16 Jul 05
Originally posted by PalynkaYes, if ALL the countries and individuals who held dollar reserves in the whole wide world decided to unload them, there'd be a problem. No kidding. The point is that the decision of Iraq to trade in Euros had no significant effect and OPEC never followed suit. Even if it had, the largest foreign holders of USD reserves are East Asian countries with over $2.2 trillion and their currencies are pegged to the dollar so they would be unlikely to be willing to see much of a drop in the USD. So your "doomsday" scenario is exceedingly farfetched.
The fact that OPEC trades in Dollars makes most importers of oil trading in Dollars. I've mentioned that before and you probably haven't read it, like most of my posts.
Most countries have their debt in USD and a lot of international trade that doesn't include the US is done in USD. The fact is that USD is the most sought out currency in the world and ...[text shortened]... very very serious economic crisis that could reach unprecedented levels in US' modern history.
In any event, if the US was soooooooooo worried about the Euro supplanting the dollar as the main currency in international trade, they would have invaded Brussels, not Iraq.
16 Jul 05
Originally posted by no1marauderI've heard that the US economy would collapse if for some reason China cashed in all its dollars. I've also heard (from some guy) that China has started investing in other foreign currencies, not just the $US. Economists! Is this true, and should it make the USA nervous?
the largest foreign holders of USD reserves are East Asian countries with over $2.2 trillion and their currencies are pegged to the dollar so they would be unlikely to be willing to see much of a drop in the USD.
In any event, if the US was soooooooooo worried about the Euro supplanting the dollar as the main currency in international trade, they would have invaded Brussels, not Iraq.
(I studied economics for two years, but all I remember is the way the smell of the textbook made me sick).
16 Jul 05
Originally posted by Bosse de NageIt's more likely the Chinese economy would collapse IF it cashed in all its dollars, which it can't do because most of them are held in US government issued assets! If you want a good overview of the genesis and effect of foreign countries holding USD's see: http://www.kwaves.com/financeasia.pdf
I've heard that the US economy would collapse if for some reason China cashed in all its dollars. I've also heard (from some guy) that China has started investing in other foreign currencies, not just the $US. Economists! Is this true, and should it make the USA nervous?
(I studied economics for two years, but all I remember is the way the smell of the textbook made me sick).
China has reduced the dollar share of its foreign currency reserves to about 75% from over 80%, but has increased the actual dollar amount. In fact as the article makes clear, China regularly intervenes in the currency markets to prop up the value of the dollar. In the entire world, US dollar reserves account for about 65% of total currency reserves one of the many reasons Palynka's "doomsday" scenario based on an OPEC decision to use a different currency in TRADING (which is a minute amount compared to total world dollar reserves) is so farfetched.
16 Jul 05
Originally posted by no1marauderWhy do you East Asian countries have foreign reserves in USD and not in another country?
Yes, if ALL the countries and individuals who held dollar reserves in the whole wide world decided to unload them, there'd be a problem. No kidding. The point is that the decision of Iraq to trade in Euros had no significant effect and OPEC never followed suit. Even if it had, the largest foreign holders of USD reserves are East Asian countries ...[text shortened]... he main currency in international trade, they would have invaded Brussels, not Iraq.
The effect of OPEC merely considering the change led to a dramatic drop in the USD. If OPEC really changed, what do you think East Asian countries would do?
Sell, sell, sell.
It's quite easy to "unpeg" a currency into free float. These countries would be fools to hang on to those reserves with a falling USD and fools to keep the peg. The peg main use is to serve as a stabilizer, if the referenced currency was falling, the peg becomes of no use.
The fact is that the imbalance is there and the US' chronic current account deficit, allied to a falling and over-supplied dollar can be critical.
16 Jul 05
Originally posted by no1marauderThis is EXACTLY why the fall can be big enough to provoke such a deep crisis.
In the entire world, US dollar reserves account for about 65% of total currency reserves one of the many reasons Palynka's "doomsday" scenario based on an OPEC decision to use a different currency in TRADING (which is a minute amount compared to total world dollar reserves) is so farfetched.
Trading and debt is the reason these countries hold those reserves. What is the exchange rate for?
16 Jul 05
1 edit
Originally posted by Bosse de NageNot unless there is a major reason why China is pressed to sell dollars fast.
I've heard that the US economy would collapse if for some reason China cashed in all its dollars. I've also heard (from some guy) that China has started investing in other foreign currencies, not just the $US. Economists! Is this tr ...[text shortened]... all I remember is the way the smell of the textbook made me sick).
It's a snowball effect that can start with the OPEC and the other countries, seeing that they are losing money with the fall of the USD, start selling these reserves, creating a spiral of sellers.
It's exactly like a stock market crash. A significant fall of a stock price leads a spiral of selling, with everybody wanting to sell it and nobody wanting to buy it. What happens? Price falls and the idiot who loses the chair game, and can't sell or holds on to his stocks, ends up jumping out the window.
16 Jul 05
Originally posted by PalynkaThat's your "economic" analysis? Simply farfetched hysteria. The value of the dollar fell 33% in the last few years at one point, but China and everybody else didn't decide to cash their dollars in, thereby wrecking their own economy. Currencies can be "de-pegged" but that would likely cause many holders to sell those currencies as it would increase their risk factor. And OPEC trade is still such a small number compared to dollars held (many of which are NOT completely liquid being in US government securities with certain expiration dates) that any effect would be small, at least in the short run. And in the long run, many other factors could come into play. The world economic system just ain't as simple as you make it sound, Pal.
Not unless there is a major reason why China is pressed to sell dollars fast.
It's a snowball effect that can start with the OPEC and the other countries, seeing that they are losing money with the fall of the USD, start selling these reserves, creating a spiral of sellers.
It's exactly like a stock market crash. A significant fall of a stock price ...[text shortened]... loses the chair game, and can't sell or holds on to his stocks, ends up jumping out the window.
16 Jul 05
Originally posted by no1marauderAgain???? I've explained all that to you before.
That's your "economic" analysis? Simply farfetched hysteria. The value of the dollar fell 33% in the last few years at one point, but China and everybody else didn't decide to cash their dollars in, thereby wrecking their own economy. Currencies can be "de-pegged" but that would likely cause many holders to sell those currencies as it woul ...[text shortened]... ould come into play. The world economic system just ain't as simple as you make it sound, Pal.
The USD fell only with a small hint of that possibility. Where does your "OPEC is small" argument stand on those facts?
The real deal would obviously have been a lot worse than the hints. If the US had not intervened, a USD collapse would probably have been the case. In the short run.
Obviously the world economic system isn't as simple as I'm writing because I'm not writing a paper here and I don't have the time to go through all of it. But if you're not getting the basics, I find it hard to believe you'd get anything else. Pal.
BTW, was the IMF Director wrong when he warned about the possibility back in 2002?
17 Jul 05
2 edits
let me see...
you both agree: trading oil in euros would have some negative affect on the usd - just to different extents.
you both agree that the reason for the u.s. invading iraq was u.s. hegemony.
you disagree on whether the affect on thse usd was the primary cause of the invasion????
can it be that you disagree about who the primary opposition was: is the european economic union the central opposition? or is it just a directionless expansion?
consider this no1 - europe is very oil poor - perhaps it is not so much about the usd as about euro "containment"
17 Jul 05
Originally posted by zeeblebotBe sure to enlist before you make a statement like that. Or are you the type to let others do your fighting for you?
re "Who else publicly announced that they were seriously considering it?", googling indicates Iran, Russia, Venezuela, and OPEC, ... at least ...
let's invade all of them!
19 Sep 05
Originally posted by zeeblebotWhich terrorists did they maintain contact with?
because when people say it's about oil, they mean:
the U.S. invaded Iraq so they could control the oil supply.
not
the U.S. invaded Iraq because Iraq was using its oil monies to finance research and production of WMDs, and maintained contacts with and support of terrorists that would like to make use of those WMDs.