Skip to comments.OPEC Dumps the Dollar
Posted on 12/06/2004 11:03:23 PM PST by ETERNAL WARMING
OPEC Dumps the Dollar NewsMax Wires Tuesday, Dec. 7, 2004 Quietly but with malice, OPEC cartel nations have been dumping the U.S. dollar over the past three years, according to the Bank for International Settlements (BIS).
The dollar has been falling dramatically in recent years -- reaching new lows against the Euro and other currencies. Story Continues Below
One key culprit may be OPEC states who have traditionally denominated their transactions in U.S. dollars -- but are now moving to the Euro in what the BIS says is a "subtle but noticeable" shift.
OPEC's actions may have been precipated by Sept. 11 and the Bush administation's "war on terrror" -- a war hotly opposed by almost all OPEC nations.
BIS data reveals that OPEC states have reduced their dollar deposits from 75 per cent in the third quarter of 2001 to 61.5 per cent today -- a fall of of some 13 percentage points.
"Since the third quarter of 2001, oil revenue seems to have been channeled increasingly into euro and other currency deposits," the bank said. "This shift out of U.S. dollars probably reflected to some extent the relative change in interest rates in the United States and the euro area since 1998."
The Financial Times also reported Monday that OPEC nations are also moving away from pricing oil in dollars.
The move away from the dollar could prove catastrophic for U.S. economic interests and bring to an end to more than a half century of dollar supremacy around the globe.
The FT suggested the shift by OPEC was due to "private Middle East investors" who are "worried about the prospect of US-held assets being frozen as part of the war on terror, leading to accelerated dollar-selling after the re-election of President George W. Bush."
Hans Redeker, global head of foreign exchange strategy at the French bank BNP Paribas, blamed the U.S. Patriot Act.
"If you trade with what the US regards as a 'dodgy' bank, you are at risk of your assets in the US being frozen," he said. "After the re-election of George Bush, the Middle East started to sell dollars like crazy due to the fears of assets being frozen."
The effect of the move away from the dollar has left the U.S. financial interests with a black eye.
Critics of the European Union have suggested that the introduction of the common currency known as the Euro was an effort to weaken the dollar's supremacy and to steal the OPEC account from the U.S. dollar.
These claims may be justified with the latest data from the Bank for International Settlements.
kind of an interesting coincide...the third quarter of 2001
thats cool...let them cut us off...
time for us to figure out a new power source and get off of oil and gas altogether...
then the Euros will be left holding the bag so to speak....
We should publicly threaten to make it our mission as a nation, if necessary, to convert to hydrogen cars if the Arabs don't stop trying to hurt America-economically and physically.
Wait till Euro's go in the toilet....payback time!
It's high time to get our financial house in order, least we become a banana republic, where the rich control everything and pay little or no taxes and the poor have no means to better themselves.
This issue is the Republicans' Achilles heal and will come back to bite in the next election cycle.
The article on this thread link said 1.80 for 1 Euro. Right now it is about 1.30....Beyond that we would have some problems, imo. Why anyone would want to invest in Euro's, is beyond me. I just don't see the long term stability of it.
BTW, a very good article from the Economist:
We're going to feel some effects very soon, like higher interest rates and inflation. Like in January. I expect the dollar to bounce back up a little very soon, too, though.
This could get very interesting.
US dollar rallies despite attack
By Laurance Norman in New York
December 7, 2004
THE US dollar chalked up a mini rally against the euro overnight and recorded more robust recoveries against other major currencies despite the attack on a US consulate in Saudi Arabia.
The dollar gained most of its ground against the single European currency in volatile late trading, when the yen also fell to a nine-month low against the euro.
Late Monday, the euro was at $US1.3393, down from $US1.3455 late Friday. That's off the euro's record high of $US1.3460 from earlier Friday.
The dollar was at 103.31 yen, a big rise from its late Friday level of Y102.04.
Complete fallacy. Every time tax rates on the rich have been lowered they pay more in absolute terms. The solution is to cut government spending drastically. Elimination of the unconstitutional Departments of Agriculture, Commerce, Education, Energy, Labor would be a modest first step.
Cutting off most foreign aid would probably save a bundle, too.
Perhaps they are just taking profits on their investments.
One of my professors opined on this and his explanation was that "people feel the euro is far more secure, because those societies/economies are more advanced that the U.S., plus in a major crisis (such as war) you know Europe will still be there, but you can't say that for the U.S."
Just more madness from academia...
Works for me. A little less compassion and a lot more fiscal responsibility would seem to be in order. My concern is that we get ourselves into a situation where our economy becomes stagnant like most of Europe.
The solution to this is, don't buy any more foreign oil and give them more piles of dollars. Let the Europeans pay the Devil for a while!
How about trimming the fat from gov't spending? HUD, NEA, NEH, pork to states, corportate welfare, entitlements to all manner of people, groups, entities, the Ad Council, etc etc.
When you read even a small list of what the gov't actually spends money on it's enough to turn you into an anarchist.
50% could be trimmed off immediately with only good results*. Sure, some people would get shook up a little. But about effing time. And when people get to keep more of their hard earned money, they'll give more in charity to organizations *they* deem worthy.
*And more later on. There's so little the fedgov should actually be doing.
Check out #7. I'm laughing too hard to respond.