR present. None of this is VALID anymore. What has been done or has happened in the past 50,000 not just 5,000 years is or will soon be for nought and meaningless.
You are arguing/defending a "present" that no longer exists - or will no longer exist if Ahmadi-Nejad, Ayatollah Mesbah Yazdi and their chosen loyals play out their strategy.
If you have not read the "Mullah Threat not sinking in" on http://www.antimullah.com then please go there and do so and take it as a warning not another reason to nitpick using YOUR parameters instead of those that will appear.
We ARE facing a horrendous situation about which we can do very little. Unless we rain destruction on the neo-Iran's military and nuclear sites. Fast becoming a survival choice of "them or us".
All the best.
The objective is to put france and germany in charge of global finace instead of the US dollar.
It is strictly a political issue.
(btw saddam was three months from doing just that. )
Don't forget the best EU country's ecconomy does not break the lowest US states's ecconomies.
The objective of US dollar to euro is also a national security issue for the USA since ecconomic stability (and control) is a security issue.
IOW don't trust the French.
Iran is not the only country exporting oil...its dollar breaking strategy could only work with the co-operation of the Saudis and all other oil export nations. Iran's oil shipments could also be militarily interdicted if necessary.
Here in this country, the pain of 100+ dollar barrel oil, if properly channeled could lead to a back-lash against the rabid enviromentalism that is choking off the proper utilization of our own resources. In an emergency, after the political hemming and hawing, you'll see this country resorting to using its coal reserves.
There is so much we could do to free our-selves from foreign black-mail...but it will take a huge shock to our national psyche to bring these changes about!
Baloney.
Bump for later.
To sort through what could happen as a result of this, think of money like any other product that might have a value that isn't fixed.
Take used cars for example. Say that a used Ford Explorer has a value on the market of $5,000 and a used diesel Volkswagen has a value on the market of $10,000. Consider what would happen if the government raised taxes on diesel fuel to the point that it cost $10 a gallon. Predictably, the value of the diesel VW would fall. If you then went to a used car dealer to try and trade an Explorer for a VW, you could get a better deal. Likewise, consider what would happen if oil shot to $100 a barrel doubling the price of all fuel. In this scenario, the market value of the Explorer would fall and if you tried to do the above mentioned swap you would have to fork over an appreciable sum of $ to get the dealer to do the deal.
(Most) currencies are very similar. As an American, we hold and use dollars because they are our "home" currency. We don't think about it. However, the market value of our currency is determined by several factors: the health of our economy, the interest rate set by the Federal Reserve, and the demand for our dollars by people who want to hold them or need to use them.
In a dollar denominated oil market, buyers and sellers of oil transact in dollars and as a result both parties need to first "buy" dollars with which to buy oil. This creates a demand for dollars and just as in the scenario with the used cars, keeps the value of the dollar high. In a Euro denominated world oil market, buyers and sellers of oil would transact in euros and instead of first buying dollars to buy oil, they would buy euros to buy oil. This would cause demand for dollars to drop, and hence the "value" of the dollar would fall.
This could have several interesting side effects. A dollar with a low value would spark inflation in the US because the imported manufacturered products we consume would now be more expensive. Or, the federal reserve could try and prop up the value of the dollar by raising interest rates - theorizing that any drop in demand for the currency as a medium in which to trade oil would be counteracted by increased demand for our higher yielding debt instruments. Of course, the side effect of raising rates would be to spark an economic slowdown or recession. Another possible side effect would be a drop in our financial markets as foreign investment left our shores so as not to be exposed to the developing exchange rate risk. The price we pay for gasoline at the pump might rise as we are forced to first buy a newly appreciated Euro before we can buy oil.
I think that it's probably just too early to tell what the magnitude of the impact will be, but the potential for it to be unpleasant certainly does exist.
Your reply shows once again how "erudite" you are - as always.
Great explanation, which makes what can happen clearly understandable. Except to those who simply say "baloney" when they cannot fathom the reality of matters.
...I'll add a few more comments:
- it may be that the Fed, looking foward and anticipating these, engaged in last year's rate hikes to bring about the current 2% rate gap between US Dollar denominated debt and Euro denominated debt. Whether this gap will be sufficient...who knows?
- whenever you think of the priorities of a welfare state that engages in deficit spending, keep in mind one thing: it must defend the integrity of its money. If that disappears, the party is over. The borders can be left open to illegal immigration, the military can be upsized or downsized, foreign policy and allies can be changed. But for the show to go on, such a nation's money and debt must be protected at all costs.
lol that would be good news for the euro community.
there is only one - and it's just stubborn not really anti-american.
here comes another one 'against'
this time from the euro-perspective.
The money market has a psychological dimension also.
I think that as long as the big players like the UAE don't switch to euro there's no threat for the greenback.
If it was only Iran trading in Euros instead of Dollars the ammount of Dollars that are not bought was just not high enough to rock this very heavy boat. Federal reserve has some space to manouver interest rates upward and other players like UAE largely invested in the US share the vital desire to keep the greenback stable.
The danger lies in the scenario that Iran started a domino effect... for example if i.e. russia traded their gas in euros that would be a different story. Your trade gap would fall like a stone on you. (can you explain why this did not happen until now ? I can't but with the reason that russia needs a stabile USA as we all do)
Buyers of Iranian oil and gas still can switch to other sources on the long term. Having a stabile source of oil is a vital interest for most countries anyhow - so ahmedinedjad is burning his capital on the long term with his fire talking.
It's all about stability I figure.
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