OPEC conciders ditching the U.S. Dollar

[Merkava_4]

Quote:
If OPEC were to switch to the euro as the standard for oil transactions, it would have serious ramifications for the US economy. Oil-consuming economies would have to flush the dollars out of their central bank holdings and convert them to euros. Some economists estimate that with the market flooded, the US dollar could drop up to 40% in value. As the currency falls, there would be a monetary evacuation by foreign investors abandoning the US stock markets and dollar-denominated assets. Imported products would cost Americans a lot more, and the trade deficit would be magnified.

It is foreign demand for the US dollar that funds the US federal budget deficits. Foreign investors flush with dollars typically look to US treasury securities as a means of secure investment. With a large reduction in such investment, the country could potentially go into default. Things could turn very bad, very quickly.

In May 2004 an additional 10 member nations will join the European Union. At that point, the EU will represent an oil consumer 33% larger than the United States. In order to mitigate currency risks, the Europeans will increasingly pressure OPEC to trade in euros, and with the EU at that stage buying over half of OPEC oil production, such a change seems likely.


OILEMPIRE


Quote:

"They get our oil and give us a worthless piece of paper," Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed U.S. President George W. Bush's policies for the decline of the dollar and its negative effect on other countries.


Kiplinger



This can't be good.

 

[Papa Bear]

There was a piece in our local newspaper the other day saying that they would welcome Canada into OPEC...

Time to trade in my "loonies" for euros.

 

[Al]

And the sad reality is our Politicians have no idea how serious this is. Soviets collapsed bc their money was worthless. I don't think the U.S. defaultiong is impossible.

Our government is not only broke its the biggest debtor nation on the planet. I have said many times the true Terrorists that will destroy us are the ones occupying the Senate and House chambers.

 

[Jethro]

Originally Posted By: Al
And the sad reality is our Politicians have no idea how serious this is. Soviets collapsed bc their money was worthless. I don't think the U.S. defaultiong is impossible.

Our government is not only broke its the biggest debtor nation on the planet. I have said many times the true Terrorists that will destroy us are the ones occupying the Senate and House chambers.


Amen.

 

[Pablo]

This is not new news. I guess the rest of the world won’t care if the USA goes down the tubes.

The world listening to two whack jobs would be NEW news. Last time I checked, mac-mah-dinnah jacket and shouldgo katshetvez are not in charge of the world.

The US stupidity knows no bounds, we should be drilling ANWAR NOW, drilling off our coasts, using our NG assets, using Nuclear power….but oh no, we have to rely on whack jobs for energy and it seems to me our press, environmentalists and politicians enjoy being hooked up to Iran and Venezuela.

 

[moribundman]

Originally Posted By: Pablo
This is not new news. I guess the rest of the world won’t care if the USA goes down the tubes.


Everybody likes having a big, strong, powerful and influential friend who gets things done. The opposite of all that is true just the same.

 

[oilyriser]

The US dollar is not backed by good fiscal discipline.

 

[NJC]

Originally Posted By: Papa Bear
There was a piece in our local newspaper the other day saying that they would welcome Canada into OPEC...

Heh. OF COURSE they will badger us to belong to the OPEC World Oilgopoly Country Club (say that one fast). Since Canada contributes a hefty volume to world oil supplies, it would beneficial to decrease our production to raise prices. So without a Canadian OPEC affiliation, we can keep the production going full steam ahead.

 

[Gary Allan]

Originally Posted By: Al
And the sad reality is our Politicians have no idea how serious this is. Soviets collapsed bc their money was worthless. I don't think the U.S. defaultiong is impossible.

Our government is not only broke its the biggest debtor nation on the planet. I have said many times the true Terrorists that will destroy us are the ones occupying the Senate and House chambers.


They had plenty of help from the financial sector. I didn't see Greenspan objecting to fiscal policy until he wasn't the head of the Fed ..then after ..he warns us of the stuff that was obvious to those who were awake enough. Wall St. thanked him for his extended cooperation.

Even our resident economic scholars don't seem to object to fiscal policy as long as their portfolio is advancing.

When they see my rants they think that it's some manifestation of "sour grapes". It's kinda like the saying "A liberal is just a conservative that hasn't gotten mugged yet". It's just that their number hasn't been pulled out of a hat yet. Well, it appears, that EVERYONE'S name got pulled out the hat this time.

Now people can relate a bit more to this "we stuff" and how, when you allow the foundation of your society to erode for the gain of the few, you're sawing the legs out from under yourself.

Then again, it's a relative argument when you're advancing ..if the floor is collapsing all around you ..you may not notice the difference. You still perceive that "they're dragging me down!!" (woe is me)..etc..etc.


Hail free trade!! Hail debt run economics!! Hail unthrottled wholesale commerce!! Hail referrences to "balance of payments"!!

Can I get an amen?!!

Who stole your cheese?

 

[cmhj]

OPEC had talked of being paid in Euros over 3 years ago. So, what's new?

 

[Drew99GT]

The dollars down 25% against the Euro in those 3 years?

 

[Shannow]

Won't happen.

Look what happened to the last country that tried trading in Euros.

 

[CivicFan]

Originally Posted By: Shannow
Won't happen.

Look what happened to the last country that tried trading in Euros.


Yeah, but a lot has changed since then. We are still dangerous but the costs are starting to catch up.

 

[Al]

Originally Posted By: Gary Allan
I didn't see Greenspan objecting to fiscal policy until he wasn't the head of the Fed ..then after ..he warns us of the stuff that was obvious to those who were awake enough.

Exactly..he has now got religion. He magically went from the dumbest man to the smartest man in the financial world on the day he left the Fed. To me though..he remains the dumbest.

 

[ToyotaNSaturn]

Originally Posted By: oilyriser
The US dollar is not backed by good fiscal discipline.


Neither are much of the U.S. people! How many people are thousands in debt beyond a house or car payment just to have the latest & greatest toys? How many have had divorce shatter their finances...or a spouse run away with all the money?

How many have never been taught anything about how NOT to spend our money? Or our time? Or our resources? Or our bodies?

We're told only to "do it!".

Arrgghhh!

 

[Merkava_4]

Quote:
An American-backed junta in Iraq would also enable the US to smash OPEC's hold over oil prices. The US or its client regime could increase Iraqi oil production to levels well beyond OPEC quotas, driving prices down worldwide and weakening the economies of the oil producing nations, thus lessening their likelihood of abandoning the dollar. It would have the short term effect of reducing the profits of domestic oil companies, but the long term effect of securing America's economic hegemony.



Quote:
The frequently offered canard of the Left that this war is being fought to secure oil revenues for American oil companies may have some truth to it. However, a more plausible explanation may be that the Bush administration is waging war to protect the dollar and smash the OPEC hold over international oil prices. It's a war whose purpose is bigger than Halliburton or Exxon: it's a war being fought to maintain America's position in the world.



OILEMPIRE


That's an interesting perspective.

 

[Gary Allan]

Quote:
Neither are much of the U.S. people! How many people are thousands in debt beyond a house or car payment just to have the latest & greatest toys?


Well, it kinda puts the term "consumer demand" in a new perspective. While I do agree with you 100% here ...someone enabled these masters of "self abus---err indulgence" to be exactly that. It was good for business. It was good for votes ...which was good for business.


The "tremendous demand of low cost quality goods produced off shore" was driven by false access to money we never had to begin with. If we weren't enabled ...there would be no such "demand".


There's a funny thing about boobytraps ...you'll always find boobies to fall into them.

 

[javacontour]

Then there are those of us for whom divorce was a financial life saver.

I was able to pay off over 30K of debts left by my former wife WHILE going through the divorce, and the remainder after the divorce was final.

It certainly was NOT cheaper to keep her, even with child support!

Back to your scheduled topic...

Originally Posted By: ToyotaNSaturn
Originally Posted By: oilyriser
The US dollar is not backed by good fiscal discipline.


Neither are much of the U.S. people! How many people are thousands in debt beyond a house or car payment just to have the latest & greatest toys? How many have had divorce shatter their finances...or a spouse run away with all the money?

How many have never been taught anything about how NOT to spend our money? Or our time? Or our resources? Or our bodies?

We're told only to "do it!".

Arrgghhh!

 

[Merkava_4]

I've almost finished reading that link; so far it's been fascinating; although a tad bit scary too.

 

[Gary Allan]

Here's the part that I've been spouting off about for a good while. I'm apparently not alone in my madness.

Quote:
The slow-motion crash of the stock markets has made foreigners think twice about parking their wealth in the US. Meanwhile, we've outsourced our manufacturing capacity to Mexico and Asia so that the American economy has come to be based soley on the creation of suburban sprawl, financed on credit, which is to say hallucinated money. Suburban sprawl is a meta-machine for consumption of resources. It produces nothing of value in and of itself. The world is onto this.