| Greenspan - Dollar Decline in Gulf - Unpeg
| Wednesday, February 27, 2008
|Alan Greenspan is recommending that the Gulf states un-peg their currency from the dollar. That means all thos petro-dollars that our country needs other countries to buy will be worth event less.
yes, this would be good for Arab states, because investing in the dollar is a bad investment, considering that there are other currencies that have an upside to them.
Just because Greenspan makes this statement (of fact) does not make him a traitor. It is in the best interest of most countries to separate them from the dollar and at some point they will. China and many other countries that accumulate dollar reserves do so in order to purchase goods from OPEC nations that only accept the dollar i exchange for crude. The OPEC nations should shift to another currency, which is another reason to emphasize energy independence. this was one of the reasons it was important to invade Iraq. We needed to keep them on the coin of the realm. We needed to keep the country dollar dependent.
I really am not a fan of the invasion of Iraq based on the publicly stated reasons, however, there were a lot of other good reasons to invade Iraq that were in the best interest of Americans in general - fear that Iraq was going to attempt to beat us in armed conflict was not on, but fear that Iraq would gain some sort of economic leverage in the region and that OPEC nations, if left to their own devices would shift to the Euro was a good reason. If we withdraw from the Middle East the currency transition will likely take place in short order. It will be good for the French, good for the Germans, and perhaps good for the Chinese. It will not be good for the US.
The problem with the war in Iraq has never really been the war - as you see are still there - it has been the politics and lies.
Greenspan may have been involved in lowering interest rates to stimulate demand and Bush may have introduces tax cuts to keep money circulating in investment, but neither held a gun to anyone's head and said go borrow more than you have a plan to pay back and neither forced American kids to play video games for the last 50 years instead of learning math.
The middle class is going to go away - or just become a poorer middle class in America for all kinds of reasons. CNN acts like Ward and Jun Cleaver are under siege and fails to fully represent the force that are at play and to get the word out that the middle class only existed in this country because of WWII and the continued threat of war. The middle class has few uses in an economy, it is not a necessary class under capitalism and were the middle class to cease to be, the economy would experience more (not less) stability.
There will still be growth in the economy, but the goods and service will move across border as a easily as a phone call and production will move to the location of least cost. None of th presidential candidates is really being honest, except Ron Paul. This country is bankrupt and it will have to sacrifice purchasing power to keep chugging. the people who come to terms with the coming changes will do fine in the future those who don't will be able to reap all the rewards of being surprised by the obvious.
Greenspan said if these countries choose to drop their dollar pegs, the inflation in the region would fall “significantly.” Gulf governments should consider the idea of floating their currencies assessing its implication in the long-term, Greenspan said.
However Saudi and UAE central bank chiefs spoke in favor of retaining dollar pegs, while Qatar's prime minister advocated for regional currency reform to avert possible unilateral revaluations. According to Saudi Central Bank Governor Hamad Saud Al Sayyari, floating the Saudi riyal would not be appropriate as the country relies on oil exports. He said floating is beneficial when the economy and exports are diversified.
This statement only makes sense if another currency is not substituted for the dollar and if other oil consuming markets do not develop. It basically reads "If we leave the US Dollar Americans won't be able to buy our petro-products and boy do they and their companies buy a lot of it! They are our best customer with their big cars and living in, wide opens spaces, and commuting. If we oil producing Gulf countries shift to away from the America market, the Americans, because of there long standing trade deficits will not be able to get the other currencies to purchase oil from us and the other suppliers at the the same rate as present and that decrease in overall demand would hurt us." However, I think Greenspan's recommendation is correct - the should unpeg their currency the same way China should. We are the borrowers and we are servants to the lenders.
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