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OPEC Dumps the Dollar
NewsMax ^ | Tuesday, Dec. 7, 2004 | staff

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.


TOPICS: Business/Economy; Foreign Affairs
KEYWORDS: dollar; euro; opec

1 posted on 12/06/2004 11:03:23 PM PST by ETERNAL WARMING
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To: ETERNAL WARMING

kind of an interesting coincide...the third quarter of 2001


2 posted on 12/06/2004 11:05:47 PM PST by chemical_boy
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To: ETERNAL WARMING

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....


3 posted on 12/06/2004 11:11:27 PM PST by MikefromOhio (32 days until I can leave Iraq for good....)
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To: ETERNAL WARMING

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.


4 posted on 12/06/2004 11:24:49 PM PST by Finalapproach29er (You can drive from coast to coast and never pass through a single county won by Kerry.)
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To: MikeinIraq

Wait till Euro's go in the toilet....payback time!


5 posted on 12/06/2004 11:35:43 PM PST by TheLion
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To: TheLion
How high can the Euro go...and the Dollar slide before WE really feel the effect?
6 posted on 12/06/2004 11:44:59 PM PST by Dallas59 ("A weak peace is worse than war" - Tacitcus)
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To: ETERNAL WARMING
It's time to face reality and raise taxes on the rich to pay off the national debt. I know this will not be a popular idea around here, but as a solution, it will at least help.

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.

7 posted on 12/06/2004 11:49:44 PM PST by Dec31,1999 (www.protestwarrior.com)
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To: Dallas59

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:
http://www.freerepublic.com/focus/f-news/1295875/posts


8 posted on 12/06/2004 11:50:44 PM PST by TheLion
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To: Dallas59

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.


9 posted on 12/06/2004 11:57:22 PM PST by Dec31,1999 (www.protestwarrior.com)
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To: ETERNAL WARMING; Dallas59

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.

....snip...

http://finance.news.com.au/common/story_page/0,4057,11614971%255E1702,00.html


10 posted on 12/07/2004 12:00:46 AM PST by TheLion
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To: Dec31,1999
It's time to face reality and raise taxes on the rich to pay off the national debt. I know this will not be a popular idea around here, but as a solution, it will at least help.

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.

11 posted on 12/07/2004 8:09:05 AM PST by Timocrat (I Emanate on your Auras and Penumbras Mr Blackmun)
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To: Timocrat

Cutting off most foreign aid would probably save a bundle, too.


12 posted on 12/07/2004 10:15:26 AM PST by Dec31,1999 (www.protestwarrior.com)
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To: ETERNAL WARMING

Perhaps they are just taking profits on their investments.


13 posted on 12/07/2004 10:26:00 AM PST by Doctor Stochastic (Vegetabilisch = chaotisch is der Charakter der Modernen. - Friedrich Schlegel)
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To: TheLion

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...


14 posted on 12/07/2004 4:18:25 PM PST by Tacos
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To: Dec31,1999

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.


15 posted on 12/07/2004 4:25:48 PM PST by Timocrat (I Emanate on your Auras and Penumbras Mr Blackmun)
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To: ETERNAL WARMING
So, when are we going to start drilling for oil in Alaska again and reverse this appalling situation?

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!

16 posted on 12/07/2004 4:42:27 PM PST by Gritty ("Experience keeps a dear school, yet Fools will learn in no other"-Benjamin Franklin)
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To: Dec31,1999

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.


17 posted on 12/07/2004 4:47:15 PM PST by little jeremiah (What would happen if everyone decided their own "right and wrong"?)
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To: ETERNAL WARMING
We could be running a bunch of diesels on biofuel (used french fry oil).
The conversion is around a grand.
The fuel is free.
18 posted on 12/07/2004 4:47:54 PM PST by muleskinner
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To: Timocrat

Yup.


19 posted on 12/07/2004 4:48:13 PM PST by little jeremiah (What would happen if everyone decided their own "right and wrong"?)
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To: Toddsterpatriot; Poohbah; LowCountryJoe

Check out #7. I'm laughing too hard to respond.


20 posted on 12/07/2004 4:52:28 PM PST by 1rudeboy
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To: Dallas59

what effects? higher prices for euro goods? who cares. higher oil prices? they have been falling. our interest rates were going up anyway.

if we can break the yuan peg, this euro/dollar thing will level off.


21 posted on 12/07/2004 4:52:33 PM PST by oceanview
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To: ETERNAL WARMING

the treasury knows who's buying and selling what, when, and through whom.


22 posted on 12/07/2004 4:55:14 PM PST by the invisib1e hand (if a man lives long enough, he gets to see the same thing over and over.)
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To: Tacos

He obviously isn't a history Prof.


23 posted on 12/07/2004 4:55:52 PM PST by monkeywrench
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To: monkeywrench

"He obviously isn't a history Prof."

He sure isn't.


24 posted on 12/07/2004 4:57:17 PM PST by Tacos
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To: Dec31,1999
Are you a nut?

Raising taxes is a dead end proposition, as any CPA will tell you.

That is the Socialist solution, and also the dems.

You don't raise taxes, which only causes capital flight, (investment chases return).

You lower government spending. Period.
25 posted on 12/07/2004 5:00:34 PM PST by bill1952 ("All that we do is done with an eye towards something else.")
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To: ETERNAL WARMING

Bump


26 posted on 12/07/2004 5:07:54 PM PST by Darnright
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To: Dec31,1999
It's time to face reality and raise taxes on the rich to pay off the national debt. I know this will not be a popular idea around here, but as a solution, it will at least help.

Great idea!! What rate were you thinking? 60%? 70%?

I think the rate should be raised until the top 10% of taxpayers pay 66% of all taxes. Tax 'em till they squeal.

27 posted on 12/07/2004 5:23:06 PM PST by Toddsterpatriot (Protectionists give me the Willies!!!)
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To: Dec31,1999

None of you really get it - do you.


28 posted on 12/07/2004 5:38:06 PM PST by Havoc (Reagan was right and so was McKinley. Down with free trade.)
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To: Tacos

In a "major crisis" Europe will surrender. I would like to ask the professor just how they are more advanced....probably in multi-cultural diversification.


29 posted on 12/07/2004 5:42:12 PM PST by TheLion
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To: Tacos
"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..."

Wow -- I'll say it's "madness."

Aside from the delusional premise of your prof, the ignoramus is actually ROOTING for the U.S. to die every which way.

30 posted on 12/07/2004 5:47:31 PM PST by F16Fighter
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To: Chani

ping


31 posted on 12/07/2004 7:23:03 PM PST by Chani (bookmark girl)
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To: Dec31,1999
That's brilliant. No, that's "Bono-like" brilliant!
32 posted on 12/08/2004 3:30:32 AM PST by LowCountryJoe (Many things in moderation, some with conservation, few in immoderation, all because of liberation!)
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To: TheLion

He talked about their standard of living, morals (HA!)health care, and educational systems.

The first three are a joke.

I do see points about education...we don't put enough disciplined effort into our educational system overall...lowering of standards...etc...
Although their systems stink overall, they still treat education seriously. Would like to see some more emphasis on training for those that don't go on to college (vocational).


And yes, they would likely surrender...I agree.


33 posted on 12/17/2004 6:17:02 PM PST by Tacos
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To: Dec31,1999

This is from someone who went from an 8MPG Beast (Hooked up 85 Monte Carlo) and recently upraded to a more practical 15 MPG vehicle (ESCALADE!).

Gas prices aint high.


34 posted on 12/17/2004 6:43:12 PM PST by chudogg (www.chudogg.blogspot.com)
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To: ETERNAL WARMING
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. Not really. Eurabia's economy (especially in FROGGYSTAN and NAZISTAN and SPANISTAN) is collapsing at an unprecidend rate.
35 posted on 12/17/2004 7:02:53 PM PST by Paul_Denton
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To: Dec31,1999

Cutting off most foreign aid would probably save a bundle, too.

Cutting of the UN's funding will go a long ways. Same with removing any aid sent to EURABIA and selling more weapons and wares to Taiwan, Israel, Japan, and South Korea.

36 posted on 12/17/2004 7:06:28 PM PST by Paul_Denton
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To: Paul_Denton

And cut off non-essential government stuff, NEA and other socialistic agencies especially.


37 posted on 12/17/2004 7:08:53 PM PST by Paul_Denton
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To: ETERNAL WARMING

I see this as one more sign that the EU is on it's way to becoming the dominant world power.


38 posted on 12/17/2004 7:11:13 PM PST by Jorge
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To: Gritty
So, when are we going to start drilling for oil in Alaska again and reverse this appalling situation?

Florida's Gulf coast is another good place to drill that the environmentalists have managed to keep off limits.

And I agree wholeheartedly with the suggestions to take an axe to the budget -- we could eliminate so much wasteful spending so quickly, and with majorities in the House and Senate, now is the time to strike. In addition to all of the good suggestions about eliminating a number of departments (and in particular, I like the idea of eliminating the Department of Education first), I would like to see the recent drug "benefit" rescinded.

Even if we didn't get out of the red in the first go-round, just getting the budget deficit down a bit would be great. Seeing the weight of a few unneeded departments also removed would be a gift to our posterity, contrary to the heavy burden of debt that we are presently laying on them.

39 posted on 12/17/2004 7:11:56 PM PST by snowsislander
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To: snowsislander

Some scary economic figures you have posted there on your Home Page...


40 posted on 12/17/2004 7:15:02 PM PST by Gritty ("A basic definition: Politics is whatever you can get away with, without going to jail"-John Armor)
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To: MikeinIraq
time for us to figure out a new power source and get off of oil and gas altogether...

Amen! And it wouldn't be that hard to do, if the environmentalist whackos would just get out of the way.

41 posted on 12/17/2004 7:17:21 PM PST by Minuteman23
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To: TheLion
The difference between the euro-zone and the US is that the euro-zone has a more or less balanced current account. For the Euro to gain against the Dollar we don't have to do anything. The same is true for most other important currencies. The there is the issue of the central banks. The ECB follows a far less expensive monetary policy. Its only job is to keep the inflation low.

About the OPEC: Can you blame them? Except for Venezuela they do more business with the EU than with the USA. If the Dollar falls they loose purchasing power.
It really doesn't make that much of a difference whether the oil is traded in dollar or euro. Maybe your fuel prices will become a little more volatile and ours a little more stable, but that's about it. it doesn't change anything. Besides, i seriously doubt they are going to dumb the dollar completely, they are just going to use more than one currency.
42 posted on 12/18/2004 4:13:39 AM PST by wu_trax
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