The Proposed Iranian Oil Bourse

[naggar]

From : http://www.countercurrents.org/us-petrov200106.htm

I. Economics of Empires
A nation-state taxes its own citizens, while an empire taxes other nation-states. The history of empires, from Greek and Roman, to Ottoman and British, teaches that the economic foundation of every single empire is the taxation of other nations. The imperial ability to tax has always rested on a better and stronger economy, and as a consequence, a better and stronger military. One part of the subject taxes went to improve the living standards of the empire; the other part went to strengthen the military dominance necessary to enforce the collection of those taxes.

Historically, taxing the subject state has been in various forms-usually gold and silver, where those were considered money, but also slaves, soldiers, crops, cattle, or other agricultural and natural resources, whatever economic goods the empire demanded and the subject-state could deliver. Historically, imperial taxation has always been direct: the subject state handed over the economic goods directly to the empire.

For the first time in history, in the twentieth century, America was able to tax the world indirectly, through inflation. It did not enforce the direct payment of taxes like all of its predecessor empires did, but distributed instead its own fiat currency, the U.S. Dollar, to other nations in exchange for goods with the intended consequence of inflating and devaluing those dollars and paying back later each dollar with less economic goods-the difference capturing the U.S. imperial tax. Here is how this happened.

Early in the 20th century, the U.S. economy began to dominate the world economy. The U.S. dollar was tied to gold, so that the value of the dollar neither increased, nor decreased, but remained the same amount of gold. The Great Depression, with its preceding inflation from 1921 to 1929 and its subsequent ballooning government deficits, had substantially increased the amount of currency in circulation, and thus rendered the backing of U.S. dollars by gold impossible. This led Roosevelt to decouple the dollar from gold in 1932. Up to this point, the U.S. may have well dominated the world economy, but from an economic point of view, it was not an empire. The fixed value of the dollar did not allow the Americans to extract economic benefits from other countries by supplying them with dollars convertible to gold.

Economically, the American Empire was born with Bretton Woods in 1945. The U.S. dollar was not fully convertible to gold, but was made convertible to gold only to foreign governments. This established the dollar as the reserve currency of the world. It was possible, because during WWII, the United States had supplied its allies with provisions, demanding gold as payment, thus accumulating significant portion of the world's gold. An Empire would not have been possible if, following the Bretton Woods arrangement, the dollar supply was kept limited and within the availability of gold, so as to fully exchange back dollars for gold. However, the guns-and-butter policy of the 1960's was an imperial one: the dollar supply was relentlessly increased to finance Vietnam and LBJ's Great Society. Most of those dollars were handed over to foreigners in exchange for economic goods, without the prospect of buying them back at the same value. The increase in dollar holdings of foreigners via persistent U.S. trade deficits was tantamount to a tax-the classical inflation tax that a country imposes on its own citizens, this time around an inflation tax that U.S. imposed on rest of the world.

When in 1970-1971 foreigners demanded payment for their dollars in gold, The U.S. Government defaulted on its payment on August 15, 1971. While the popular spin told the story of "severing the link between the dollar and gold", in reality the denial to pay back in gold was an act of bankruptcy by the U.S. Government. Essentially, the U.S. declared itself an Empire. It had extracted an enormous amount of economic goods from the rest of the world, with no intention or ability to return those goods, and the world was powerless to respond- the world was taxed and it could not do anything about it.

From that point on, to sustain the American Empire and to continue to tax the rest of the world, the United States had to force the world to continue to accept ever-depreciating dollars in exchange for economic goods and to have the world hold more and more of those depreciating dollars. It had to give the world an economic reason to hold them, and that reason was oil.
In 1971, as it became clearer and clearer that the U.S Government would not be able to buy back its dollars in gold, it made in 1972-73 an iron-clad arrangement with Saudi Arabia to support the power of the House of Saud in exchange for accepting only U.S. dollars for its oil. The rest of OPEC was to follow suit and also accept only dollars. Because the world had to buy oil from the Arab oil countries, it had the reason to hold dollars as payment for oil. Because the world needed ever increasing quantities of oil at ever increasing oil prices, the world's demand for dollars could only increase. Even though dollars could no longer be exchanged for gold, they were now exchangeable for oil.

The economic essence of this arrangement was that the dollar was now backed by oil. As long as that was the case, the world had to accumulate increasing amounts of dollars, because they needed those dollars to buy oil. As long as the dollar was the only acceptable payment for oil, its dominance in the world was assured, and the American Empire could continue to tax the rest of the world. If, for any reason, the dollar lost its oil backing, the American Empire would cease to exist. Thus, Imperial survival dictated that oil be sold only for dollars. It also dictated that oil reserves were spread around various sovereign states that weren't strong enough, politically or militarily, to demand payment for oil in something else. If someone demanded a different payment, he had to be convinced, either by political pressure or military means, to change his mind.

The man that actually did demand Euro for his oil was Saddam Hussein in 2000. At first, his demand was met with ridicule, later with neglect, but as it became clearer that he meant business, political pressure was exerted to change his mind. When other countries, like Iran, wanted payment in other currencies, most notably Euro and Yen, the danger to the dollar was clear and present, and a punitive action was in order. Bush's Shock-and-Awe in Iraq was not about Saddam's nuclear capabilities, about defending human rights, about spreading democracy, or even about seizing oil fields; it was about defending the dollar, ergo the American Empire. It was about setting an example that anyone who demanded payment in currencies other than U.S. Dollars would be likewise punished.

Many have criticized Bush for staging the war in Iraq in order to seize Iraqi oil fields. However, those critics can't explain why Bush would want to seize those fields-he could simply print dollars for nothing and use them to get all the oil in the world that he needs. He must have had some other reason to invade Iraq.

History teaches that an empire should go to war for one of two reasons: (1) to defend itself or (2) benefit from war; if not, as Paul Kennedy illustrates in his magisterial The Rise and Fall of the Great Powers, a military overstretch will drain its economic resources and precipitate its collapse. Economically speaking, in order for an empire to initiate and conduct a war, its benefits must outweigh its military and social costs.

Benefits from Iraqi oil fields are hardly worth the long-term, multi-year military cost. Instead, Bush must have gone into Iraq to defend his Empire. Indeed, this is the case: two months after the United States invaded Iraq, the Oil for Food Program was terminated, the Iraqi Euro accounts were switched back to dollars, and oil was sold once again only for U.S. dollars. No longer could the world buy oil from Iraq with Euro. Global dollar supremacy was once again restored. Bush descended victoriously from a fighter jet and declared the mission accomplished-he had successfully defended the U.S. dollar, and thus the American Empire.

II. Iranian Oil Bourse

The Iranian government has finally developed the ultimate "nuclear" weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar than Saddam's, because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether. If so, then it is likely that almost everyone will eagerly adopt this euro oil system:

The Europeans will not have to buy and hold dollars in order to secure their payment for oil, but would instead pay with their own currencies. The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the European at the expense of the Americans.

The Chinese and the Japanese will be especially eager to adopt the new exchange, because it will allow them to drastically lower their enormous dollar reserves and diversify with Euros, thus protecting themselves against the depreciation of the dollar. One portion of their dollars they will still want to hold onto; a second portion of their dollar holdings they may decide to dump outright; a third portion of their dollars they will decide to use up for future payments without replenishing those dollar holdings, but building up instead their euro reserves.

The Russians have inherent economic interest in adopting the Euro - the bulk of their trade is with European countries, with oil-exporting countries, with China, and with Japan. Adoption of the Euro will immediately take care of the first two blocs, and will over time facilitate trade with China and Japan. Also, the Russians seemingly detest holding depreciating dollars, for they have recently found a new religion with gold. Russians have also revived their nationalism, and if embracing the Euro will stab the Americans, they will gladly do it and smugly watch the Americans bleed.

The Arab oil-exporting countries will eagerly adopt the Euro as a means of diversifying against rising mountains of depreciating dollars. Just like the Russians, their trade is mostly with European countries, and therefore will prefer the European currency both for its stability and for avoiding currency risk, not to mention their jihad against the Infidel Enemy.

Only the British will find themselves between a rock and a hard place. They have had a strategic partnership with the U.S. forever, but have also had their natural pull from Europe. So far, they have had many reasons to stick with the winner. However, when they see their century-old partner falling, will they firmly stand behind him or will they deliver the coup de grace? Still, we should not forget that currently the two leading oil exchanges are the New York's NYMEX and the London's International Petroleum Exchange (IPE), even though both of them are effectively owned by the Americans.

It seems more likely that the British will have to go down with the sinking ship, for otherwise they will be shooting themselves in the foot by hurting their own London IPE interests. It is here noteworthy that for all the rhetoric about the reasons for the surviving British Pound, the British most likely did not adopt the Euro namely because the Americans must have pressured them not to: otherwise the London IPE would have had to switch to Euros, thus mortally wounding the dollar and their strategic partner.

At any rate, no matter what the British decide, should the Iranian Oil Bourse accelerate, the interests that matter-those of Europeans, Chinese, Japanese, Russians, and Arabs-will eagerly adopt the Euro, thus sealing the fate of the dollar. Americans cannot allow this to happen, and if necessary, will use a vast array of strategies to halt or hobble the operation's exchange:

Sabotaging the Exchange-this could be a computer virus, network, communications, or server attack, various server security breaches, or a 9-11-type attack on main and backup facilities.
Coup d'état-this is by far the best long-term strategy available to the Americans.

Negotiating Acceptable Terms & Limitations-this is another excellent solution to the Americans. Of course, a government coup is clearly the preferred strategy, for it will ensure that the exchange does not operate at all and does not threaten American interests. However, if an attempted sabotage or coup d'etat fails, then negotiation is clearly the second-best available option.

Joint U.N. War Resolution-this will be, no doubt, hard to secure given the interests of all other member-states of the Security Council. Feverish rhetoric about Iranians developing nuclear weapons undoubtedly serves to prepare this course of action.
Unilateral Nuclear Strike-this is a terrible strategic choice for all the reasons associated with the next strategy, the Unilateral Total War. The Americans will likely use Israel to do their dirty nuclear job.

Unilateral Total War-this is obviously the worst strategic choice. First, the U.S. military resources have been already depleted with two wars. Secondly, the Americans will further alienate other powerful nations. Third, major dollar-holding countries may decide to quietly retaliate by dumping their own mountains of dollars, thus preventing the U.S. from further financing its militant ambitions. Finally, Iran has strategic alliances with other powerful nations that may trigger their involvement in war; Iran reputedly has such alliance with China, India, and Russia, known as the Shanghai Cooperative Group, a.k.a. Shanghai Coop and a separate pact with Syria.

Whatever the strategic choice, from a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between Scylla and Charybdis-between deflation and hyperinflation-it will be forced fast either to take its "classical medicine" by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.

The Austrian theory of money, credit, and business cycles teaches us that there is no in-between Scylla and Charybdis. Sooner or later, the monetary system must swing one way or the other, forcing the Fed to make its choice. No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of the Great Depression and an adept Black Hawk pilot, will choose inflation. Helicopter Ben, oblivious to Rothbard's America's Great Depression, has nonetheless mastered the lessons of the Great Depression and the annihilating power of deflations. The Maestro has taught him the panacea of every single financial problem-to inflate, come hell or high water. He has even taught the Japanese his own ingenious unconventional ways to battle the deflationary liquidity trap. Like his mentor, he has dreamed of battling a Kondratieff Winter. To avoid deflation, he will resort to the printing presses; he will recall all helicopters from the 800 overseas U.S. military bases; and, if necessary, he will monetize everything in sight.

His ultimate accomplishment will be the hyperinflationary destruction of the American currency and from its ashes will rise the next reserve currency of the world-that barbarous relic called gold.

About the Author: Krassimir Petrov (Krassimir_Petrov@hotmail.com) has received his Ph. D. in economics from the Ohio State University and currently teaches Macroeconomics, International Finance, and Econometrics at the American University in Bulgaria. He is looking for a career in Dubai or the U. A. E.

[Marco Polo]

this is a must read. naggar, please post it here as it is important. i shall make the thread sticky later.

i will comment on it later and strickland and city jo should read it as its what we were talking about last night.

[Gladiator]

What did I always predict? The system the Globalization of the world economy, will all collapse.

It is all about MONEY! So would Multiculturalism in Europe!

[naggar]

The Laboratoire européen d’Anticipation Politique Europe 2020 (LEAP/E2020) now estimates to over 80% the probability that the week of March 20-26, 2006 will be the beginning of the most significant political crisis the world has known since the Fall of the Iron Curtain in 1989, together with an economic and financial crisis of a scope comparable with that of 1929. This last week of March 2006 will be the turning-point of a number of critical developments, resulting in an acceleration of all the factors leading to a major crisis, disregard any American or Israeli military intervention against Iran. In case such an intervention is conducted, the probability of a major crisis to start rises up to 100%, according to LEAP/E2020.

An Alarm based on 2 verifiable events
The announcement of this crisis results from the analysis of decisions taken by the two key-actors of the main on-going international crisis, i.e. the United States and Iran:
--> on the one hand there is the Iranian decision of opening the first oil bourse priced in Euros on March 20th, 2006 in Teheran, available to all oil producers of the region ;
--> on the other hand, there is the decision of the American Federal Reserve to stop publishing M3 figures (the most reliable indicator on the amount of dollars circulating in the world) from March 23, 2006 onward [1] (http://www.europe2020.org/en/section_global/150206.htm#1).
These two decisions constitute altogether the indicators, the causes and the consequences of the historical transition in progress between the order created after World War II and the new international equilibrium in gestation since the collapse of the USSR. Their magnitude as much as their simultaneity will catalyse all the tensions, weaknesses and imbalances accumulated since more than a decade throughout the international system.

A world crisis declined in 7 sector-based crises
LEAP/E2020's researchers and analysts thus identified 7 convergent crises that the American and Iranian decisions coming into effect during the last week of March 2006, will catalyse and turn into a total crisis, affecting the whole planet in the political, economic and financial fields, as well as in the military field most probably too:
1. Crisis of confidence in the Dollar
2. Crisis of US financial imbalances
3. Oil crisis
4. Crisis of the American leadership
5. Crisis of the Arabo-Muslim world
6. Global governance crisis
7. European governance crisis

cont : http://www.europe2020.org/en/section_global/150206.htm

[wiking]

Very good article Naggar. Seems events are fast approaching the Anno Zero scenario i.e. always if these people know what they are about.
Hold on to your gold, friends.

Hmmm chewy Point 9 at the very bottom:
The United Kingdom indeed owns close to 3,000 billion $ of credits, that is almost three times what countries such as France or Japan hold. (source Bank of International Settlements....)

[Marco Polo]

number 7 is what i am waiting for. maybe we can awake our sleeping giant.

[Marco Polo]

I believe we are in for some deep shit.

i couldnt have put it more eloquently myself.

one thing i am seeing that is very worrying is that asia is not really heading for 'deep shit'. 'deep shit' must be created in asia too! preferably war.

[Marco Polo]

Hehe Mark, probably they are smarter. (In fact they even have a higher IQ compared to whites).

This is quite an impo thread, pity there was little feedback and discussion about it. In less than a month's time, our world could change...

if they are more intelligent then its all the more reason to get them warring isnt it?

africans are not a big problem as they are quite capable of wiping themselves out without any help from us. If the west turns upside down though Asia is in a prime position to move into siberia and africa.

we would then be in 'deep shit', real 'deep shit'

the geopolitical scenarios are a nightmare. lets hope europe wakes up and plonks troops in east africa and helps out the Ruski in Siberia and Kazakstan.

[Neverwinter]

This information about the Iranian oil boarse and the m13 indicator being removed by the fed reserve is very important. The events leading to the coming cataclysmic crisis may begin next month. It is a great opportunity for the Radical Right in Europe. There is a very good chance that America is about to be given a mortal wound. Only the IDEA can save Europe. There is nothing else! I am preparing for the depression. Do the same comrades.

[Marco Polo]

This information about the Iranian oil boarse and the m13 indicator being removed by the fed reserve is very important. The events leading to the coming cataclysmic crisis may begin next month. It is a great opportunity for the Radical Right in Europe. There is a very good chance that America is about to be given a mortal wound. Only the IDEA can save Europe. There is nothing else! I am preparing for the depression. Do the same comrades.

did you buy your guns yet?

you need a hand gun, shot gun and rifle along with plenty of ammo.

if the negros come knocking the government will not save you. shoot.

also if things start to screw up stock up on some tinned goods.

do you have gold?

[Marco Polo]

In case of a total breakdown you will need at least:

Preserved food - tuna, luncheonmeat, some dry carbs, vits
Mineral water, a lot of it.
Disinfectant, bandages, sticks, some generic anti-biotics, pain-killers, a good supply of pills you might depend on.
A basic radio receiving as much channels as possible, good supply of batteries.
A flashlight with a good supply of batteries.
A swiss knife
Something to hold all that on you without impairing too much the body movement.


Life is a city in chaos can be even more tough than life in the wild because you will not find any animals to eat or water to drink in the streets. What you can get is quite a nightmare. Gold could be useful once some basic order is restored.

those come later. as collapse seems clear. just make sure you have a list of what you need and preferably some precious metals.

dont buy stuff u will chuck away if disaster doesnt happen. guns are always useful and living in america you should have already!

oh, and find out where your political representatives live too ;)

[naggar]

Asia (read China) will take the opportunity. There's Iran , the problem, it's oil pumping the giant China. If US/Israel attacks Iran, China will not stay there and look. But first it has to take care of Taiwan, then can retaliate if necessary at the best opportunity.

Neverwinter : get out of Georgia. Try Canada or Utah and never in a city. Only countryside. Wherever you'll be the first to think of is WATER. A gun with lots of ammunition, a bycicle (spare tyres) and as food try something like vitamin bars, (rice is not good, needs water to boil).

PS : read between the lines...Bush said that US is depending too much on oil lately.Choose north and NEVER the coastlines (both east and west.)

Europe, we needed that constitution. Nationalism will be on the rise hopefully but we need to be united.

We Malta will need that oil.What are they still talking on? Don't they see that gaddafi is just loosing time?

[Neverwinter]

did you buy your guns yet?

you need a hand gun, shot gun and rifle along with plenty of ammo.

if the negros come knocking the government will not save you. shoot.

also if things start to screw up stock up on some tinned goods.

do you have gold?I am working on these things currently. These and others..

[Marco Polo]

I am working on these things currently. These and others..

good.

and if you have a now common beer belly get rid of it. get fit and learn how to shoot ;)

may your guns never jam

[Marco Polo]

http://eureferendum.blogspot.com/

Interesting and may be relating to this thread. The brits realigning their defence policy with the EU?

i hope so. fingers crossed. bring aboard russia too

[Marco Polo]

i am posting it here. seems like the usual bickering to me.

http://photos1.blogger.com/blogger/4640/388/400/JSF%20Mail%201.jpg (http://photos1.blogger.com/blogger/4640/388/1600/JSF%20Mail%201.jpg)In complete vindication of our piece posted on 25 January (http://eureferendum.blogspot.com/2006/01/uk-to-dump-joint-strike-fighter.html), when we reported that the UK was getting set to dump the US Joint Strike Fighter, the Financial Mail today leads its front page with "Anglo-US defence deals in jeopardy".

Britain, reports the Mail, "may consider buying up to 150 French fighter jets for two new-generation aircraft carriers scheduled to go into service with the Royal Navy in 2013".

Never mind that the in-service date is a tad optimistic, the substance of the Mail piece is that the "unexpected verbal offer" to buy Rafale marine jets "came on 24 January when defence secretary John Reid met his opposite number, Michele Alliot-Marie, for crucial talks in London".

This is precisely the event which we reported – an event ignored almost completely by the MSM – when the French unexpectedly caved in on the price for using the UK design of the proposed carriers, actually offering more than the asking price.

We also reported at the time that the deal was completely unexpected by the officials involved in the talks and concluded that "fairy-tale endings like this do not happen in real life." There was, we averred, "a very strong smell of a side-deal which has not been disclosed."

http://photos1.blogger.com/blogger/4640/388/320/JSF%20Mail%202.jpg (http://photos1.blogger.com/blogger/4640/388/1600/JSF%20Mail%202.jpg)And now it has come to pass that there was a side-deal, or the makings of one – exactly as we suspected – with Reid agreeing to consider the offer made by Alliot-Marie. Says the Mail, "even agreeing to give the proposal serious consideration could be seen as a major snub to the Americans, whose relations with the French on defence are strained".

Of course, if the MSM had had its wits about it (stop giggling at the back), it would have put two and two together, not least the otherwise inexplicable manoeuvrings of Tony Blair on the second engine (http://eureferendum.blogspot.com/2006/02/sheep-may-safely-graze.html) for the JSF, which looked to us like he was struggling to invent an excuse for refusing to buy the aircraft.

http://photos1.blogger.com/blogger/4640/388/320/JSF%20Mail%203.jpg (http://photos1.blogger.com/blogger/4640/388/1600/JSF%20Mail%203.jpg)One thing - amongst several – the Mail gets wrong is its claim that the UK will now consider cancelling the JSF contract. As it stands, of course, no production contracts have been signed. Completion on these is scheduled for November of thereabouts. Thus, the UK government is playing its options in a "window of opportunity" between now and then, when it must make a firm commitment to the JSF or withdraw from the project.

Cited by the Mail as one of the reasons why the UK might wish to pull out is the continuing problems with technology transfer, the Americans being reluctant to release technology to the British for fear that it might end up in the hands of the French and thence be passed to the Russians and the Chinese.

This is an issue we have rehearsed many times on this blog, most recently here (http://eureferendum.blogspot.com/2006/01/riding-two-horses.html), but if you need any more reasons why the US is entirely justified in its suspicions, The Business (http://www.thebusinessonline.com/Stories.aspx?Russia%20reaches%20for%20the%20skies&StoryID=03FC7DE9-98C2-4999-8024-D64D54541EAF&SectionID=BA48E3D7-CCB9-4976-883F-EE19F9206FB3) provides more evidence of the growing closeness between the Russian and French Aviation industries.

This must be read in conjunction with our story on 22 August last year (http://eureferendum.blogspot.com/2005/08/another-nail-in-coffin.html) when we remarked on the tie-up between EADS and the Russian MiG company, aimed at developing high-performance UCAVs. Knowledge of JSF stealth technology would, of course, be invaluable to the French in progressing this project.

All together, therefore, the report in today's Mail is of considerable importance and it says something that, although it is given some prominence, it is still confined to the business pages. This points up the utter inability of the MSM to understand the significance of what is going on, an inability which is reflected in political (and especially Conservative) circles and, unforgivably, much of the Eurosceptic community.

http://photos1.blogger.com/blogger/4640/388/320/Wrong%20side.0.jpg (http://photos1.blogger.com/blogger/4640/388/1600/Wrong%20side.0.jpg)Blinded by current – what might be called "legacy" - commitments, where our armed forces are working in close harmony with the US in the Iraqi and Afghan theatres, they fail to realise that the gradual realignment in defence procurement, detailed in my CPS pamphlet Wrong side of the hill (http://www.cps.org.uk/pdf/pub/416.pdf), sets the tone for the future. Blinded by the short-term, commentators are failing to see the longer-term trends.

That longer-term trend is a closer alignment with European Union member states, and especially with the French, involving the progressive severing of military ties with the United States. The fracture will be brought about by procurement decisions that have yet to take effect but which will have a vital influence on future military and political decisions. All this is happening in front of our noses and yet, as we have remarked so often on this blog, there seems an almost wilful refusal to join up the dots.

The myopia of the Conservatives is illustated by the comment in the Mail piece from their defence procurement spokesman, Gerald Howarth, who bleats: "This shows the danger of the American refusal to give us the technology. They could drive us into the arms of the French".

This is a line Howarth has taken consistently, marking his refusing to acknowledge that the US reluctance to share technology (http://eureferendum.blogspot.com/2005/11/grave-and-important-development.html) with us stems from their observations of our closer defence ties (http://eureferendum.blogspot.com/2005/08/smoking-gun.html) with the French and other European countries, the EU enthusiasm for lifting the Chinese arms embargo, and the risks of technology leakage (http://eureferendum.blogspot.com/2005/09/step-too-far.html) to the Chinese.

The JSF, therefore, is very much the litmus test. If the UK does walk away from this aircraft and buy Rafales, then at least what we have been warning about will be out in the open - not that it will make a blind bit a difference to what The Business today calls: "the dim-witted Tories".

[Neverwinter]

good.

and if you have a now common beer belly get rid of it. get fit and learn how to shoot ;)

may your guns never jamNo beer belly here. I have never had one. However, I do need to build up some muscle mass. LoL Other people are not as fortunate as myself eh? Good metabolism and frequent running have kept me stable since high school.

[Neverwinter]

i hope so. fingers crossed. bring aboard russia tooIf Russia should side with Asia rather than Europe in the future it would be a terrible blow to Europe. We must bring Russia on board. It is crucial. It would be a paradox comrades....an IE formed and Russia to be manipulated to side with China. It must never happen!

[naggar]

'However, I do need to build up some muscle mass.' - neverwinter

- stop playing rpg then.:p

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Yen Carry Trade to Unwind - Market Crash Alert

source : http://www.kitco.com/ind/Laird/feb222006.html

There is a very important development regarding the YEN carry trade. I deem this important enough to post a market crash alert.
The Japanese economy is strengthening enough to cause an unwinding of the massive YEN carry trade. The last time this happened, there was the LTCM collapse.

Japan has had enough economic growth these last quarters, in production growth and consumer spending, that the BOJ may well end the policy of zero interest rates in Japan.

That zero rate interest policy has lasted about ten years, and is the first source of the liquidity bubbles world wide, and is very much a part of the liquidity bubbles here in the US. Once the BOJ starts to raise interest rates in Japan, the Yen carry trade will start to unwind.

The Yen carry mechanism is to borrow Yen at virtually zero rates, and then to purchase US treasuries at about a 3% interest rate gain net. There are literally trillions USD of yen carry trade positions scattered amongst hedge funds, insurance companies, and mutual funds. The phenomena is so widespread and has gone on so long, that the BOJ and even the BIS does not have data on the known net amount of YEN carry trade floating out there in the world. The result is that the effects of an unwinding of the Yen carry trade are unknown, but are sure to be very negative.
Here are the kinds of things that will happen when the Yen carry trade is unwound:

• US treasuries will become less desirable, much of the purchases of UST’s last year were from foreign private entities who bought the UST’s to benefit from the interest differential of about 3% net over Japan.

• UST’s were not the only beneficiaries of the Yen carry trade. Markets world wide are given massive amounts of liquidity, as Yen borrowed for virtually nothing are then invested eventually in foreign stock markets everywhere. Real estate markets also benefit greatly, as the Yen carry trade finds its way into real estate markets from Shanghai to the US to everywhere. The BOJ literally acts like a central bank of the world through the Yen carry trade, supplying liquidity that finds its way into markets everywhere.

The phenomena is a decade old now for the latest manifestation. The last time this level of penetration of the Yen carry trade was reached was just prior to the LTCM collapse. Back then, when the Yen unexpectedly strengthened 20% it caused a massive move out of Borrowed Yen on the Cheap, and caused massive market sell offs world wide, and was a direct cause of the LTCM collapse, where the US FED had to act immediately to bail out banks and illiquid brokerages and financial entities with blank checks to forestall that crisis....

[Marco Polo]

yes, but broad alliance, let's not forget their treacherous past.

there is nothing russia can do though. they need us as much as we need them. they would benefit greatly too.

[Marco Polo]

'However, I do need to build up some muscle mass.' - neverwinter

- stop playing rpg then.:p

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Yen Carry Trade to Unwind - Market Crash Alert

source : http://www.kitco.com/ind/Laird/feb222006.html

There is a very important development regarding the YEN carry trade. I deem this important enough to post a market crash alert.
The Japanese economy is strengthening enough to cause an unwinding of the massive YEN carry trade. The last time this happened, there was the LTCM collapse.

Japan has had enough economic growth these last quarters, in production growth and consumer spending, that the BOJ may well end the policy of zero interest rates in Japan.

That zero rate interest policy has lasted about ten years, and is the first source of the liquidity bubbles world wide, and is very much a part of the liquidity bubbles here in the US. Once the BOJ starts to raise interest rates in Japan, the Yen carry trade will start to unwind.

The Yen carry mechanism is to borrow Yen at virtually zero rates, and then to purchase US treasuries at about a 3% interest rate gain net. There are literally trillions USD of yen carry trade positions scattered amongst hedge funds, insurance companies, and mutual funds. The phenomena is so widespread and has gone on so long, that the BOJ and even the BIS does not have data on the known net amount of YEN carry trade floating out there in the world. The result is that the effects of an unwinding of the Yen carry trade are unknown, but are sure to be very negative.
Here are the kinds of things that will happen when the Yen carry trade is unwound:

• US treasuries will become less desirable, much of the purchases of UST’s last year were from foreign private entities who bought the UST’s to benefit from the interest differential of about 3% net over Japan.

• UST’s were not the only beneficiaries of the Yen carry trade. Markets world wide are given massive amounts of liquidity, as Yen borrowed for virtually nothing are then invested eventually in foreign stock markets everywhere. Real estate markets also benefit greatly, as the Yen carry trade finds its way into real estate markets from Shanghai to the US to everywhere. The BOJ literally acts like a central bank of the world through the Yen carry trade, supplying liquidity that finds its way into markets everywhere.

The phenomena is a decade old now for the latest manifestation. The last time this level of penetration of the Yen carry trade was reached was just prior to the LTCM collapse. Back then, when the Yen unexpectedly strengthened 20% it caused a massive move out of Borrowed Yen on the Cheap, and caused massive market sell offs world wide, and was a direct cause of the LTCM collapse, where the US FED had to act immediately to bail out banks and illiquid brokerages and financial entities with blank checks to forestall that crisis....

do you know anymore about this yourself please? im quite ignorant on this issue and would like to know more.

[naggar]

The currency carry trade :

A strategy in which an investor sells a certain currency with a relatively low interest rate (http://www.investopedia.com/terms/c/currencycarrytrade.asp#) and uses the funds to purchase a different currency yielding a higher interest rate. A trader (http://www.investopedia.com/terms/c/currencycarrytrade.asp#) using this strategy attempts to capture the difference between the rates - which can often be substantial, depending on the amount of leverage the investor chooses to use.

Here's an example of a "yen carry trade": let's say a trader borrows 1,000 yen from a Japanese bank, converts the funds into U.S. dollars and buys a bond for the equivalent amount. Let's assume that the bond pays 4.5% and the Japanese interest rate is set at 0%. The trader stands to make a profit of 4.5% (4.5% - 0%), as long as the exchange rate between the countries does not change. Many professional traders use this trade because the gains can become very large when leverage is taken into consideration. If the trader in our example uses a common leverage factor of 10:1, then she can stand to make a profit of 45%.

The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.

source : http://www.investopedia.com/terms/c/currencycarrytrade.asp

------------
What I understand is this:

When the Bank of Japan will increase the interest rates (currently at 0 %), it will cause an 'unwinding of the currency trade'.
ie : the repatriation of japanese assets.

The last time it occured (1998) it led to the collapse of the Long Term Capital Managment which in turn led to a global crash. The fed-reserve had to come to the rescue.

The question is what will happen if this occurs again particularly at this time when the US is carrying an unprecendented debt?

[Gladiator]

In case of a total breakdown you will need at least:

Preserved food - tuna, luncheonmeat, some dry carbs, vits
Mineral water, a lot of it.
Disinfectant, bandages, sticks, some generic anti-biotics, pain-killers, a good supply of pills you might depend on.
A basic radio receiving as much channels as possible, good supply of batteries.
A flashlight with a good supply of batteries.
A swiss knife


Something to hold all that on you without impairing too much the body movement.


Life is a city in chaos can be even more tough than life in the wild because you will not find any animals to eat or water to drink in the streets. What you can get is quite a nightmare. Gold could be useful once some basic order is restored.

You forgot a blow-up plastic doll. Just in case the opposit sex are full of AIDS.

[Gladiator]

The last time it occured (1998) it led to the collapse of the Long Term Capital Managment which in turn led to a global crash. The fed-reserve had to come to the rescue.

The question is what will happen if this occurs again particularly at this time when the US is carrying an unprecendented debt?

The feds will not help out this time around, cause they do not have the reserves to bail out any Asian Banks( Japanese).

This is when gold will come in handy. Watch the price of gold sky rocket!:eek:

[naggar]

Gladiator? Do you know under which circumstances can gold be confiscated when there's a market crash? (as long it's possible)

------------------
From : http://portal.telegraph.co.uk/money/main.jhtml?xml=/money/2006/02/24/cccredit24.xml&menuId=242&sSheet=/money/2006/02/24/ixcoms.html

Global credit ocean dries up.

The cash machine that sustained a world boom is about to close, and it's going to get ugly, says Ambrose Evans-Pritchard

One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive...

...There were early signs of panic this week when the Icelandic krone crashed 8pc in two days, setting off dominoes in high-yielding currencies of New Zealand, Australia, South Africa, Hungary and Brazil...

..."There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable," said Stephen Lewis, an economist at Monument Securities. "When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes."...

>end

[Gladiator]

Gladiator? Do you know under which circumstances can gold be confiscated when there's a market crash? (as long it's possible)

------------------
From : http://portal.telegraph.co.uk/money/main.jhtml?xml=/money/2006/02/24/cccredit24.xml&menuId=242&sSheet=/money/2006/02/24/ixcoms.html

Global credit ocean dries up.

The cash machine that sustained a world boom is about to close, and it's going to get ugly, says Ambrose Evans-Pritchard

One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive...

...There were early signs of panic this week when the Icelandic krone crashed 8pc in two days, setting off dominoes in high-yielding currencies of New Zealand, Australia, South Africa, Hungary and Brazil...

..."There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable," said Stephen Lewis, an economist at Monument Securities. "When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes."...

>end

I just heard in Canada, Banks raised the cost of credit. Which means Interest rates went up .5 of a percentage point.:confused:

Gladiator? Do you know under which circumstances can gold be confiscated when there's a market crash? (as long it's possible)


Naggar what exactly do you mean by confiscated?

[naggar]

I mean if a country has a market crash and is in a war , could that country confiscate the gold of its citizens to continue financing its war?

[Marco Polo]

I mean if a country has a market crash and is in a war , could that country confiscate the gold of its citizens to continue financing its war?

anything can happen if their gun is big enough!

[Gladiator]

I mean if a country has a market crash and is in a war , could that country confiscate the gold of its citizens to continue financing its war?

Yes it could lead to that. Case in point - Italy did it in 1942-43. Italy ran out of gold to back up it's financing of the War.
Britain did have some gold to back up it's war effort but it did not have enough, because they didn't know for how long the war would last?

Thus the famous Cash and carry option Roosevelt proposed to Churchill.
By 1945 Britain was bankrupt and the Pound Sterling was never back up by the gold reserves.
Up to this day Britain is still paying the USA for the War material. The giving up naval bases in the Caribbean Sea. The permanent US air based aircrafts in Britain itself.
The USA controls the World Bank.


FYI - Spain had shipped its gold reserves to Russia in 1934 and it's still there. Russia never returned the gold, because Franco won the civil war.

[naggar]

The International Bank of Settlements is calling for a new global financial system to fix the world’s debt problems.

The world’s economic and monetary system is broken. Granted, this is not new news for regular Trumpet readers. What is new is that, in an abrupt change of stance, one of the world’s top banking authorities, the Bank for International Settlements (bis), now warns of a dangerously unbalanced world economy and is calling for an “overhaul of the current global economic system” (Telegraph, February 20 (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/02/20/cndebt20.xml)).

Further, in another radical move, the bis has suggested that many of the world’s nations should abandon their currency and adopt one of a small number of formal currency blocks “based on the dollar, euro and renminbi or yen” (ibid.).

For such a major bank to call for such drastic action, it must recognize a big problem.

That problem is soaring debt levels!...

...So just where are all these imbalances leading? To a huge crash—the biggest ever.

What is preventing a crash for now is the fact that demand for U.S. dollars is still strong because the dollar is the world’s reserve currency—a status now being challenged. Once that status deteriorates, then watch out!

As America’s economic imbalances and debt build up, even America’s current status as the reserve currency controller will not prevent it from becoming vulnerable to currency collapse and hyper-inflation.

Since raising taxes and slashing benefits and services are tantamount to political suicide, watch for government leaders to try to take the seemingly easier path out of debt—the path they have already started down—the path that might be hid for a little while longer. The inflationary (http://www.thetrumpet.com/index.php?page=article&id=2045) path!

source : http://www.thetrumpet.com/index.php?page=article&id=2061

[Marco Polo]

neverwinter. get preparing, and faster!!!!!!

learn to shoot is priority as well as living without running services

[Neverwinter]

LEAP/E2020 PUBLIC COMMUNICATION
March 15, 2006

USA-Dollar-Iran / Confirmation of Global Systemic Crisis end of March 2006

Nine indicators prove that the crisis is unfolding

Nine indicators developed in this month’s GlobalEurope Anticipation Bulletin, coordinated by Franck Biancheri, out of which 5 are presented in this public communication, enable LEAP/E2020 to confirm the beginning of a global systemic crisis by the end of March 2006. The recent international trends that particularly affect the international financial system, and the preoccupying trends in the US, namely as concerns the reliability of statistics on the US economy [1], have brought our research team to conclude that this global systemic crisis is already unfolding.

M3 [2] is really the decisive indicator…

As illustrated by most of the 5 indicators developed in the present communication, the last weeks have confirmed how decisive is the US Federal Reserve’s decision to stop to publish M3 [3] on March 23, 2006. LEAP/E2020 is now convinced that this decision anticipates a period of acceleration of money-printing by the US, concealed behind public declarations of inflation handling, that will result in the collapse of the US Dollar and in the monetarisation of the US debt (public and private), which a growing number of US experts now estimate that it will never be reimbursed [4] considering its gigantic amount in constant growth (the US public debt now represents more than 8,000[5] billions dollars, i.e. about 4 times the federal budget in 2006 [6]) ). According to the very conservative Heritage Foundation, if we take in consideration the consequences on the budget of recent decisions made by the Bush Administration regarding health and pensions, the real debt is of 42,000 billions dollars, i.e. 18 times this year’s federal budget, and 3 ½ times the US GDP in 2005 [7].

… as well as Iran

Thus confirming the catalyst role of the opening of an Oil Bourse priced in Euros by Iran (recent Iranian allegations [8] suggest that in case of an aggravation of the crisis, the Iranian authorities could simply decide to proceed to their international transactions in euros, thus following the example provided by Syria [9] which decided a few weeks ago to adopt this policy) and/or that of a US and/or Israeli attack on Iran – probably a « surprise-attack » not supported by the UN Security Council [10]-, the scope of the reaction to the publication of last month’s LEAP/E2020 Alert has revealed a deeply-rooted anxiety among a significant part of the actors of the financial system, individual actors mostly. This impact was particularly important in the US from where comments reached us mainly focused on the question of M3, the real-estate bubble, US deficits and the reliability of figures on the US economic performance. These reactions have led LEAP/E2020 to concentrate this second communication on these aspects of the global systemic crisis, all the more since a number of very preoccupying facts appeared in the last weeks.

The real-estate bubble starts collapsing …

Some of the predictions made by LEAP/E2020 already became true such as the collapse of the real-estate bubble in the US (for the first time in 5 years, new-home sales slid 5% in January 2006 compared to January 2005; and the stock of homes for sale languishes up to 6 months, a figure never reached since 1988 [11]). The end of the real-estate bubble will progressively affect the consumption of US households, one highly depending on their growing debt due to mortgage loans calculated on the basis of their home’s value [12]. In parallel, the slow-down in the housing-related sector will directly affect employment, knowing that this sector alone has been providing 40% of private job creations these 5 last years in the US.

… currencies of emerging countries are really the first ones to be affected by the unfolding crisis…

During the week of February 20, 2006, Iceland’s Krona was downgraded by a credit rating agency calling the country’s credit deficit unsustainable. The National currency instantly plummeted 10%, causing emerging market currencies such as the Brazilian, South African, Mexican and Indonesian currencies [13] , to decline due to the speculative positions taken by operators acting on those markets. During the week of March 6, 2006, it was the turn of Central and Eastern European currencies [14]to plummet as a result of excessive deficits and of the implementation of new policies (increased interest rates and/or removal of liquidities) by the European and Japanese central banks. Finally, since March 14th 2006, Arabic stock markets are crashing down [15], including of course in Saudi Arabia and the Emirates (with a loss of already more than 15% and local experts predicting final losses up to 50% or 60%).

… and the crisis of confidence in the US economy really plays a key-role in the release of the global crisis

Among the aspects suggesting that the crisis is already beginning, there is the scope of the impact of LEAP/E2020’s February 2006 Alert itself, which indicates a high level of worry worldwide. According to LEAP/E2020, the international financial system, and in particular its dollar-base [16], now mostly rely on two interconnected pillars: on the one hand, the trust actors put in the system itself; and on the other hand, the statistics describing the systems’ trends. Regarding the second pillar, the impact of the LEAP/E2020 Alert is a significant indicator itself worth the analysis [17] : with dozens of millions of page views, hundreds of thousands of individual visitors on www.europe2020.org, spontaneous translations of the paper in some twenty languages, being posted on hundreds of websites, medias and blogs worldwide, and the popularity of the analysis in the US themselves, all these elements reflect a growing worry about the system’s trends. This element is indeed an integral part of the global systemic crisis given that psychological factors, such as confidence, have become central in the system.

Five out of nine indicators suggesting an acceleration of the process of crisis

These are five out of the nine indicators proving, according to LEAP/E2020, that the system crisis is unfolding:
1. the US government operates in technical default since mid-February 2006, tthe debt ceiling authorized by the Congress has been reached since then. Since this date, the US government has suspended sales of the « State and Local Government series (SLGS) non-marketable Treasury Securities » designed to enable the printing of Treasury Bonds [18]. According to US Treasury Secretary John Snow, if by mid-March, the Congress has not voted a rise of the statutory debt ceiling by 800 billion dollars (i.e. 10% of the current ceiling of 8,200 billion dollars, which was already raised twice in the last 3 years), the technical default will become very problematic.

2. Unexpected resignation of the Fed’s vice chairman, Roger Ferguson, in charge of crisis management, one week after the publication of our Alert while he had 8 years left to serve [19] Roger Ferguson had won high marks for his handling of the Fed’s initial response to the Sept. 11, 2001 attacks, which occured while Greenspan was in Europe. His opposition to the strategic choices made by new Fed’s chairman, was notorious.

3. Bank of China’s decision to allow investors to buy and sell gold using their USD in order to diversify its holdings, today mostly in USD [20].

4. Continued increase of US public and trade deficits in 2006 (respectively $119 billion in February et $68,5 billion in January) showing that current trends are not handled: on the contrary the drift accelerates. The deficit of the monthly budget review is the highest ever recorded. Washington no longer tries to mention improvements, but prefers to explain that these deficits do not mean anything because “the economy has changed”. This type of explanation was used too on the eve of the collapse of the « Internet » bubble, referring to the « new economy ».[21] For information, along these last five years, the US borrowed more money from the rest of the world that they did in their cumulated history going from 1776 to 2000 [22].

5. Growing doubts in the US themselves on the reliability of US economic statistics [23] leading to counter-analyses showing that in the last three years, the US GDP is in fact decreasing and not increasing [24] , and that the real inflation today rates between 6 and 12% (with direct consequences of course on the real profitability of the various types of investments).


Three different measures of the consumer price index:
in blue, the method used under the Clinton-presidency, in orange, the method used by the Bush administration, and in yellow, the method currently elaborated by US authorities.


Anticipation is therefore really required in order to limit the damage

A systemic crisis expands like a tsunami progressing through an ocean and hitting different coasts at different moments. When the wave hits a coast, the tsunami has been formed already long ago. An early information is clearly the only way to take some safety measures. In any event, considering the nine indicators developed in GEAB 3, it is now clear for LEAP/E2020 that the crisis is entering its release phase. The GlobalEurope Anticipation Bulletin N°3 details all these analyses and points at some tracks of solution in order to help private and public operators getting prepared to make some proper decisions.

Considering the significance and the convergence of the trends confirming the anticipated systemic crisis, only trends as powerful could reverse the evolution described by LEAP/E2020. Until today, LEAP/E2020 was not able to identify the smallest of such reverse trends. Contrary to what some may say, « crises happen even when they are not of collective interest » (WWI or the 1929 crack already proved that). The Iran crisis, the Irak civil war, or the deterioration of US deficits prove that our international leaders have no hand over the events. It is vain to hope that they will in the last minute appear as « deux ex machina » and solve problems that they contributed to develop in the last decades. Lastly, in case a crisis occurs, and contrary to what happened in the last decades, the Dollar will not act as reserve currency anymore due to the fact that the loss of confidence in the US and in their currency (including for the Americans themselves) is precisely one of the characteristics of this new crisis.

_____________

Apart from the analyses detailed in GEAB 3, LEAP/E2020 would like to give two clear advices to the readers of this public communication:

*
during the unfolding of a global systemic crisis, the main strategy to adopt consists in diversifying as much as possible one’s holdings, because given the unpredictability of the unfolding, only a diversification can limit the loss. It is important to bear in mind the following aspect: in a context of general crisis, the aim is no longer to gain more but to avoid losing too much.
*
as regards currencies, LEAP/E2020 noticed that its strategic analyses and advices concerning the Euro were largely read and commented at the highest level of the Eurozone governance system. This reinforces our feeling that Euroland will be in the coming months the only monetary area capable of resisting to a Dollar crisis. Decision-makers have grown aware in the proper timing of the measures to take on D-Day.

http://www.europe2020.org/en/section_global/150306.htm

[Neverwinter]

I was wondering what happened to the Iranian Oil Boarse. Seems that it was delayed. - Neverwinter -

Vaziri-Hamaneh: Oil Stock Exchange to be set up in Iran next week
Tehran, April 26, IRNA

Iran-Oil Stock Exchange-Minister
Oil Minister Kazem Vaziri Hamaneh said on Wednesday that the establishment of Oil Stock Exchange is in its final stage and the bourse will be launched in Iran in the next week.

He told reporters, upon arrival from Qatar where he attended the 10th General Assembly of International Energy Agency and consultations with OPEC member states, that registration of the Oil Stock Exchange is underway and the entity will operate after being approved by by Council of Stock Exchange.

He rejected a statement attributed to him saying that Oil Stock Exchange will bring to the ground the US economy and said, "I don't know who has speculated that I've not talked about US economy." Asked about conference on energy in Doha, he said that more than 60 countries and 30 oil companies and consultants took part in the conference.

Vaziri Hamaneh said that serious discussions were held including security of supply and demand, security of investment in energy and environment issues.

"The best method for security of demand in the oil sector is that consumers should be given opportunity to enter into partnership with the suppliers in investment in oil industry."
He said that the conference called for diversifying energy resources and cooperation of the developed states with the countries possessing oil and gas resources.

Asked about the oil price rise, Vaziri-Hamaneh said that oil price is being influenced by political situation, whereas it should be freed from political impacts and economic and technical fundamentals should determine the oil prices.

"As long as political impacts dominate the oil market, price hike will continue," he concluded.

http://www.irna.ir/en/news/view/menu-237/0604263051192849.htm

[Sepp44]

"As long as political impacts dominate the oil market, price hike will continue," he concluded.
Well we all know who THE politcal impacts are.I will go out and do some 'comfort' eating at Ben 'n' Jerrys' ice cream parlour.

[Neverwinter]

2006-04-24

Global Systemic Crisis /
NATO 2006 – Year of global dilution and of EU/USA decoupling

Riga, November 28-29, 2006 – The upcoming NATO summit [1] which chose to take place on former soviet soil in order to symbolize the success of the North Atlantic Treaty Organisation, is likely to be remembered as the Summit where two opposite trends thrust the Alliance into the ongoing global systemic crisis, and as the symbol of « the end of the western world we have known since 1945 ».

This is the analysis extensively described by LEAP/E2020 in their latest GlobalEurope Anticipation Bulletin (GEAB Nr4). This fourth issue tackles other topics such as: sectors to follow / sectors to leave when you’re an investor lost in the middle of the present systemic crisis, or the monthly chronicle of this same crisis; this month, LEAP/E2020 also decided to focus on the strategic and military implications of the global systemic crisis (they even added a new GlobalEurometre indicator describing public opinion trends as regards defence issues, the TIDE External/Defence indicator), thus confirming that they are the one and only letter of political anticipation in Europe with trans-disciplinary contents (economy, strategy, finance, politics…).

The economic, financial or monetary aspects were only three of the seven facets of the crisis described by the LEAP/E2020 research team, and announced in the February 2006 GlobalEurope Anticipation Bulletin. The dollar, by the way, lost 10% of its value against the Euro and 15% against gold in less than 2 months; meanwhile US real-estate is collapsing; and the Iran crisis is in such a deadlock that the US now threatens to proceed to targeted nuclear attacks. Will 1945-2006, the two ends of a now obsolete world, be the two years when nuclear weapons were used?

In any event, beyond this Iran crisis which will certainly accelerate all present trends, a first class strategic and military crisis is also to be triggered for NATO this year, centred around three key-factors: the financing and development of the “21st-century air-fighter”, the Joint Strike Fighter (JSF) [2]; the divergence between Europeans and Americans in terms of threat perception; the confidence crisis among European public opinion and decision makers as regards US capacity and skill in handling an efficient and responsible leadership of the Alliance.

The Alliance is ill. This is a commonplace, hardly concealed by official statements knowing that the re-launch of NATO and the redefinition of its missions have become recurrent topics of all transatlantic meetings. The illness results from the disappearing of the Alliance’s main reason-to-be: the fight against a lethal enemy, common to Americans and Western Europeans: USSR.

Since the fall of the Iron Curtain, NATO no longer knows what it stands for. It is called upon to protect the Olympic Games of Athens or Turin, to transport third world aid and to intervene on limited crises (Kosovo, Afghanistan security enforcement…); but on the two major military operations of the past decade, it was dismissed. The United-States rejected it to attack Afghanistan after 9/11 (despite European offers). The Europeans refused to activate it when Iraq was invaded in 2003 (despite US demands).

A strategic alliance which is inoperative in case of major military events, because either one or the other partner refuses it to be activated, is an alliance with nothing left of strategic. The question now is whether it has anything left of an alliance, or if little by little NATO is turning into something else.

According to LEAP/E2020, the transformation « into something else » is already on the go. In 2006, because of the Iran crisis - but also due to a whole range of factors out of which three in particular (JSF, threat perception, global distrust) are described in the fourth issue of the GlobalEurope Anticipation Bulletin -, the Alliance will experience a political expansion of its geographic territory and turn into a “global alliance of democracies”; while the military organisation will have to let the Europeans accelerate the creation of a common defence independent from the Alliance.

These trends will be seen as positive ones by a large number of players within NATO itself and in the rest of the world. The geographic enlargement results from Washington’s assertive will [3]; meanwhile the acceleration of an independent common European defence has been expected by a large majority of Europeans for many years already [4].

This is an example of the fact that the ongoing global systemic crisis does not convey catastrophes and problems only; it is a historic “passage” between two more stable eras. But the process will often affect the players themselves in an unpredicted (though not unpredictable) manner; indeed a dominant player can manage to have a decision of his own adopted, and end up unpleasantly surprised by the real consequences of this decision.

The invasion of Iraq is there to illustrate this feature. As regards NATO, part of the trends described by LEAP/E2020 belongs to the same logics, with reforms initiated by Washington likely to result in a major weakening of the Alliance and of Washington’s strategic weight in Europe and worldwide, and, in the end, in the tearing apart of this “transatlantic pact” that guaranteed US global pre-eminence since 1945. By the end of 2006, something USSR strove to obtain in vain, will be achieved: the decoupling of European and American defence systems.

http://www.europe2020.org/en/section_global/240406.htm

[Marco Polo]

europe still needs to change to take advantage of it all.

[Sepp44]

The Last Gasp of the Dollar?

Iran bourse opens next week

By Mike Whitney

05/07/06 "ICH (http://informationclearinghouse.info/)" -- -- If one day the world's largest oil producers demanded euros for their barrels, "it would be the financial equivalent of a nuclear strike.” Bill O'Grady, A.G. Edwards commodities analyst

“Everybody knows the real reason for American belligerence is not the Iranian nuclear program, but the decision to launch an oil bourse where oil will be traded in euros instead of US dollars….The oil market will break the dominance of the dollar and lead to a decline of global American hegemony.” Igor Panarin, Russian political scientist

Overnight the story of Iran’s proposed oil bourse (http://www.google.com/custom?hl=en&lr=&ie=ISO-8859-1&oe=ISO-8859-1&client=pub-5174720432180771&cof=FORID%3A1%3BGL%3A1%3BBGC%3AFFFFFF%3BT%3A%23000000%3BLC%3A%230000ff%3BVLC%3A%23663399%3BALC%3A%230000ff%3BGALT%3A%23008000%3BGFNT%3A%230000ff%3BGIMP%3A%230000ff%3BDIV%3A%23336699%3BLBGC%3A336699%3BAH%3Acenter%3B&domains=informationclearinghouse.info&q=oil+bourse&btnG=Search&sitesearch=informationclearinghouse.info) has slipped into the mainstream press exposing the real reasons behind Washington’s ongoing hostility towards Tehran. Up to this point, analysts have brushed aside the importance of the upcoming oil-exchange as a Leftist-Internet conspiracy theory unworthy of further consideration. Now, the Associated Press has clarified the issue showing that an Iran oil bourse “could lead central bankers around the world to convert some of their dollar reserves into euros, possibly causing a decline in the dollar’s value”.

Currently, the world is drowning in dollars, even a small movement could trigger a massive recession in the United States. There’s nothing remotely “conspiratorial” about this. It is simply a matter of supply and demand. If the oil bourse creates less demand for the dollar, the value of the dollar will sink accordingly; pushing energy, housing, food and other prices higher.

Oil has been linked to the dollar since the 1970s when OPEC agreed to denominate it exclusively in dollars. This provided the US a virtual monopoly which has allowed it to run huge account deficits without fear of crippling interest rate hikes. As Bill O’ Grady of A.G.Edwards said, “If OPEC decided they didn’t want dollars anymore, it would be the end of American hegemony by signaling the end to the dollar as the sole reserve currency.”

“If the dollar lost its status as the world’s reserve currency, that would force the United States to fund it massive account deficit by running a trade surplus, which would increase inflationary pressures.” (Associated Press)

There’s no prospect of the US running a trade surplus anytime soon. Bush has savaged the manufacturing sector outsourcing over 3 million jobs and shutting down plants across the country. His short-sighted “free trade” policies and enormous tax cuts for the rich ensure that Americans will be left to face skyrocketing energy costs and a hyper-inflationary greenback. There’s no way we can retool fast enough to “manufacture our way” out of the quagmire of red ink.

Currently, the national debt is a whopping $8.4 trillion with an equally harrowing $800 billion trade deficit. (7% of GDP) The ever-increasing demand for the greenback in the oil trade is the only thing that has kept the dollar from freefalling to earth. Even a small conversion to euros will erode the dollar’s value and could precipitate a sell-off.

Presently, oil is sold exclusively on the London Petroleum Exchange and the New York Mercantile Exchange both owned by American investors. If the bourse opens, central banks around the world will reduce their stockpiles of dollars to maintain a portion of their currency in euros. This is the logical step for Europe which buys 70% of Iran’s oil. It is also the reasonable choice for Russia which sells two-thirds of its oil to Europe but (amazingly) continues to denominate those transactions in dollars.

Washington has succeeded in maintaining its monopoly by propping up the many corrupt and repressive regimes in the Gulf States. The prudent choice for Saudi Arabia would be to move away from the debt-ridden dollar and enhance its earnings with the stronger euro. Regrettably, Uncle Sam has a gun to their head. They understand that such a transition would invite the same response that Saddam got 6 months after he converted to euros and was removed through “shock and awe”.

Regardless, of the outcome, the profligate spending, budget-busting tax cuts, and the shocking increase in the money supply (the Fed has doubled the money supply in one decade) has the greenback headed for the dumpster. Already, China and Japan (who hold an accumulated $1.7 trillion in US securities and currency) are gradually moving away from the dollar towards the euro (although the Fed has blocked the public from knowing the extent of the damage by abandoning the M-3 publication of inflows) The European Central Bank (ECB) and Japan’s central bank are frantically trying to conceal the probability of a dollar collapse by issuing carefully worded statements to allay public fears while they to prepare for an “orderly” retreat.

But, it won’t be “orderly”. The dollar has lost 5% against the euro since April and is quickly headed south. The Iran bourse could be the final jolt that pushes the greenback over the edge. This is the bitter lesson for those who choose to ignore economic fundamentals and build their house on sand. Paul Volcker anticipated this scenario in a speech last year when he said that account imbalances were as great as he had ever seen and predicted “a 75% chance of a dollar crash in the next 5 years”.

Volcker was right, but economic advisor, Peter Grandich summarized it even better when he opined, “The only one who doesn’t know the US dollar is dead is the US dollar.”

Prepare for the requiem.

[Maltese80]

Something to follow closely.

[Sepp44]

Something to follow closely.

The neo cons should never have been allowed to drag the global village down to this level.It is not only ameriKa and the americans that will suffer.Extraction of Maltese oil is even more important than ever before.When the gonz was in ameriKa ,did he too make a deal with the yanks not to bring up maltese oil?There isn't a confessional box big enough for the gonz ,puppet to the neocons.Makes you wonder why he toodles along to go visit the 'jewish community' of Malta to celebrate israeli independence day.:rolleyes::confused:Gols chutzpah indeed.More like gonzis' chutzpah the fink.:mad:

[Neverwinter]

At work today I was contemplating the fall of the dollar and the collapse of the USA economically. I have a thought to share with you all. This is for those of us who have researched the globalism/international finance issue....

Jews seized Russia and created the USSR. After they had economically destroyed it many of them emmigrated to Israel and the USA as well as other countries in the West. Of course the USA had a shadow war with the USSR. All along Jews were passing Western technology to our supposed 'enemy'. Jews played both fields as they always do. So here is my question....

If the USA is soon to collapse economically, which seems imminent, what is the next move of the International Finance cabal and their government lackeys? Will they use the huge global economic disruption/depression to attempt the complete realization of their messianic agenda of Jewish domination of the entire world. Will they attempt to use it to corral us into global government?

[Marco Polo]

At work today I was contemplating the fall of the dollar and the collapse of the USA economically. I have a thought to share with you all. This is for those of us who have researched the globalism/international finance issue....

Jews seized Russia and created the USSR. After they had economically destroyed it many of them emmigrated to Israel and the USA as well as other countries in the West. Of course the USA had a shadow war with the USSR. All along Jews were passing Western technology to our supposed 'enemy'. Jews played both fields as they always do. So here is my question....

If the USA is soon to collapse economically, which seems imminent, what is the next move of the International Finance cabal and their government lackeys? Will they use the huge global economic disruption/depression to attempt the complete realization of their messianic agenda of Jewish domination of the entire world. Will they attempt to use it to corral us into global government?

that is what it seems. the problem is they seem to be influencing the eu too much. we cant say what is going to happen but a world war seems likely and the west is in no shape for one.

[etoile noir]

At work today I was contemplating the fall of the dollar and the collapse of the USA economically. I have a thought to share with you all. This is for those of us who have researched the globalism/international finance issue....
what do you think of the strengthening of the euro in the face of the falling us dollar?

Jews seized Russia and created the USSR. After they had economically destroyed it many of them emmigrated to Israel and the USA as well as other countries in the West. Of course the USA had a shadow war with the USSR. All along Jews were passing Western technology to our supposed 'enemy'. Jews played both fields as they always do. So here is my question....
russia is strong, very strong. and putin is nobody's fool. jew or no jew putin's not going to take any bs from anyone.
remember soros, khodorovsky's yukos "empire", etc.

the russian economy is healthy. putin wiped out the debt of the entire ussr and now they dont owe a red cent to anyone.
see here (http://english.pravda.ru/russia/economics/22-08-2006/84038-paris-club-0)

If the USA is soon to collapse economically, which seems imminent, what is the next move of the International Finance cabal and their government lackeys? Will they use the huge global economic disruption/depression to attempt the complete realization of their messianic agenda of Jewish domination of the entire world. Will they attempt to use it to corral us into global government?
the usa will not collapse at the touch of a button. they should get their act together, pull out of iraq and afghanistan and clean out their own backyard. what is happening to the US is entirely the fault of bush and his cohorts.

if it does collapse and there is a war europe does not figure anywhere. the eu simply does not have the balls for jack shit. any war that will occur will be one between jews and muslims for world domination.
who would you bank on? yes the jews are powerful but dont underestimate the muslim world. they have the oil dosh, and they have more than enough lunatics ready to be greeted by 77 vestal virgins.

[dust commander]

Quote [ they have the oil dosh, and they have more than enough lunatics ready to be greeted by 77 vestal virgins.] Quote.

I bet on the ones with the n-u-k-e-s. There better be about 30,800,000,000 vestal virgins coz otherwise they're gonna be disappointed.;)

[etoile noir]

they have the oil dosh, and they have more than enough lunatics ready to be greeted by 77 vestal virgins.

I bet on the ones with the n-u-k-e-s. There better be about 30,800,000,000 vestal virgins coz otherwise they're gonna be disappointed.;)
well let's leave the nukes and the gazillion vestal virgins out of it for now since neverwinter is talking economy.

dont you think that american exports should be doing much better at the moment with the dollar so weak? foreign buyers should be having a field day. they effect payment in dollars - for whatever they purchase, even if its a dell pc made in china - therefore this is the time to buy. america wins whichever way.

thoughts anyone?

[Marco Polo]

well let's leave the nukes and the gazillion vestal virgins out of it for now since neverwinter is talking economy.

dont you think that american exports should be doing much better at the moment with the dollar so weak? foreign buyers should be having a field day. they effect payment in dollars - for whatever they purchase, even if its a dell pc made in china - therefore this is the time to buy. america wins whichever way.

thoughts anyone?

its not so much as it makes american exports cheaper but makes other developed nations more expensive (europe). america doesnt export much anymore. how many american made goods do you buy? i cant even remember any in the uk.

actually you are probably more likely to come across a US made landmine than an actual consumer product.

[Neverwinter]

It is good to see the Euro rising. However, the current EU will take all of Europe to the dustbin of history...same locale that the USA is quickly headed to. Currently the USA has a debt that allocates approximately $350,000 to each of us. I can't pay my share! LOL EU must become IE. It is all I want. All else is pointless.

[dust commander]

well let's leave the nukes and the gazillion vestal virgins out of it for now since neverwinter is talking economy.

dont you think that american exports should be doing much better at the moment with the dollar so weak? foreign buyers should be having a field day. they effect payment in dollars - for whatever they purchase, even if its a dell pc made in china - therefore this is the time to buy. america wins whichever way.

thoughts anyone?

http://www.thevillagenews.com/story.asp?story_ID=17420

Don't worry.