Financial News

It is vital in today’s world to understand the complex interplay of international politics, energy, and financial markets.

Bluntly put the United States has a financial house of cards that will collapse. There are two major issues expressed in the attached articles today:

The first is that the United States must absorb billions of dollars each and every day in NEW investment, just to remain solvent. As the largest debtor nation this world has ever seen, we are in an extraordinarily vulnerable position to those other countries who, until recently, have purchased most of our debt. China, Japan and others will continue to purchase our debt only as long as it benefits them. Given the brutal, arrogant, and obnoxious way the Bush Administration has treated foreign relations, it is hardly likely that foreign altruism will save our bacon.

Secondarily, we are in an extraordinarily vulnerable position to those countries who posses quantities of oil and gas. Unfortunately, most of these gifted areas are located in regions of the planet where war and instability are the norm, not the exception. Yet here we are, firmly connected to a pipeline that leads to disaster and with no apparent strategy to disconnect.


China signals reserves switch away from dollar

By Geoff Dyer in Shanghai and Andrew Balls in WashingtonPublished: January 5 2006 20:13 | Last updated: January 6 2006 02:43
”China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds – a potential shift with significant implications for global financial and commodity markets.
Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves – currently accumulating at about $15bn (€12.4bn) a month – it could put heavy downward pressure on the greenback…”


Iran is Cheney's Next Target
It's the financial threat of Iran introducing a euro-based energy exchange.
by Allen L Roland, Ph.D

“Iran is Cheney's next target ( note , I did not mention Bush who is the cheerleader for the Cheney/Rumsfeld cabal ) and the reason Iran is next has nothing to do with a nuclear threat and everything to do with the financial threat of Iran introducing a euro-based energy exchange…”
" One of the major unstated reasons the United States invaded Iraq was to stop Saddam Hussein from trading oil for euros, which he had begun in 2000. Hussein actually made more money selling oil for euros, as the euro appreciated 17 percent against the dollar between 2000 and 2003. Other countries in the region, particulary Iran and Syria, began public musing about switching from dollars to euros around the same time.... All three countries were subject to a barrage of threats from the United States government, but only Iraq went through with the switch, and it was summarily invaded. One of the US government's first acts in Iraq was to switch oil sales back to dollars."

Iran in the Crosshairs

By Ryan McGreal

"Starting in 2006, Iran will start up an "oil bourse", or a stock exchange for trading energy, that will be based on the euro, not the US dollar. While this may seem innocuous, it will be a grave risk to continued American global hegemony.Petrodollar HegemonyToday, most oil trading takes place on the New York Mercantile Exchange (NYMEX) and the London-based International Petroleum Exchange (IPE). Since the 1970s, the OPEC countries have all agreed to sell oil for US dollars only. This means every country that wants to buy oil must first acquire enough US dollars to buy what it needs…”


The scramble for energy fuels a new era of power politics

By Philip Stephens Published: January 6 2006 02:00

“At first glance the story had a tolerable if not quite a happy ending. For a moment this week Europeans shivered at the prospect of a winter of disrupted gas supplies. They were confronted with the long obvious, but wilfully unacknowledged, reality that most of Europe depends on the good will of Vladimir Putin's Kremlin to keep warm. Then, just as the chill set in, Russia and Ukraine swerved to avoid a collision. The rest of us could turn up the central heating and fret again about climate change.

Would that were so. A first draft of history may well view the fight between Moscow and Kiev over the price of Russian gas as an adjunct to the power struggle between Mr Putin and Ukraine's Viktor Yushchenko. A more reflective judgment may see it as the first skirmish of an era in which the scramble for hydrocarbons became a prime threat to global stability. Either way, energy security, or more accurately, insecurity, has forced its way up the geopolitical agenda…”

“….The emergence of China and India as the motors of rising demand changes everything. The interests of consumers are no longer obviously aligned. China's per capita oil consumption is only about one 25th of that of the US. Yet secure and rising energy supplies are vital to its rise as a global power. India, too, has more to lose than established western powers from disruption to its supplies.

The threat now is of conflict between consumers as much as any stand-off with suppliers. The early signs are already visible in the explosion of Chinese diplomacy in Africa, the Middle East and Latin America. Much of the west sees Iran as a threat. Sudan stands condemned for blatant human rights violations. Washington worries that Venezuela's leftist government is destabilising Latin America. Yet Beijing looks at these countries through an entirely different lens. They are reliable guarantors of its energy needs…”

I am not an expert on anything, let alone national economies, but even I can see the enormous problems we face. Problems that are deliberate actions by our current political leadership. AFter all, THEY won't be hurt by the coming economic collapse, you and I will.