Just when I thought I was out-they pull me back in
virus: The dollar vulnerability
« on: 2004-09-26 13:04:30 »
serenade posted a link to this excellent summary of world financial markets in irc today.
I though it important enough to put the content into our record, so we're not dependent on the link should it disappear. ------------------------------------------------------------------------------------------------------------------------ Can USA pay for its wars? The dollar vulnerability From William Engdahl 9 September, 2004
The greatest threat to world peace and stability today comes from the US dollar, which remains the foundation of the global economic and financial system. The danger from the dollar goes hand in hand with the problem of world oil. Both threaten a period ahead of financial and economic troubles unlike any since 1945.
Why do I say this when by most cited indications, including statements by Alan Greenspan and the Government, the US economy is said to be in a major growth period? Jobs are being created. The stock market has recovered, and the US housing market is in the middle of the greatest boom in history. The problem is that this edifice is built solely on debt, and on record low, "emergency" levels of US interest rates--I won't even take up the issue of deliberate US Government manipulation of jobs and growth data in recent months--It also takes place at a time world oil prices, in dollar terms, are rising faster than anytime since 1980, up in dollars so far this year by some 62%.
The world is rapidly running out of abundant, cheap oil.
The US debt bubble
The problem is that this rise in energy costs takes place during the greatest expansion of dollar debt - private and public - in world history. Total debt in the US economy is now higher than during the 1930's Great Depression. Today, according to official Fed statistics, total US debt is above $34 trillions. US GDP is $11 trillion. That means debt is 3 times GDP, 300% more. In 1933 US debt was 2.5 times GDP. This debt in per capita terms is today $125,000 for every man, woman and child in America.
Personal consumer debt, excluding home mortgages, has doubled since 1994 to $9.4 trillion. A record. That is about $37,000 for each child, woman and man in America. Corporate debt is $5 trillion, a record. Federal Government debt is $7 trillion, a record. And at record low interest rates that debt has been growing at hyperbolic rates the last 3 years.
Since 1971 when Nixon took the dollar off the Gold Standard, and put the US on a pure paper money, dollars have been created in staggering amounts - the real source of global inflation of the past 30 years. During the gold standard period, between 1950 and 1970, total dollars printed grew by 55%, a mild rise. From 1971 to 2000 dollars expanded by more than 2,000%!
In the past four years dollar debts have grown exponentially. The Bush Administration has opened the floodgates to deficit spending, partly to create government jobs to get him reelected. Never in US history has the Federal deficit been so big. This year it will break $500 billions, a new record. Next year more than $512 billion is expected. The Government must borrow to finance this gap.
"Now, how do they pay for that deficit? They have to go borrow money. Most of it they borrow from the Chinese and the Japanese government. Sure, these countries are competing with us for good jobs, but how can we enforce our trade laws against our bankers? I mean, come on..." -Bill Clinton at the 2004 Democratic National Convention
This quote by former President Clinton was perhaps his most important quote in several years, yet the media didn't give it much attention.
The Trade deficit is also breaking records as the US imports record amounts of clothes, furniture, electronics and cars from China, Japan and elsewhere, including Germany. This is the secret of the dollar standard. In buying the products of China, Japan, Germany and the rest of the world, the US pays for them in paper dollars. Since 1971, those paper dollars are just that, paper. No gold stands behind it. What does China, do with its annual $100 billion US dollar trade surplus? The Chinese central bank, Bank of China, takes the paper dollars and buys interest-earning, "safe" dollar assets, like any investor. The safest bet is to give it back to the US Treasury, by buying US Government bonds.
Since 1971 the USA has run chronic annual trade deficits. Today the trade deficit is more than 5% US GDP, some $500 billion! These are levels where Argentina or Thailand would face a panic selloff by foreign investors. But the USA has the world reserve currency and happens to be the world's only military Superpower since 1990. China and Japan think long and hard before doing anything to irritate that giant, especially since the Iraq war.
The result is that China and Japan and other trade partners continue to reinvest their surplus paper dollars in US Government bonds. That in effect finances the US deficit, things like the war in Iraq, with foreign money, an elegant system! Chinese workers or Germans, in effect, invest their labor skills in building computers or BMWs that American consumers buy. Toyota or BMW make a better car than General Motors or Ford. Detroit Big 3 carmakers now sell fewer cars than in the recession year 1990. Their profits come from their financial divisions, speculating in derivatives and currencies, even in Japanese or Korean stocks. Americans borrow to buy the imports, and pay in paper dollars.
Each year the US Government and the Fed, create more paper dollars. No one can stop them. They control the so-called printing presses. Last year a Fed Governor boasted of the fact:
"The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes, at essentially no cost…under a paper-money system, a determined government can always generate higher spending and hence positive inflation". --- Ben S. Bernanke
Because the dollar has no gold standard to restrain it, the only limit on printing dollars is political. The role of the USA as sole military superpower is today's "gold" behind the dollar.
In June the US trade deficit hit a new alltime record of $56 billion, an annual rate of $670 billion. Normally a nation must finance a trade deficit by savings. But Americans are not saving. They are spending-- to consume is patriotic, Bush says. So to finance or balance the trade deficit without seeing a dollar crash, the US must attract billions from foreign investors. Asians invest $1 million each minute to keep the dollar debt system going. Net foreign purchases of U. S. debt, bonds, totalled $411.6 billion year-to-date through May 31, 2004, 40.3 percent higher than the first five months of last year.
Today foreign central banks are buying US bonds and other assets at a record pace, partly to protect their dollar export trade. This is the only reason we have not seen a dollar crisis so far, though a year ago it was close to one. The US is dependent on foreign central banks, above all Japan and China central banks. Last year Japan bought a record sum of US Government bonds and debt. Thank you Japan.
China also has bought tens of billions in US debt. Though this year, China has turned from buying US paper debt or bonds, and is buying more hard, real commodities - oil, steel, grain, copper, iron ore - to build its economy. China fears the US might cut off its raw materials. That leaves Japan as the main prop of the world's dominant economy, USA.
The US is a net debtor to foreign creditors. That started in 1989. Before, America had been a net creditor. Today, the US owes the world almost $3. trillions. Foreign central banks, mainly China and Japan today own 42% of US Government debt, about $1.5 trillion of it. They bought $750 billion, or half of that debt in just the last 2 years.
Never in history has a country had such trade deficits or external debts.
Greenspan in a debt trap
The problem for Alan Greenspan and Washington is that this debt-based credit inferno must create ever-larger volumes of debt (credit), to prevent a financial implosion or collapse. Each time the Fed has tried to slow the bubble growth, the collapse of financial markets has threatened to blow sky high, and the Fed is forced to turn on the money spigot even higher. This was so in 2001 with the dot. com crash. To prevent a worse economic depression, the Fed cut interest rates and printed record volumes of dollars, which created the current housing boom, creating a cushion for the economy and creating a worldwide speculative economic bubble today. The entire world growth since 2003 depends on the record Fed money supply and low US interest rates. It is all based on US record low interest rates, easy money. China's export boom is America's import deficit.
This has now taken on an exponential or hyperbolic growth rate since 2001. Such rates of growth, 25-30% a year and more, can last only so long. US interest rates also cannot remain at 1.5% forever. Today's debt can only be paid at those emergency low rates however.
Low interest rates in the US are stimulating record US consumption, and especially home buying. But the main benefit is consumption of Chinese or Japanese goods, not US made products. China furniture export to the USA is up 41% this year. US companies are investing in new production, but in China, not in Ohio. American jobs are being wiped out by this globalization of dollar debt. Today 90% of filings for personal bankruptcy in the USA come from middle-class families. American workers can't compete with Chinese or Indians on wages. Job losses, far higher that official US data admit, mean stagnant US income growth. Household debt is at record highs. Record oil prices are adding a huge tax of costs to the economy. That is pushing yet more jobs overseas to cheaper sites. The number of US manufacturing jobs today is the level of 1961, for a far larger population.
Oil prices are creating major inflation problems even if the US statistics ignore energy prices. If the Fed does not raise interest rates to control inflation, bondholders will sell US bonds, driving the dollar down, and US interest rates up. That will set off a vicious cycle of panic selling. That is why the Fed raised rates so cautiously this summer. Greenspan is forced to feed the myth of a US recovery or risk a panic selloff of the dollar before the election. But the higher rates will threaten the debt economy, especially private household debt, and home mortgage debt. Some 70% of all home mortgages in recent months are written at floating rate debt. Now rates are low and costs too.
The ultra-low rates have created the biggest home buying rush in US history in the past 3 years. The National Association of Realtors says the biggest surprise this year has been the performance of interest rates… 'The momentum of existing-home sales this year is unprecedented,' New-home sales have been at or near-record levels each month in 2004.' They predict the strongest level of housing construction since 1978.
Sales of existing homes hit the highest pace on record in the second quarter, according to the National Association of Realtors. Sales rose by double-digit rates in 34 states compared to the same quarter in 2003, and no state recorded a decline… The strongest year-to-year increase was in Nevada, where the second quarter resale pace rose 32.5 percent. Next came Idaho, which rose 31.0 percent from a year ago. Arizona posted the third highest increase, up 25.1 percent from last year.
Home prices are exploding, up 9.1% nationally year on year. Las Vegas homes are 52% higher, Southern California up 39% in price in a year, and Miami up 25%. Nationally, more regions saw price rises above 10% than ever in history. This is a bubble built on emergency low Fed interest rates and $500 billion a year in foreign investment in US debt.
As US interest rates begin to rise, millions of over-indebted American families will suddenly be forced to give up their homes, unable to pay higher interest costs. That will hit the banks just as in the 1930's.
What is likely now? In fact, the Fed cannot raise interest rates to normal levels, despite the pain that means for pension funds, insurance companies and others of fixed income. Greenspan is bluffing markets. He must expand credit, and do it at ever faster rates or the world economic system will implode. To do that, the US must depend on ever more trade deficits and more Japanese or foreign buying of US debt. But by definition, that debt becomes more and more worthless in real purchasing terms. What foreign investor wants to buy debt that will become worth less? Yet that is the only way the US can keep the system afloat - devalue the dollar and repay its debts in cheaper currency.
After US elections, a major effort to slow the dollar debt is likely. That will threaten a major collapse.
How long will China or Japan continue to support this dollar system? No one knows. Japan, China, South Korea and other countries have started to reassess their appetite for US Treasuries. Some Asian finance ministers have spoken out openly about diversifying out of dollars and plowing reserves into alternatives such as gold, oil or commodities and euros.
How much more personal debt can Americans add before they cannot pay? No one knows, but the limits are visible. It has major implications for the world.
So long as China is the locomotive of world growth, she destroys jobs in the Europe, US and rest of the world. If China stops being the factory of the industrial world, the debt pyramid of the USA implodes. Never in history has the world economy been so interdependent on such an unstable basis. The US debt markets and dollar are in a trap. If rates rise, the debt collapses in a global depression. To avoid that, the Fed must print money and risk exporting hyper-inflation to the world. --- To unsubscribe from the Virus list go to <http://www.lucifer.com/cgi-bin/virus-l>
RE: virus: The dollar vulnerability
« Reply #1 on: 2004-09-26 16:32:00 »
Walter Watts Sent: 26 September 2004 07:05 PM <snip> serenade posted a link to this excellent summary of world financial markets in irc today.
I though it important enough to put the content into our record, so we're not dependent on the link should it disappear. ------------------------------------------------------------------------ ------------------------------------------------ Can USA pay for its wars? The dollar vulnerability From William Engdahl 9 September, 2004</snip>
[Blunderov] Disturbing. It's the economics of Prometheus. Mugabe does the same thing - nobody dare foreclose because if they do EVERYONE gets burned. He just goes on printing money and everyone spends it as fast as they can just to keep from starving, not always with complete success.
I was reading about the South Sea Bubble a moment ago - the first stock market crash.
There seem to be some similarities to the current frenzy, particularly in respect of buying debt that becomes worthless.
Maybe this can work - the indefinite rolling over of debt - but I doubt it.
<assumes doomsayer pose> The markets will crash. Hyperinflation will become pandemic. The Middle East will boil over completely. Competition for increasingly strained hard resources (like water) will cause widespread warfare. Some big players will make their moves against the USA when her economy is hurting (I won't mention the 'C' word Erik!) Under these circumstances nukes are not out of the question. All this against a background of a rapidly declining environment.
RE: virus: The dollar vulnerability
« Reply #2 on: 2004-11-09 01:56:19 »
Walter Watts Sent: 26 September 2004 07:05 PM <snip> Can USA pay for its wars? The dollar vulnerability From William Engdahl 9 September, 2004
The greatest threat to world peace and stability today comes from the US
dollar, which remains the foundation of the global economic and financial system. The danger from the dollar goes hand in hand with the problem of world oil. Both threaten a period ahead of financial and economic troubles unlike any since 1945. </snip>
[Blunderov] Yep, here we go. Time to stock the pantries with candles and non-perishables? Maybe not just yet, but it would do no harm to keep a weather-eye on developments. Best Regards.
Dollar expected to fall amid China's rumoured selling By Steve Johnson in London and Andrew Balls in Washington Published: November 7 2004 19:43 | Last updated: November 7 2004 19:43
The dollar could slide still further, in spite of hitting an all-time low against the euro last week in the wake of George W. Bush's re-election, currency traders have said.
The dollar sell-off has resumed amid fears among traders that Mr Bush's victory will bring four more years of widening US budget and current account deficits, heightened geopolitical risks and a policy of "benign neglect" of the dollar.
Many currency traders were taken aback on Friday when the greenback fell in spite of bullish data showing the US economy created 337,000 jobs in October.
"If this can't cause the dollar to strengthen you have to tell me what will. This is a big green light to sell the dollar," said David Bloom, currency analyst at HSBC, as the greenback fell to a nine-year low in trade-weighted terms.
The dollar's fall comes as the Federal Reserve is widely expected to raise US interest rates by a quarter point to 2 per cent when it meets on Wednesday and to signal that it will continue with a measured pace of rate increases.
Speculative traders in Chicago last week racked up the highest number of long-euro, short-dollar contracts on record. Options traders have reported brisk business in euro calls - contracts to buy the euro at a pre-determined rate.
However, the market has been rife with rumours that the latest wave of selling has been led by foreign governments seeking to cut their exposure to US assets.
India and Russia have reportedly been selling US assets, as well as petrodollar-rich Middle Eastern investors.
China, which has $515bn of reserves, was also said to be selling dollars and buying Asian currencies in readiness to switch the renminbi's dollar peg to a basket arrangement, something Chinese officials have increasingly hinted at. Any re-allocation could push the dollar sharply lower and Treasury yields markedly higher.
RE: virus: The dollar vulnerability
« Reply #3 on: 2004-11-09 13:52:21 »
Unfortunately, there is very little that the US can do now to prevent an eventual collapse. The only questions are now those of scale and timescale.
Incidentally, although Nixon's and later, Reagan's, deregulation of the global financial community have been major contributors to this situation, the problem can be traced back to the end of WW2.
I'm strapped for time at the moment, so I'm going to have to cut and paste part of a previous posting that's relevant to this question. Don't hate me.
<snip>
After WWII, the current world financial system was put in place (under the alias of helping to rebuild war-ravaged countries). This was (wrongly) attributed to Keynes (hence 'keynesian' economics) but in actuality the current system was the brainchild of a man named Harry Dexter White. Keynes actually came up with a radically different system, that I'll post more about at a future date.
Essentially the US used its post-war clout to structure the world financial system to its own advantage. Through a combination of loan repayments, the use of the US dollar as the world standard of currency, and protectionism (on western countries part, not the poorer countries) wealth is designed to flow from poorer countries to richer ones.
This has meant that for almost three generations, the USA has had a massive economic buffer against debt defaults, devaluation and shrinking markets. The influx of foreign assets into the western economies has acted as a buffer on financial markets, allowing successive US governments to run massive deficits for political, economic and military gain. During the Cold War, this was used to out-defence budget the Soviet empire into submission. Since the end of the Cold War, this has been used for the political/financial gain of the particular subset of the US ruling elite in power at the time, but mainly has been done for the benefit of corporations, with massive deregulation the result across the board.
As the current fiscal irresponsiblity of Bush&Co shows, the US can maintain a massive, trillion dollar deficit and still stave off the hyper-inflation, currency devaluation and general economic chaos that would follow in another country were it to behave as the US does.
Were it not for this buffer, the economic policies of the US for the past forty years would have been unsustainable, not just the last four.
A side effect of this system is that a belief in a manifest economic destiny exists in the US, and deficits are seen as a nuisance, not a disaster. This is something that may well prove deadly in the future. Moreover, another side-effect is the universal dislike/hatred felt by many in the developing world towards the west in general and the US in particular.
As long as the current financial system persists, we'll see no re-run of the Wall Street Crash. But I wouldn't celebrate just yet. The signs are there of what might yet bring down the current system.
As has been pointed out here, it is capitalism's own success that threatens it with destruction. As an elite forms in any market due to successes, it inevitably attempts to use its resources to prevent the market from functioning properly. Regulation, enforced by the state, is the only antidote for this. Market and state are thereby interdependent. The ongoing and increasing corporatisation (some might say corruption) of the US political system threatens this.
The real danger however, is not the US, but the rest of the world. It may, simply, get together and decide not to play the US's game anymore. A massive debt default on the part of the discontented developing world, or a decision by Japan, China and the other major players to switch to the increasingly influential Euro could spell the end of the current paradigm. The jitters the IMF and world bank are currently showing (and a sudden willingness to discuss repayment schedules) may well be proof they are aware of this. The trigger may end up being the peaking of oil prices sometime within the next fifteen years.
<snip>
NB- Incidentally, oil prices are actually set to come down significantly over the short term (they are actually artifically high at the moment), however the long term trend over the next generation is a clear one.
More on this soon. I'm currently researching the actual system Keynes came up with for the global community. It might surprise you.
romanov
_________________________________________________________________ Express yourself with cool new emoticons http://www.msn.co.uk/specials/myemo
RE: virus: The dollar vulnerability
« Reply #4 on: 2004-11-27 18:44:25 »
mark daniel robinson Sent: 09 November 2004 08:52 PM
Unfortunately, there is very little that the US can do now to prevent an
eventual collapse. The only questions are now those of scale and timescale.
[Blunderov] I suppose a declining dollar is not an unmitigated disaster - exports from the USA will become more competitive. But imports will become more expensive and the USA imports quite a lot of oil. This would drive up input costs and negate the benefits to some extent at least.
(What's going on with the price of petrol in the USA? When I filled up the other day I was unpleasantly surprised to discover how much extra it cost me - 20% more or so. Our prices fluctuate quite a bit here but it still seems surprising when the cost per barrel is actually going down.)
It does seem risky to play fast and loose with the stability of currency markets. Best Regards.
Dollar Heads for Weekly Decline; Foreigners May Reduce Holdings
Nov. 26 (Bloomberg) -- The dollar is poised for a seventh straight weekly drop against the euro, its longest losing streak in 10 months, on concern foreign investors and central banks may reduce holdings of U.S. assets...
...China, the second-largest foreign holder of U.S. government debt, reduced its holdings of U.S. Treasuries, China Business News said. The country's central bank declined to comment on the report. China's holdings of Treasuries rose to a record $174.4 billion at the end of September, according to the Treasury Department.
``The real risk is that the sharper and the quicker the dollar falls that these investors pull out pretty quickly from U.S. markets,'' said Mitul Kotecha, global head of currency research in London at Calyon, the investment banking unit of Credit Agricole SA.
Chinese international reserve assets were a record $514.5 billion in September, accounting for about 15 percent of the world's total, excluding holdings of gold, according to data compiled by Bloomberg.
Russian central bank official Alexei Ulyukayev said three days ago Russia may trim the share of dollars held in its foreign- exchange reserves. Russian foreign currency and gold reserves totaled $113.1 billion in the week ended Nov. 12.
The central bank keeps about a third of its reserves in euros and the rest mainly in dollars, central bank Deputy Chairman Konstantin Korishchenko said in an interview on Nov. 3.
``There's no escaping a weaker dollar,'' said Ashley Davies, currency strategist in Singapore at UBS AG.``A lack of faith in the dollar by central banks reaffirms our bearish stance.''
Re: virus: The dollar vulnerability
« Reply #5 on: 2004-11-28 06:08:29 »
Everyone thinks that war is good for an economy. But that's bullshit. It's the *kind* of war, and how you fight it that determines whether it will be profitible.
Back in the old days, the US made a ton of money on war profiteering u because we sold weapons to allies in major conflicts.
But this Iraq war is strictly coming out of our pockets, and is killing our economy. Hundreds of billions of dollars are being wasted every year in nonexportable production. It will bankrupt the Federal government, if we don't stop it. --- To unsubscribe from the Virus list go to <http://www.lucifer.com/cgi-bin/virus-l>
WW II and the subsequest reconstruction of Germany and Japan were expensive, too, as were our Cold War expenditures, but I consider those expenditures to be investments; they have paid immense dividends, monetary and otherwise. Counting the ripple effects on the economy (airlines, tourist industry, etc.), 9/11 was an extremely expensive proposition, and well worth spending blood and treasure to avoid having repeated. The best - and perhaps the only - way to do this long-term is to democratize the Middle East. It is an expensive and long-term commitment, true, but the benefits (once again, monetary and otherwise) of success will be substantial and long-lasting, and the opportunity costs of not even trying could be catastrophically devastating.
For those who want to construct an economic argument for bugging out of Iraq before the job is finished, I need only to point to the eventual costs this country incurred by prematurely bugging out of Afghanistan, or even of not finishing the job in Iraq in Gulf War I; if they haven't yet absorbed that lesson, I hope that at least our policymakers have.
RE: virus: The dollar vulnerability
« Reply #7 on: 2004-11-30 10:20:13 »
So all those people who claimed the war was for OIL were (as some of us knew all along) plain wrong? All of those who said it was simply to boost the US economy were plain wrong too (as some of us knew all along)...
The Iraq war is a tiny fraction of the defence budget. Keep in mind some of the US's biggest growth took place during the Cold War when defence spending (like Iraq) was treble what it is now.
Of course there is a price for the Iraq war, but then again, there is for everything (including letting homicidal maniacs like Saddam continue to govern gigantic oil rich countries in the middle of the most volatile region in the world with a nuclear armed near-neighbour and an impending oil shock).
Regards
JD
-----Original Message----- From: owner-virus@lucifer.com [mailto:owner-virus@lucifer.com] On Behalf Of Erik Aronesty Sent: 28 November 2004 11:08 To: Church of Virus Subject: Re: virus: The dollar vulnerability
Everyone thinks that war is good for an economy. But that's bullshit. It's the *kind* of war, and how you fight it that determines whether it will be profitible.
Back in the old days, the US made a ton of money on war profiteering u because we sold weapons to allies in major conflicts.
But this Iraq war is strictly coming out of our pockets, and is killing our economy. Hundreds of billions of dollars are being wasted every year in nonexportable production. It will bankrupt the Federal government, if we don't stop it. --- To unsubscribe from the Virus list go to <http://www.lucifer.com/cgi-bin/virus-l>
mark daniel robinson Sent: 09 November 2004 08:52 PM
Unfortunately, there is very little that the US can do now to prevent an
eventual collapse. The only questions are now those of scale and timescale.
[Blunderov] I suppose a declining dollar is not an unmitigated disaster - exports from the USA will become more competitive. But imports will become more expensive and the USA imports quite a lot of oil. This would drive up input costs and negate the benefits to some extent at least.
(What's going on with the price of petrol in the USA? When I filled up the other day I was unpleasantly surprised to discover how much extra it cost me - 20% more or so. Our prices fluctuate quite a bit here but it still seems surprising when the cost per barrel is actually going down.)
It does seem risky to play fast and loose with the stability of currency markets. Best Regards.
[Jonathan]
Hi B
You are absolutely right.
The US *could* easily spend its own foreign reserves and shore up the dollar, but it is not in its interests to do so.
Billions are being wiped off the deficit, imports are more expensive and exports are cheaper.
I hope they know what they are doing. We live in a global economy. If the US goes down, everyone goes with them. The US has been the engine of the world economy for 15 years and there is no replacement in sight.
RE: virus: The dollar vulnerability
« Reply #9 on: 2004-12-01 07:43:13 »
On Tue, 2004-11-30 at 15:20 +0000, Jonathan Davis wrote: > So all those people who claimed the war was for OIL were (as some of us knew > all along) plain wrong? All of those who said it was simply to boost the US > economy were plain wrong too (as some of us knew all along)...
I don't think anyone claimed they were good at economics.
> > The Iraq war is a tiny fraction of the defence budget. Keep in mind some of > the US's biggest growth took place during the Cold War when defence spending > (like Iraq) was treble what it is now. > > Of course there is a price for the Iraq war, but then again, there is for > everything (including letting homicidal maniacs like Saddam continue to > govern gigantic oil rich countries in the middle of the most volatile region > in the world with a nuclear armed near-neighbour and an impending oil > shock). > > Regards > > JD > > > > > > > > > -----Original Message----- > From: owner-virus@lucifer.com [mailto:owner-virus@lucifer.com] On Behalf Of > Erik Aronesty > Sent: 28 November 2004 11:08 > To: Church of Virus > Subject: Re: virus: The dollar vulnerability > > Everyone thinks that war is good for an economy. But that's bullshit. It's > the *kind* of war, and how you fight it that determines whether it will be > profitible. > > Back in the old days, the US made a ton of money on war profiteering u > because we sold weapons to allies in major conflicts. > > But this Iraq war is strictly coming out of our pockets, and is killing our > economy. Hundreds of billions of dollars are being wasted every year in > nonexportable production. It will bankrupt the Federal government, if we > don't stop it. > --- > To unsubscribe from the Virus list go to > <http://www.lucifer.com/cgi-bin/virus-l> > > --- > To unsubscribe from the Virus list go to <http://www.lucifer.com/cgi-bin/virus-l> > >
RE: virus: The dollar vulnerability
« Reply #10 on: 2004-11-30 18:41:45 »
Jonathan Davis Sent: 30 November 2004 05:35 PM [Jonathan]
You are absolutely right.
The US *could* easily spend its own foreign reserves and shore up the dollar, but it is not in its interests to do so.
Billions are being wiped off the deficit, imports are more expensive and exports are cheaper.
I hope they know what they are doing. We live in a global economy. If the US goes down, everyone goes with them. The US has been the engine of the world economy for 15 years and there is no replacement in sight.
[Blunderov] I wonder whether letting the dollar slide isn't also a tactic to offset and help prevent future WTO sanctions.
I have my doubts about the USA financial system collapsing anytime soon - the dollar is probably more robust than that.
But it does seem a gamble. If the US can consolidate its present guaranteed access to cheap(ish) oil then all will be hunky dory. Especially if it's competitors have less certainty in this regard.
But if it takes too long to do this, or is prevented by unforeseen circumstances, then things could go a bit pear-shaped. If military operations should widen in the Middle East, for instance, it might become difficult to manage a faltering economy.
Japan must be worried. They hold a horrendous amount of Dollars and their economy depends enormously on imports. If the Yen weakens badly they may be in trouble.
Re: virus: The dollar vulnerability
« Reply #11 on: 2004-12-06 17:59:14 »
: So all those people who claimed : the war was for OIL were (as : some of us knew all along) plain : wrong?
Saddam was selling cheap oil to France and China - in violation of U.N. sanctions and in violation of OPEC agreements.
In some was it is a war to prevent the extortive manipulation of our economy by oil powers - what's wrong with that? --- To unsubscribe from the Virus list go to <http://www.lucifer.com/cgi-bin/virus-l>
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