more bad news for the dollar

[bishop]

http://www.mosnews.com/money/2005/02...cybasket.shtml

The Bank of Russia said in a statement it had begun targeting a dual currency basket — made up of 90 U.S. cents and 10 euro cents — as of Feb. 1 and would gradually raise the weighting of euros. “Increases of the weighting of the euro in the twin currency basket, to a level appropriate for the task of exchange rate policy, will take place step-by-step as market players adapt,” the statement said. The greenback’s weakness on global currency markets, as well as Russia’s oil-driven current account surplus, have led central bankers to say they were looking more at the euro as a guide to day-to-day exchange rate targeting. Dealers said the statement triggered dollar selling on the local currency market. One said the policy shift would help stop the ruble being buffeted by sharp euro-dollar moves, although other dealers remained at a loss over the practical impact.

http://www.bloomberg.com/apps/news?p...d=aEBBmwvtNuxA

Here in Malaysia, for example, Prime Minister Abdullah Ahmad Badawi recently said he is seeking ways to reduce the economy's reliance on the dollar for trade. Indonesia has mentioned it is considering trimming its holdings of U.S. Treasuries. The same goes for Thailand, according to the Financial Times. China also has been in the news as traders speculate that Asia's No. 2 economy may pull the plug on dollar-denominated debt. Such a move by the second-biggest holder of U.S. Treasuries after Japan could send shockwaves through global markets.

with bush aimed to either meet or beat last year's deficit, i think it's clear what the future holds...

[Samildanach]

Yep, US dollar is in for a long term bashing. Global markets are moving towards a two currency system on the wholewhich means the USA won't be able to fund its massive current account deficit nearly as easily as it has in the past. If some of the OPEC countries switch to demanding payment for oil in Euros then the dollar will really start to slide. It has been estimated (please forgive the lack of a source) that if Saudi Arabia started to demand paymenyt for its oil in Euros that the US dollar would slide 30% overnight. Coincidence that the US declared war on Iraq after they started to demand payments for their oil in Euros in 2001? I think not. Say goodbye to cheap imports.

[Nono]

And there's one good reason to have one's hand on the oil tap in You-Know-Where.

Lucky coincidence that they decided to liberate the Iraqi people when they did.

[Zeebadee]

We've set ourselves up for an economic Pearl Harbor. By relying on returning petro-dollars from the middle east, and the grossly one-sided balance of payments from the far east to finance our massive budget deficits, we've left ourselves wide open to economic warfare. By not only ceasing to buy new U.S. Treasuries, but also dumping hundreds of billions of dollars worth of discounted existing ones on the open market, our enemies are set to drive a stake through the heart of Wall Street. Such a scenario would make it virtually impossible for the U.S. to mount any kind of opposition to a Chinese military solution to it's Taiwan problem, as well as create an energy crisis in the U.S. that will make anything we've previously seen look pale in comparison. We've got to get our house in order, there's very little time left..

[Scribbler1]

We can't get our house in order. Not as long as we have this nationalistic arrogance going for us. For a long time, and for the sake of profits this country has been becoming a part of the world political and economic system. The problem is the meatheads in this country are still acting like we did before WW2. We just can't afford to ignore the rest of the world but we act as though we can.
We are NOT alone in the world and the rest of the world can put a mighty hurt on us.

We are in debt up to our asses, we invade sovereign countries with no real provocation and can't even elect a president that a lousy 50% APPROVES of! I can only imagine how little prestige we have left in the world. They won't hesitate to bankrupt us if it is in their interest, and we have given them the means to do it.

[bishop]

that's very interesting samil.. if you can find a link before someone else, definitely post it. i'm aware that they did have serious concerns about opec thinking about using euros, but never anything to that degree.

is anyone in congress even talking about this issue?

[G. Adams]

http://www.trinicenter.com/oops/iraqeuro.html

[bishop]

good article, but no mention of the saudis. this one's getting closer, but i'm still looking for this 30% depreciation figure.

http://washingtontimes.com/upi-break...1853-3224r.htm

Member countries of the oil cartel, OPEC, have sharply increased deposits in Euro's and placed less in dollars compared with earlier oil revenue booms times, according to a report by the Bank for International Settlements. U.S. dollar-denominated deposits fell from 75 percent of total deposits in the third quarter of 2001 to 61.5 percent in the most recent quarter, while the share of Euro denominated deposits rose from 12 percent to 20 percent over this same period, the BIS said in its latest quarterly report published Monday.

One international economist, speaking on condition of non-attribution said this would be determined more whether the dollar continues to fall vis-à-vis the Euro, and other major currencies, and if Russia, a major oil exporter, also decides to diversify away from dollar contracts, or not.

this second quote is exactly what is happening. the first article i linked states that the russian central bank is gradually going to increase its euro-denominated assets.

He admitted, they could do it if they wanted to gang up on the U.S. for political reasons but that would be, he stressed "very short sighted and out of the realm of economics." A switch away from the oil-dollar nexus would be a major strategic and political significance, said a senior official with an international economic agency who declined to be identified. "This would be considered by the U.S. as an unfriendly act," the senior official said and added it could have adverse repercussions for Saudi Arabia, and other rich oil countries.

while it may not be economically sound to switch away from the dollar, russia is moving away from it, as is china and opec. these countries all want our power to be decreased, as we constantly interfere in everybody's affairs. it's well within the realm of possibilities for them to "gang up" on the dollar.

[Rainbow]

"Euro" - as a monetary equivalent for european currency, was developed and hardly pressed to be implemented within Europe, by France and Germany.
(Now, I hope you have a clue why France and Germany so strongly opposed U.S. role in Iraq, guys :-))) )

"Euro"s ranking is over-rated. It was aimed to limit (read : "destroy") U.S. economy and influence on earopean countries, mostly those who have emerged after Moscow-based system collapsed.
European monetary (or funds) commission - I do not remember that comission's full name or title - has already announced that it will meet (some time around April) to discus "Euro - U.S. Dollar" issue, and stated that some adjustements must be made to correct "Euro"s real value.

That is why, U.S.'s presence in Iraq will clarify and stabilize U.S. Dollar, in order to re-shape U.S. influence on european market. It will take time, then do not get "excited", guys :-)))
U.S. Dollar will go up. Be patient, guys :-)))

[Zeebadee]

Quote by: Rainbow "Euro" - as a monetary equivalent for european currency, was developed and hardly pressed to be implemented within Europe, by France and Germany. (Now, I hope you have a clue why France and Germany so strongly opposed U.S. role in Iraq, guys :-))) ) "Euro"s ranking is over-rated. It was aimed to limit (read : "destroy") U.S. economy and influence on earopean countries, mostly those who have emerged after Moscow-based system collapsed. European monetary (or funds) commission - I do not remember that comission's full name or title - has already announced that it will meet (some time around April) to discus "Euro - U.S. Dollar" issue, and stated that some adjustements must be made to correct "Euro"s real value. That is why, U.S.'s presence in Iraq will clarify and stabilize U.S. Dollar, in order to re-shape U.S. influence on european market. It will take time, then do not get "excited", guys :-))) U.S. Dollar will go up. Be patient, guys :-)))

Yeah, another $250 billion added to our deficits to pay for the Iraq war is gonna do a lot to "clarify and stabilize" the dollar.

[bishop]

rainbow, what, exactly, will cause the dollar to appreciate? excuse me if i take your lack of detail to mean that you're full of hot air.

recent data just showed that our trade deficit decreased, yet the dollar continued to depreciate. long-term oil futures are expected to remain high, because global demand is contantly increasing as countries develop. countries like russia and china have long-term plans to increase their holdings of euros, and decrease their holdings of dollars. venezuela, a major u.s. oil supplier, has embarked on a campaign to convert its reserves to euros, and has been meeting with other latin american countries to convince them to do the same. opec, as my link above states, also has long-term plans to increase its euro reserves and decrease it's dollar reserves...

these policies have already been enacted!

economists have been warning for years that the dollar is overvalued. every analysis paper that i've read indicates that the dollar should continue to fall in the next several years. and during that time, central banks (and opec) will continue to reduce their dollar holdings - meaning that global demand for the dollar will continue to diminish.

not to mention the fact that every hint of u.s. interventionism sends the dollar further down against both the euro and the yen.

so please, what great uninformed insight to you have where iraq holds the key to all the dollar's problems?

[Rainbow]

Quote by: bishop recent data just showed that our trade deficit decreased, yet the dollar continued to depreciate. long-term oil futures are expected to remain high, because global demand is contantly increasing as countries develop. countries like russia and china have long-term plans to increase their holdings of euros, and decrease their holdings of dollars. venezuela, a major u.s. oil supplier, has embarked on a campaign to convert its reserves to euros, and has been meeting with other latin american countries to convince them to do the same. opec, as my link above states, also has long-term plans to increase its euro reserves and decrease it's dollar reserves... so please, what great uninformed insight to you have where iraq holds the key to all the dollar's problems?

#2
Markets.
#1
Markets.

Iraq is an "empty place and space", that needs to develope marketting, among other issues.
Since U.S. would have favourable contracts (with new Iraqi government) on oil and gas - in comparison to other countries - U.S. economy will get an additional "boost", while keeping prices as low as possible, to provide people with acceptable marchandise and services.
That is why a stabilization and U.S. presence in Iraq is a necessity.
It takes time.

Example (only !) :
- $10.00 a barrel, for U.S.
- $20.00 a barrel, for others
That is business, guys. Politics is all about business, that means money.

Most of post-communist countries in Europe have not fully adopted all the required bases for the Constitution and the Law yet, to create fundaments for their states in order to get an acceptable status needed for trades, business, ect. It takes time to comply with.
EU tries hard to be the first all over these states and fill their markets with their own merchandise, services, goods, ect.. They do not want U.S. to create a "back-door" - within these post-communist states. They want to make trades, ect. (with these countries) based on "Euro" currency, only (!).

Example :
Few days ago President Bush met with Polish President. Among other things, a new visa policy was established - while some rules and restrictions were removed - to give Poles much better (and easier) ways to apply for U.S. visa and stay on U.S. territory.
That step is the result of Poles' participation in Iraq and help privided for U.S., in that matter. Step-by-step U.S. is going to improve its relations with post-communist countries, and by that account create new "path" for business in order to open new markets within these post-communist countries.

It has taken almost 4 years "Euro" currency to grow to its actual state. It may take longer time U.S. to restore its dollar value, yet.

As you see, other countries do not pay much attention what U.S. does, and they make business whoever they may with. Then stating that Bush is not fair, lies, ect. could be equally addressed to others as well. Mercy does not apply in politics, since one may not trust the other side for variety of reasons. Who lies ? Which side ?
Business is all about : who gains more, and not how it looks, or whether it is moral and/or ethical.
When turning a switch on, do you ask questions or consider whether the electricy that powers up your home (or place you stay) came by "fair and righteouss" business as the result of politics, or you just turn that switch on ?
What and/or Who is fair, then ? We can cultivate sucuh positive values within friends, families, relatives, ect. , but not in politics, definitely.

[bishop]

heh.. thanks for the laugh rainbow.. was that post of yours an explanation of how the dollar will appreciate once things settle down in iraq? talking about visa agreements with poland and "what business is all about" doesn't answer the problems with the dollar.. it isn't even relavent!

[Samildanach]

Hahahahahhahahaha..that was the best joke I have read in years Rainbow, your grasp on global economics is astounding!, this explains why most banks across the world are diversifying their assets AWAY from the US dollar and bloomberg is predicting it to fall for the entire year. However I will report to the market that Poland is staying...Im sure it will have important consequences for the US currency and they will reassess accordingly....hahahahahaha

[bishop]

not to mention that poland's a member of the EU and will adopt the euro in a couple years.

from bloomberg:

http://www.bloomberg.com/apps/news?p...currency_rates

Foreigners bought a net $61.3 billion of U.S. financial assets, down from a revised $89.3 billion in November, the Treasury Department said in a report on transactions of government and corporate bonds, stocks and other financial assets. Economists expected net purchases of $58.3 billion, based on the median forecast in a Bloomberg survey. <snip> The deficit in the current account was a record $164.7 billion in the third quarter. The gap means the U.S. must receive about $1.8 billion every day, or $55 billion a month, to maintain the dollar's value, according to Bloomberg calculations. The current account is a measure of trade, services, tourism and some investments.

[G. Adams]

I wouldn't count on Iraq to keep the US boat afloat either. If the US respects the results of this election, then we will see Grand Ayatollah Ali-Sistani's people in power, and they're committed to nationalising the oil industry and having a speedy withdrawal of US troops. I hope this is the case, would be good to see all the ill-gotten gains taken away from Bush's buddies.

[bishop]

that article i quoted from bloomberg's SCARY.

if global demand for the dollar drops by $3.3 billion per month, we could have some real inflation problems on our hands.

[Rainbow]

Here, I have a link for you, guys :
http://www.scoop.co.nz/mason/stories/HL0303/S00182.htm

Instead of laughing you had better start praying Sistani will become "Iraqi hero" when it comes to the choice :
- going for "the new world"
- going back to Islamic fundaments
Option #1 is what U.S. needs. Otherwise, U.S. economy is in a deep *** today, and years to come, so the next generations' existance along with the way of living may appear less-dreaming, but rather hellish one.
If that happens, and U.S. economy collapses or will be hit hardly, then Europe suffers as well.

Who has money ? and what this world is all about ?
Sometimes, I think that Earth is Hell or can transform into something like that or close to it.

[Scribbler1]

It's amazing how often I keep hearing how "strong" this country is when the U.S. has boxed itself into a situation where, due to the pursuit of wealth, our economy is, and has been, hanging by a thread for decades. I remember a story about 15 years ago that exaplained how even MEXICO could bring this country almost to its knees.
It has to do with debt, and this economist (or whatever) was explaining how many billions in debt to american banks Mexico was. As you probably know, a bank lists the money owed to it as an asset even though it doesn't actually HAVE the money. The story went on to say that if Mexico decided to default on its loans (and it could do that with the swipe of a presidential pen) it would throw all those banks into chaos and many into collapse.
I'm not an economist but I figure if you take THAT and add it to the billions the U.S. OWES to other countries, it indicates our economy is much like the North American electric power grid. One little mishap somewhere and the whole system goes down. I believe we have already lost control of the situation and the end is merely delayed by the efforts of thousands of fingers trying to plug millions of holes in the dam.

[Samildanach]

The fact is the markets are very good at judging the way the scales are tipping. Currently they are tipping towards the Euro and away from the USA. That is why the dollar is decreasing in value. In order for the dollar to increase in value a few things have to happen.
Chavez would need to be replaced and soon, time is a critical issue. Once the American dollar starts spirals down past a certain point its game over.
America must ensure a govt is elected that is pro denationalisation of oil reserves and is US friendly.
It must also cut the deficit although I don't see this happening.

The fact is the Euro now has a good foothold. Iraq swapping to the euro for oil sales gave it a beach head from which to springboard off. It has already sprung and is closing on the dollar as an international currency daily, it has gained acceptancy so much that countries are shifting part of their stockpile of dollars into Euros again driving the dollar down and creating demand for the Euro driving its value upwards. The stronger the Euro gets the more likely OPEC countries are to adopt it for oil sales as they can get a lot more money for their oil.
I expect that in the end both Dollars and Euros will be used for oil sales and while this might hit the US economy hard it will not collapse it, especially if it happens slowly enough, which I think most countries are commited to as no country wants to see American go bust as it would make their stockpiled dollars worthless and destroy the biggest consumer nation on earth leading to a vast number of countries having a massive cut in their export volume.
The war may even be just an over-reaction on the part of Washington, maybe it was never ment to throw the Euro back into the sea, just slow down its adoption so it can apply a brake to the downward economic effect, slowing it so its impact is much less than it otherwise would have been.