THE Euro Thread (merged)

[MonteQuest]

One last try, Keith. 80% of the world's savings is tied up in the US debt. We borrowed your life savings to fund our debt. If we collapse, you don't get your money back. We'd be broke. Can't pay you back. We done spent it already. Empty pockets. No cash, Nada, Zip!

Kind of makes the dollar sacred, don't it? Sorry, that is reality.

[Markos101]

Looks like Project Mayhem should be invoked then, in that case.

Mark

[Falconoffury]

Well, you still have the money. The government takes it away in the form of inflation.

That's why it's good to diversify your wealth in other things, and precious metals is one of the best.

[Keith_McClary]

One last try, Keith. 80% of the world's savings is tied up in the US debt. We borrowed your life savings to fund our debt. If we collapse, you don't get your money back. We'd be broke. Can't pay you back. We done spent it already. Empty pockets. No cash, Nada, Zip!

Kind of makes the dollar sacred, don't it? Sorry, that is reality.

I'm not disagreeing with you that this is how things worked for decades, and that the parties to Bretton Woods and some OPEC members would like to keep it going. But it's all based on the perception that the US dollar is "good as gold", which, as you indicate, is no longer the case.

So the winners will be those who cash in their dollars while they're still worth something.

[MonteQuest]

I'm not disagreeing with you that this is how things worked for decades, and that the parties to Bretton Woods and some OPEC members would like to keep it going. But it's all based on the perception that the US dollar is "good as gold", which, as you indicate, is no longer the case.

So the winners will be those who cash in their dollars while they're still worth something.

Yes, that is the perception on which this house of cards is built, I confess, but like any house cards, there is no way to take it down without it falling in a heap, then you have to rebuild it. Yep, I'm getting into gold and silver. The people who hold a lot of US securities may have nothing but a lost dream in their hands.

[Keith_McClary]

If they exchanged their money on the currency market to dollars as you suggest, they would devalue their currency. If everyone did this the entire world economy would collapse. Go to a website and read up on this.

I suggested that they pay for the oil in their own currency or the producing country's currency and not bother about converting to dollars or lending money to the US treasury.

Keith, this is a ballgame where if can't take your ball and go home. The whole team can't play anymore; there is only one ball, the US dollar. If you look around on this site, you will see many posts where I have explained this in detail. Your proposal is just not an option, period. You could not have a stable currency. The price fluctuations would be impossible to control.

But how are countries going to get dollars to build up reserves other than by converting their own currecny and hence devaluing it? And then if they spend from their reserves to buy oil, soon they will have no reserve left. So to maintain the same level of reserves they have to convert more of their currency to dollars for their oil purchases, further devaluing it.

If they can find an oil producer willing to accept their currency they avoid all these problems.

[OilsNotWell]

Hope this wasn't already posted...

Did you catch this one??? Looks pretty serious.....

The UN is now warning about a dollar collapse, flight of foreign capital from the US, concern about sustainability, etc...

UN body warns of US$ crisis
Currency likely to be devalued because of deficit

GENEVA — The US dollar is likely to be devalued to deal with the booming trade deficit in the United States, raising the prospect of global financial instability, the UN Conference on Trade and Development said yesterday.

Rest of Article Here
http://www.todayonline.com/articles/26118.asp

[MonteQuest]

But how are countries going to get dollars to build up reserves other than by converting their own currecny and hence devaluing it? And then if they spend from their reserves to buy oil, soon they will have no reserve left. So to maintain the same level of reserves they have to convert more of their currency to dollars for their oil purchases, further devaluing it.

If they can find an oil producer willing to accept their currency they avoid all these problems.

You still don't get it, do you. They do it buy selling their exports to us. We give them dollars. Yes, they can do that if they wish, but in doing so they can kiss those US securities they bought bye-bye. No buyee debt, no payee back. No money. Lo siento.

[MonteQuest]

Hope this wasn't already posted...

Did you catch this one??? Looks pretty serious.....

The UN is now warning about a dollar collapse, flight of foreign capital from the US, concern about sustainability, etc...

UN body warns of US$ crisis
Currency likely to be devalued because of deficit

GENEVA — The US dollar is likely to be devalued to deal with the booming trade deficit in the United States, raising the prospect of global financial instability, the UN Conference on Trade and Development said yesterday.

Rest of Article Here
http://www.todayonline.com/articles/26118.asp

No, I hadn't, but for those of you who have been following this thread, you will see that the predictions in this article are exactly those I have offered. This move is serious. They may do this through what is called SDR's, (Special Drawing Rights) issued through the IMF. More later on SDR's, but for now it would transfer that debt to the third world. I'm jsut learning about them. Warren Buffett has mentioned something like it.

[MonteQuest]

A growing number of companies are entering the euro bond market for the first time, encouraged by the opportunity to reach new investors with low financing costs.

The move to the euro bond:


http://news.ft.com/cms/s/d26c5fea-089d- ... 511c8.html

[MonteQuest]

Here's a corroborative link that EnviroEngr posted on another thread on the Endangered Dollar by Richard Heinberg.


http://www.museletter.com/archive/149.html

[MonteQuest]

Here's a good link to follow the euro:

Euro – Where are We Headed Next?

http://www.fxcmmini.com/euro-115-125.html

[frankthetank]

This post is a very interesting read. I've got a question. How does the collapse of the dollar effect the stock market? I'm guessing a big time adjustment (crash?)

Does a person find safety in only investing in Gold/Silver/Platinum? Are there other ways of investing? I ask because I believe retirement for me (mid 20's) is doomed and i might as well save something for the upcoming financial crash.

Another point i might need clarification on is how peak oil fits in here? Is peak oil the knockout punch?

thanks

[MonteQuest]

This post is a very interesting read. I've got a question. How does the collapse of the dollar effect the stock market? I'm guessing a big time adjustment (crash?)

Does a person find safety in only investing in Gold/Silver/Platinum? Are there other ways of investing? I ask because I believe retirement for me (mid 20's) is doomed and i might as well save something for the upcoming financial crash.

Another point i might need clarification on is how peak oil fits in here? Is peak oil the knockout punch?

thanks

Frank,

I'm not an economist, but as the dollar tanks, people will move out of the market to bonds(they already are doing that) and to other currencies like the euro, or precious metals. Gold has been going up lately. Market growth is dependant on the growth of the companies traded and their earnings potential. Low earnings are being reported now. Now there may be some stocks that you can make money in, such as oil futures, etc. But you are taking a big risk as volatile as the market is right now.

I believe that some other factor is going to trigger the market downturn before peak-oil is a reality to all.

[MonteQuest]

The dollar has been steadily dropping to the euro, now at 1.23 euros to the dollar. The Japanese Yen is even down farther due to high import of raw materials, especially oil. (Japan imports 99% of their oil) The US wants China to unpeg their currency to the dollar and let it float which would strengthen the yuan and lift other currencies, particularly the yen. The present Renminbi Yuan is pegged to the US$ at 8.28. Chinese leaders have given little indication that they are willing to float the currency, which some studies estimate could be undervalued by as much as 40 per cent. When they fix their currency artificially low by 40% all Chinese products sold in America are under-priced by 40% compared to real free market values. And also all American products sold in china are over-priced by 40% due to the currency manipulation.

The Renminbi has so far been impervious to the financial turmoil in Asia due to China’s large domestic market, a rising trade surplus, as well as, the record-level foreign exchange reserves of US$ 400 billion dollars! There are calls for import tariffs, but how do you enforce tariffs on your banker? Moreover, China has an economy growing at 9% in 2004. This has given Chinese exporters a major advantage on world markets.
Remember, one of the side- effects of the war in Iraq is that all their oil will be sold in terms of dollars only. When you require that all oil purchases be done in dollars, then you artificially prop up the value of the dollar. It is the biggest grab for world power in modern times. America's allies in the invasion, Britain and Australia, are betting America will win and that they will get some trickle-down benefits for jumping on to the US bandwagon. Presumably, China would like to see the Europeans build a share of international trade currency ownership at this point while it continues to grow its international trading presence to the point where it, too, can share the leadership rewards.

[MrBean]

I don't think petro-euro would a good thing for even Europe - getting free ride is good for no one as US example shows. In bilateral trade with Russia yes, using dollars to buy Russian oil is stupid and bad for both EU and Russia. Only thing in the way is Russias fear of rocking the boat too much and sinking US and global recession if Russia goes Euro, but it is going to happen sooner or later.

OPEC should adopt basket of currencies, consisting of dollar, euro, yen, renmimbi and few others for global oil market. Or even better, gold-dinar!

[gg3]

News tonight, after the Presidential debate, that Russia is moving very quickly toward ratifying Kyoto, at Putin's insistence (he will almost certainly get his way).

(see your favorite newsfeed for news stories on this)

Question is, with the projected inflow of revenue to Russia as a direct effect of signing the treaty, and with Russia joining the EU thereafter, what's the effect on the dollar and the US economy in general?

[backstop]

gg3 - I like this juxtaposition:

"News tonight, after the Presidential debate, that Russia is moving very quickly toward ratifying Kyoto, "

Did Kerry do well enough to trigger the U-turn by Putin ?

Plainly, even the gesture-politics of Kyoto has a pivotal bearing on the oil market, and who becomes president is similarly critical.

If the U-turn is unrelated to the debate, then it's one hell of a coincidence of timing.

Regards,

Backstop

[MonteQuest]

OPEC should adopt basket of currencies, consisting of dollar, euro, yen, renmimbi and few others for global oil market. Or even better, gold-dinar!

Get serious! It would be impossible to have or set a stable oil price if they did that. The global economy is dependent upon a stable price for a barrel of oil.

[MonteQuest]

Here's is a great article on the petro-dollar and the near future.

Ominous: The US deficit vs the dollar

Let's say you are in control of the world's money supply. And you see that the cost of oil is threatening global economic growth. And let's also say that you keep an eye on gold prices because you once wrote a paper extolling the virtues of gold. And let us say your last name starts with the letter G. Okay, the stage is set. What do you do now?

Hmm, you're thinking: if I can somehow get the dollar price of gold to increase, it might take a lot of pressure off of the global economy by reducing the real cost of oil and clear the way for sustained economic growth. If you're thinking that, then you're thinking a weaker dollar.

http://atimes.com/atimes/Global_Economy/FJ14Dj01.html