pete
27/03/2003, 5:32 PM
Interesting (not too far fetched) if a bit long read.
> ---------------------
> IT'S NOT ABOUT OIL OR IRAQ.
> IT'S ABOUT THE US AND EUROPE
> GOING HEAD-TO-HEAD ON WORLD ECONOMIC DOMINANCE.
> By Geoffrey Heard
> Melbourne, Australia
>
> Summary: Why is George Bush so hell bent on war with Iraq? Why does
> his administration reject every positive Iraqi move? It all makes
> sense when you consider the economic implications for the USA of not
> going to war with Iraq. The war in Iraq is actually the US and Europe
> going head to head on economic leadership of the world.
>
> America's Bush administration has been caught in outright lies, gross
> exaggerations and incredible inaccuracies as it trotted out its litany
> of paper thin excuses for making war on Iraq. Along with its two
> supporters, Britain and Australia, it has shifted its ground and
> reversed its position with a barefaced contempt for its audience. It
> has manipulated information, deceived by commission and omission and
> frantically "bought" UN votes with billion dollar bribes.
>
> Faced with the failure of gaining UN Security Council support for
> invading Iraq, the USA has threatened to invade without authorisation.
> It would act in breach of the UN's very constitution to allegedly
> enforced UN resolutions. It is plain bizarre. Where does this
> desperation for war come from?
>
> There are many things driving President Bush and his administration to
> invade Iraq, unseat Saddam Hussein and take over the country. But the
> biggest one is hidden and very, very simple. It is about the currency
> used to trade oil and consequently, who will dominate the world
> economically, in the foreseeable future -- the USA or the European
> Union.
>
> Iraq is a European Union beachhead in that confrontation. America had
> a monopoly on the oil trade, with the US dollar being the fiat
> currency, but Iraq broke ranks in 1999, started to trade oil in the
> EU's euros, and profited. If America invades Iraq and takes over, it
> will hurl the EU and its euro back into the sea and make America's
> position as the dominant economic power in the world all but
> impregnable. 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.
>
> France and Germany are the spearhead of the European force -- Russia
> would like to go European but possibly can still be bought off.
>
> 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.
>
> DEBATE BUILDING ON THE INTERNET
>
> Oddly, little or nothing is appearing in the general media about this
> issue, although key people are becoming aware of it -- note the
> recent slide in the value of the US dollar. Are traders afraid of war?
> They are more likely to be afraid there will not be war.
>
> But despite the silence in the general media, a major world discussion
> is developing around this issue, particularly on the internet. Among
> the many articles: Henry Liu, in the 'Asia Times' last June, it has
> been a hot topic on the Feasta forum, an Irish-based group exploring
> sustainable economics, and W. Clark's "The Real Reasons for the
> Upcoming War with
> Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken
> Truth" has been published by the 'Sierra Times', 'Indymedia.org', and
> 'ratical.org'.
>
> This debate is not about whether America would suffer from losing the
> US dollar monopoly on oil trading -- that is a given -- rather it is
> about exactly how hard the USA would be hit. The smart money seems to
> be saying the impact would be in the range from severe to
> catastrophic. The USA could collapse economically.
>
> OIL DOLLARS
>
> The key to it all is the fiat currency for trading oil.
>
> Under an OPEC agreement, all oil has been traded in US dollars since
> 1971 (after the dropping of the gold standard) which makes the US
> dollar the de facto major international trading currency. If other
> nations have to hoard dollars to buy oil, then they want to use that
> hoard for other trading too. This fact gives America a huge trading
> advantage and helps make it the dominant economy in the world.
>
> As an economic bloc, the European Union is the only challenger to the
> USA's economic position, and it created the euro to challenge the
> dollar in international markets. However, the EU is not yet united
> behind the euro -- there is a lot of jingoistic national politics
> involved, not least in Britain -- and in any case, so long as nations
> throughout the world must hoard dollars to buy oil, the euro can make
> only very limited inroads into the dollar's dominance.
>
> In 1999, Iraq, with the world's second largest oil reserves, switched
> to trading its oil in euros. American analysts fell about laughing;
> Iraq had just made a mistake that was going to beggar the nation. But
> two years on, alarm bells were sounding; the euro was rising against
> the dollar, Iraq had
> given itself a huge economic free kick by switching.
>
> Iran started thinking about switching too; Venezuela, the 4th largest
> oil producer, began looking at it and has been cutting out the dollar
> by bartering oil with several nations including America's bete noir,
> Cuba. Russia is seeking to ramp up oil production with Europe (trading
> in
> euros) an obvious market.
>
> The greenback's grip on oil trading and consequently on world trade in
> general, was under serious threat. If America did not stamp on this
> immediately, this economic brushfire could rapidly be fanned into a
> wildfire capable of consuming the US's economy and its dominance of
> world trade.
>
> HOW DOES THE US GET ITS DOLLAR ADVANTAGE?
>
> Imagine this: you are deep in debt but every day you write cheques for
> millions of dollars you don't have -- another luxury car, a holiday
> home at the beach, the world trip of a lifetime.
>
> Your cheques should be worthless but they keep buying stuff because
> those cheques you write never reach the bank! You have an agreement
> with the owners of one thing everyone wants, call it petrol/gas, that
> they will accept only your cheques as payment. This means everyone
> must hoard your cheques so they can buy petrol/gas. Since they have to
> keep a stock of your cheques, they use them to buy other stuff too.
> You write a cheque to buy a TV, the TV shop owner swaps your cheque
> for petrol/gas, that seller buys some vegetables at the fruit shop,
> the fruiterer passes it on to buy bread, the baker buys some flour
> with it, and on it goes, round and round -- but never back to the
> bank.
>
> You have a debt on your books, but so long as your cheque never
> reaches the bank, you don't have to pay. In effect, you have received
> your TV free. This is the position the USA has enjoyed for 30 years --
> it has been getting a free world trade ride for all that time. It has
> been receiving a huge subsidy from everyone else in the world. As it
> debt has been growing, it has printed more money (written more
> cheques) to keep trading. No wonder it is an economic powerhouse!
> Then one day, one petrol seller says he is going to accept another
> person's cheques, a couple of others think that might be a good idea.
> If this spreads, people are going to stop hoarding your cheques and they
> will come flying home to the bank. Since you don't have enough in the
> bank to cover all the cheques, very nasty stuff is going to hit the fan!
>
> But you are big, tough and very aggressive. You don't scare the other
> guy who can write cheques, he's pretty big too, but given a
> 'legitimate' excuse, you can beat the tripes out of the lone gas
> seller and scare him and his mates into submission.
>
> And that, in a nutshell, is what the USA is doing right now with Iraq.
>
> AMERICA'S PRECARIOUS ECONOMIC POSITION
>
> America is so eager to attack Iraq now because of the speed with which
> the euro fire could spread. If Iran, Venezuela and Russia join Iraq
> and sell large quantities of oil for euros, the euro would have the
> leverage it needs to become a powerful force in general international
> trade. Other nations would have to start swapping some of their
> dollars for euros.
>
> The dollars the USA has printed, the 'cheques' it has written, would
> start to fly home, stripping away the illusion of value behind them.
> The USA's real economic condition is about as bad as it could be; it
> is the most debt-ridden nation on earth, owing about US$12,000 for
> every single one of it's 280 million men, women and children. It is
> worse than the position of Indonesia when it imploded economically a
> few years ago, or more recently, that of Argentina.
>
> Even if OPEC did not switch to euros wholesale (and that would make a
> very nice non-oil profit for the OPEC countries, including minimising
> the various contrived debts America has forced on some of them), the
> US's difficulties would build. Even if only a small part of the oil
> trade went euro, that would do two things immediately:
>
> * Increase the attractiveness to EU members of joining the
> 'eurozone', which in turn would make the euro stronger and make it
> more attractive to oil nations as a trading currency and to other
> nations as a general trading currency.
>
> * Start the US dollars flying home demanding value when there isn't
> enough in the bank to cover them.
>
> * The markets would over-react as usual and in no time, the US
> dollar's value would be spiralling down.
> ---------------------
> IT'S NOT ABOUT OIL OR IRAQ.
> IT'S ABOUT THE US AND EUROPE
> GOING HEAD-TO-HEAD ON WORLD ECONOMIC DOMINANCE.
> By Geoffrey Heard
> Melbourne, Australia
>
> Summary: Why is George Bush so hell bent on war with Iraq? Why does
> his administration reject every positive Iraqi move? It all makes
> sense when you consider the economic implications for the USA of not
> going to war with Iraq. The war in Iraq is actually the US and Europe
> going head to head on economic leadership of the world.
>
> America's Bush administration has been caught in outright lies, gross
> exaggerations and incredible inaccuracies as it trotted out its litany
> of paper thin excuses for making war on Iraq. Along with its two
> supporters, Britain and Australia, it has shifted its ground and
> reversed its position with a barefaced contempt for its audience. It
> has manipulated information, deceived by commission and omission and
> frantically "bought" UN votes with billion dollar bribes.
>
> Faced with the failure of gaining UN Security Council support for
> invading Iraq, the USA has threatened to invade without authorisation.
> It would act in breach of the UN's very constitution to allegedly
> enforced UN resolutions. It is plain bizarre. Where does this
> desperation for war come from?
>
> There are many things driving President Bush and his administration to
> invade Iraq, unseat Saddam Hussein and take over the country. But the
> biggest one is hidden and very, very simple. It is about the currency
> used to trade oil and consequently, who will dominate the world
> economically, in the foreseeable future -- the USA or the European
> Union.
>
> Iraq is a European Union beachhead in that confrontation. America had
> a monopoly on the oil trade, with the US dollar being the fiat
> currency, but Iraq broke ranks in 1999, started to trade oil in the
> EU's euros, and profited. If America invades Iraq and takes over, it
> will hurl the EU and its euro back into the sea and make America's
> position as the dominant economic power in the world all but
> impregnable. 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.
>
> France and Germany are the spearhead of the European force -- Russia
> would like to go European but possibly can still be bought off.
>
> 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.
>
> DEBATE BUILDING ON THE INTERNET
>
> Oddly, little or nothing is appearing in the general media about this
> issue, although key people are becoming aware of it -- note the
> recent slide in the value of the US dollar. Are traders afraid of war?
> They are more likely to be afraid there will not be war.
>
> But despite the silence in the general media, a major world discussion
> is developing around this issue, particularly on the internet. Among
> the many articles: Henry Liu, in the 'Asia Times' last June, it has
> been a hot topic on the Feasta forum, an Irish-based group exploring
> sustainable economics, and W. Clark's "The Real Reasons for the
> Upcoming War with
> Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken
> Truth" has been published by the 'Sierra Times', 'Indymedia.org', and
> 'ratical.org'.
>
> This debate is not about whether America would suffer from losing the
> US dollar monopoly on oil trading -- that is a given -- rather it is
> about exactly how hard the USA would be hit. The smart money seems to
> be saying the impact would be in the range from severe to
> catastrophic. The USA could collapse economically.
>
> OIL DOLLARS
>
> The key to it all is the fiat currency for trading oil.
>
> Under an OPEC agreement, all oil has been traded in US dollars since
> 1971 (after the dropping of the gold standard) which makes the US
> dollar the de facto major international trading currency. If other
> nations have to hoard dollars to buy oil, then they want to use that
> hoard for other trading too. This fact gives America a huge trading
> advantage and helps make it the dominant economy in the world.
>
> As an economic bloc, the European Union is the only challenger to the
> USA's economic position, and it created the euro to challenge the
> dollar in international markets. However, the EU is not yet united
> behind the euro -- there is a lot of jingoistic national politics
> involved, not least in Britain -- and in any case, so long as nations
> throughout the world must hoard dollars to buy oil, the euro can make
> only very limited inroads into the dollar's dominance.
>
> In 1999, Iraq, with the world's second largest oil reserves, switched
> to trading its oil in euros. American analysts fell about laughing;
> Iraq had just made a mistake that was going to beggar the nation. But
> two years on, alarm bells were sounding; the euro was rising against
> the dollar, Iraq had
> given itself a huge economic free kick by switching.
>
> Iran started thinking about switching too; Venezuela, the 4th largest
> oil producer, began looking at it and has been cutting out the dollar
> by bartering oil with several nations including America's bete noir,
> Cuba. Russia is seeking to ramp up oil production with Europe (trading
> in
> euros) an obvious market.
>
> The greenback's grip on oil trading and consequently on world trade in
> general, was under serious threat. If America did not stamp on this
> immediately, this economic brushfire could rapidly be fanned into a
> wildfire capable of consuming the US's economy and its dominance of
> world trade.
>
> HOW DOES THE US GET ITS DOLLAR ADVANTAGE?
>
> Imagine this: you are deep in debt but every day you write cheques for
> millions of dollars you don't have -- another luxury car, a holiday
> home at the beach, the world trip of a lifetime.
>
> Your cheques should be worthless but they keep buying stuff because
> those cheques you write never reach the bank! You have an agreement
> with the owners of one thing everyone wants, call it petrol/gas, that
> they will accept only your cheques as payment. This means everyone
> must hoard your cheques so they can buy petrol/gas. Since they have to
> keep a stock of your cheques, they use them to buy other stuff too.
> You write a cheque to buy a TV, the TV shop owner swaps your cheque
> for petrol/gas, that seller buys some vegetables at the fruit shop,
> the fruiterer passes it on to buy bread, the baker buys some flour
> with it, and on it goes, round and round -- but never back to the
> bank.
>
> You have a debt on your books, but so long as your cheque never
> reaches the bank, you don't have to pay. In effect, you have received
> your TV free. This is the position the USA has enjoyed for 30 years --
> it has been getting a free world trade ride for all that time. It has
> been receiving a huge subsidy from everyone else in the world. As it
> debt has been growing, it has printed more money (written more
> cheques) to keep trading. No wonder it is an economic powerhouse!
> Then one day, one petrol seller says he is going to accept another
> person's cheques, a couple of others think that might be a good idea.
> If this spreads, people are going to stop hoarding your cheques and they
> will come flying home to the bank. Since you don't have enough in the
> bank to cover all the cheques, very nasty stuff is going to hit the fan!
>
> But you are big, tough and very aggressive. You don't scare the other
> guy who can write cheques, he's pretty big too, but given a
> 'legitimate' excuse, you can beat the tripes out of the lone gas
> seller and scare him and his mates into submission.
>
> And that, in a nutshell, is what the USA is doing right now with Iraq.
>
> AMERICA'S PRECARIOUS ECONOMIC POSITION
>
> America is so eager to attack Iraq now because of the speed with which
> the euro fire could spread. If Iran, Venezuela and Russia join Iraq
> and sell large quantities of oil for euros, the euro would have the
> leverage it needs to become a powerful force in general international
> trade. Other nations would have to start swapping some of their
> dollars for euros.
>
> The dollars the USA has printed, the 'cheques' it has written, would
> start to fly home, stripping away the illusion of value behind them.
> The USA's real economic condition is about as bad as it could be; it
> is the most debt-ridden nation on earth, owing about US$12,000 for
> every single one of it's 280 million men, women and children. It is
> worse than the position of Indonesia when it imploded economically a
> few years ago, or more recently, that of Argentina.
>
> Even if OPEC did not switch to euros wholesale (and that would make a
> very nice non-oil profit for the OPEC countries, including minimising
> the various contrived debts America has forced on some of them), the
> US's difficulties would build. Even if only a small part of the oil
> trade went euro, that would do two things immediately:
>
> * Increase the attractiveness to EU members of joining the
> 'eurozone', which in turn would make the euro stronger and make it
> more attractive to oil nations as a trading currency and to other
> nations as a general trading currency.
>
> * Start the US dollars flying home demanding value when there isn't
> enough in the bank to cover them.
>
> * The markets would over-react as usual and in no time, the US
> dollar's value would be spiralling down.