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Open Thread: The Dollar, M3 and the Iranian Oil Bourse

Posted on March 5, 2006
Filed Under Uncategorized |

Due to a number of deadlines coming up for projects on my to-do list, I likely won’t be doing much writing for the website in the coming few weeks. The website is a hobby that I enjoy very much, but it takes a back seat to putting bread on the table.

However, there is a lot going on over the next month or so that is worthy of discussion, so I’m going to leave an Open Thread up every Monday for items of pressing interest. I’ll be keeping an eye on the comments, and throwing my two cents in as warranted.

This week’s topic: The Dollar, M3 and the Iranian Oil Bourse. Will the US attack Iran over the Bourse? Is this the death knell for the dollar? Or is it simply much ado about nothing?

Here are two excellent articles for reference, one on each side of the issue

The Proposed Iranian Oil Bourse, and the Demise of the US Dollar
by Dr. Krassimir Petrov, Ph.D.
http://www.financialsense.com/editorials/petrov/2006/0120.html

Oil Priced in Euros Won’t Matter
Mike Shedlock
http://globaleconomicanalysis.blogspot.com/2005/10/oil-priced-in-euros-would-it-matter.html

Looking forward to the comments.

Michael

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Comments

53 Comments so far
  1. diana Moeliker March 5, 2006 8:30 pm

    Sear Mike - Jim Willie on 321gold.com mentioned in his last letter that the Iranian Oil Bourse won’t be going ahead and that the Iranians will make some excuse. Can you find out further what is happening? Diana

  2. River March 5, 2006 9:00 pm

    I haven’t heard anything about the bourse not going through. I would be interested if anyone else has heard something like that. Personally, I tend to agree with the second article that Michael posted - I don’t think it is going to be the end of the world, at least not immediately. March 20 with come and go as a non-event for the dollar.

    I agree with Mish - the petrodollar holders have always had alternatives for their dollars. It is not hard to exchange currency. The US has so far been the most attractive place for investment. But I think the world is starting to wise up - there is a great article this week in BusinessWeek about Dubai, and how they’re really putting their money to work at home. They’re working on the tallest building in the world there - 40% taller than the current tallest building!

    There will be a slow erosion of the dollar’s power, but it is due to a number of factors - not just Iran’s oil market. America had a good run, but you can’t stay on top forever. It’s just like winning the Superbowl - Nations come and go, then they come back again. China has been so backward for so long…it is their turn again. They are hungry in a way that America no longer is. But being a second rate power won’t be so bad…Just look at England.

    - River

  3. Joe March 5, 2006 9:23 pm

    Today a value meal can be bought for $6.00. In April or May $6000.00? The FED is hiding M-3 because they will print and create credits on computer far faster than it has been since 1913. The dollar may be like Italian lire before the Euro with a bunch of zeros. For an comparison $50000.00 lire in 1998 was worth $30.00. A Weimer Republic Germany situation is possible in USA.

  4. JIM ALASKA March 5, 2006 9:38 pm
  5. Nish March 6, 2006 4:58 am

    I can’t help thinking that this administration is deliberately trying to destroy the US. When 9/11 happened, and you want to go into IRAQ, why not have a war tax, why loweer taxes accross the board. Why have insiders leak out information of GITMO and GITMO’s son. Why have those cartoons printed in Europe wo even yelling at the Danish. Why not have proper response to Katrina? Why, Why, Why can lead one to believe that these actions are all deliberate to destory the US currency, destory the US image, and ultimately destory the US way of life.

  6. Anon March 6, 2006 10:00 am

    From a libertarian perspective it seems that dollar weakness is overestimated by the left because they believe capitalism leads to poverty and not wealth. I love this blog for the links but I simply can not believe that you can believe in Socialism while having a firm grasp on economics. I say that as a non-republican who doesn’t think Bush is doing a good job.

  7. Michael Nystrom March 6, 2006 10:58 am

    Dear Anon.,

    I’d appreciate some elaboration on your comment above. Your economy of words makes it difficult to understand what you’re trying to say. Don’t be shy to express what you really think!

    There are lots of different ways that capitalism can be practiced. I agree that current practices are leading to the impoverishment of the masses, not wealth since it takes ever increasing amounts of debt to power GDP growth. This is largely the fault of the Fed, and not the system of capitalism itself.

    I don’t think capitalism is all bad, but I don’t think it is the answer to all our problems either. Some problems cannot be solved by capitalism, and that is the reason that we have government.

    Basic rights should be provided to citizens as part of the social pact we create with one another called government. Healthcare, utilities such as gas, water and electricity (and increasingly, broadband) should not be offered as for profit services, but rather by government. Such basic services provide everyone with a level playing field upon which to compete.

    I have a fairly good grasp of economics, but that does not mean I agree with its underlying assumptions. Economics is based on some premises that may have been true at one time, but may be less so today - scarcity and human greed and self-interest. As scarcity decreases greed and self-interest may also. The world is evolving, and the “science” of economics has to evolve with it. Do the bedrock premises still hold true in all circumstances?

    Should raising a family be based on capitalistic principles as well? How about if parents charged their children for food, or for a hug, or for a bedtime story? Would that be a better world? A family is based on Socialism - cooperation, sharing and unity. Friendships are also based on the same socialistic principles. So what is wrong with a little socialism?

  8. Anon March 6, 2006 11:54 am

    OK, here’s a better explanation. Capitalism leads to more wealth but that wealth is concentrated at the top where most of the wealth is made. I think Socialists generally don’t like the stigma associated with welfare so they re-route wealth redistribution through businesses (using labor unions and campaign contributions) and an increase in government jobs which is devastating to economies as seen in Germany and France.

    Contrary to Socialist assumptions you can have wealth redistribution without bureaucracy. For instance, with food stamps the private sector creates the food, not the government, and thank god, my public school lunches were terrible.

    I believe that productivity is going to wipe out millions of jobs in the next decade, think ATMs, Skype, Robots ticket machines at the movies, etc. So I believe wealth redistribution will become necessary but only if the government leaves the private sector alone and uses simplified progressive taxation plus electronic food stamps applied to healthcare, education, etc.

    Unfortunately free trade is painful for America in the short run because until recently we had a monopoly on capitalism. Now we have to compete and we don’t like it. Eventually wage arbitrage will stabilize (there is a housing boom in India right now) but jobs will continue to vanish as automation accelerates. It’s harder to blame that ticket robot than an Indian dude with an accent.

    One take on the economics of families is that spoiling your children is akin to socialism. It changes the mentality of people subject to it, I’d argue for the worse.

  9. ron March 6, 2006 12:01 pm

    The policies that result in dollar abasement have little connection with market economics(pentagon contractors don’t
    operate that way).That said all economic systems throughout human history have contained elements of competition and cooperation.We have never gotten along without each.Illusions to the contrary are just ideological rhetoric.

  10. Rich March 7, 2006 6:59 am

    Folks,

    how about some predictions about what is going to happen by the end of this month?

    Will the Iranian Oil Bourse ever see the light of day?
    -or will Tehran take a hit?
    -will there be sudden regime change, stroke to the leadership?
    -or will the Russians, Chinese, etc. back away from supporting the oil idea at the last minute?

    Will the dollar get whacked by 10% or more if the bourse opens?

    Will the mainstream press even mention this event on anything but page 5 column 3?

    Does Oil shoot to an all time high?

    And of course, does Gold go to $580+, and the dollar down to 85?

    What are you thoughts and is this even a meaningful event?

    Lets keep the conversation going until Michael is back.

    Cheers Rich

  11. robert March 7, 2006 7:12 am

    Hey Rich, I’ll throw in my two cents. There is definitely something strange going on, and I smell a fish. The US Government is running out of money and the Treasury is borrowing from here and there to pay the bills, yet the dollar has just embarked on a massive rally. This is the 5 year anniversary of the Nasdaq crash, and stocks are showing a lot of weakness. Gold just collapsed again from a lower high, and is sitting on support at 555. Oil is also not behaving as if we’re going to see a war.

    My predition: The oil bourse will open - it will be a non-event, just like Y2K was. At least at first. The real pain will come later. US won’t attack Iran because it doesn’t want WWIII with US against China and Russia. At least not yet.

    I believe in a certain intelligence to the markets, and if we were going to war, I would expect to see oil and gold already pushing to new highs - instead they are showing weakness. I don’t know why the dollar is rallying, but the fact is that it is. Anyway, I look forward to more opinions.

    - Robert

  12. Scott March 7, 2006 7:21 am

    I think the one thing that keeps people in the middle and lower classes going is the IDEA that someday they too will arise out of their current economic class to something better. That IS the American dream.

    Too bad our graduated tax system and economic policies make it hard for that to become a reality for most people. One would hope that hard work in a specialized field alone would make it possible. (Few people expect that flipping burgers at McDonald’s will do the trick.)

    What has quickly eroded that possibility is the government’s interventionist policy of social services which ends up as an undue burden on all of the working classes. Socialized health care can only make this worse.

    On another note, relating society to a family unit is not a worthwhile endeavor. First, for as many healthy families out there, there are also many unhealthy and unhappy ones. Second, for those families that are healthy and balanced, children are not given whatever they want, whenever they want it. That sort of behavior is for those families that are unhealthy and parents who are insecure. They need acceptance from the children. And I am sorry to say that no one respects that sort of behavior from those in authority.

    So is a little socialism good? Maybe in the smallest possible dose. After all, who likes even using the bathroom in a public restroom? I prefer my own thank you very much.

  13. Breck Breckenridge March 7, 2006 2:22 pm

    Interesting discussion, and from folks who appear to know each other and who appear to have contributed to this forum before. I am a newcomer and as such probably have a somewhat unique viewpoint. The topics regarding the Iranian oil bourse, Capitalism per se, and other matters are OK I guess. But really isn’t the heart of the matter ‘what is wrong with America?’. Arguing the merits of capitalism in the face of a completely corrupt governmental system isn’t really very productive. We are so far away from capitalism now in America that whether that form of economy is good or not is irrelevant (at least until we return to it). I will make this observation however. If socialism is so bad then why is America in such bad shape economically and Sweden is doing very well thank you very much? In the face of the greed factor, which seems to have reared its head to its ultimate level here in early 21st century America, I’d allow a little “social contracting”. In Sweden there are not as many super rich people as in America, but there are also not so many very destitute. Somehow they have managed to strike more of a happy medium than has America. I am not sure why or how. Maybe they are simply old enough as a society to understand that government should take care of its own citizens, and that means not exporting good jobs so that various companies can get just a bit more profit, and the hell with the workers that get laid off. Ross Perot had it right, yes? Wasn’t he the one who argued against NAFTA with the catchy phrase “that sucking sound of jobs going out of America”?

    I don’t know. Until Americans, especially the ever shrinking middle class, realize what’s afoot, I don’t think the future looks too good. What is important is not that Mega-Corporation X makes a few more dollars of profit by “cutting costs” (i.e. putting some of their loyal employees out of work). What is important is that people are people! We are all citizens of this society. What bankrupts one will eventually bankrupt us all. Dr. Richbacher (sic?) points this out admirably.

    If American companies focused more upon quality rather than profit, goods would be better made, would cost more to buy, yes, BUT there would be people with jobs and money in their pockets to “buy American”. The American government would support and encourage domestic production and consumption, not the opposite. But then the American government is run by those who want the mega-corporations to have their way.

    I won’t even get into 9/11 here, but I certainly feel surreal walking around in this country knowing of the complicity of OUR government in the so-called terrorist attacks, but seeing hardly anyone else aware of this! And if you do say something about it then you are automatically derided as a “conspiracy theorist”. I wonder if that is what the Nazis called those Germans who saw through the Reichstag fire?

    Well enough for now. Catevala in Spokane

  14. bp March 7, 2006 4:19 pm

    hm, I would have to agree pretty much with the last commentor. I have been in a number of companies in the last 30 years, and usually the workers and management have been the salt of the earth, imperfect, but solid people. The trouble in this country does seem to be unbridled corporate capitalism - the big fish eating the little fish - without producing benefit for society. I figure it is the responsibility of government to create an environment for the people in the society to prosper - what we have now is a system that is governed by influence and power, not market forces. As long as the people who govern this nation believe they can “create” reality without considering the facts or employing people of ability (rather than partisan hacks), I have little faith of our country’s ability to avoid financial difficulties or further escalation of hostilities.

  15. Rich March 7, 2006 6:28 pm

    Hey folks.

    I agree with the pointlessness of debating capitalism vs socialism, vs any other ism at this point - - because we have to deal with what we have.

    What we have is the Fed Res and the Mandrake Mechanism, and what has sprung from that.

    If you don’t understand the Mandrake Mechanism then read the article Michael put up a couple of weeks ago.

    Basically, we have created a money making machine (the Fed) that benefits its member banks, who in turn work closely with members of the establishment in industry, academia, the military, government, etc. to create a symbiotic organism that is happy with the direction they are leading us - - even though for the most part we are sickened by their management.

    Over time there folks, in control of the banks, have become the most powerful economic entities on earth, and the corporations they control have become the monopoly players in their respective industries.

    The result is that we are now dealing with a virtual hi-jacking of the US economy through the creation of the Fed Res nearly 100 years ago. The system itself has worked like a form of compound interest, the interest has accrued to the member banks, the debt is what all the people owe the government, who in turn owe it to the banks - - - in short we’re screwed, because “we the people” were fooled by the bankers in to letting our “representatives” give the banks the power to take over the creation of money/debt. As a result, on paper, the member banks of the Fed Res actually own us, because we have to pay back what the government has been spending on our behalf.

    Nice ain’t it.

    Now, through massive manipulation and obfuscation, secret societies, cross directorates and a lot of complicity on the part of citizens who sold their souls for a tiny piece of the action, we are faced with a shadow power/government/elite/world order, that is in control of the means of production of everything, from money to pharamceuticals, to the food you eat and the cars you drive.

    Just how you describe this economic entity is beyond me, but it ain’t capitalism, it ain’t statism - - it’s a hybrid whereby enough folks who think they are socialists buy in to the support of their big government programs, and enough people who believe they are capitalists buy in to venture capital activity, hi-tech start-ups,small businees, etc. but in reality all of them fall under the very direct (but invisible) control of a shadow power that we all know exists but can’t see, feel or even argue with!

    Until we defrock the Ponzi Scheme that is the Fed Res (and all that is behind it) and set about constructing a system based on sound money principles, and good old fashioned decency, ethics and morality, we are doomed to suffer whatever injustices the current elites choose to meter out - - - ironically in our name, and scarily (like in good old Nazi Germany) probably with the backing of enough of the sheeple so that there appears to even be a mandate for whatever they do.

    Of course, if the alternatives are Pol Pot, Mao, Stalin or Adolf, then give me the bankers.

    Cheers Rich

  16. Dan March 7, 2006 11:42 pm

    Rich,

    There remains the HOPE of one other alternative besides the Ponzi Scheme, Pol Pot, Mao, Stalin or Adolf. It is a strategy that is espoused by Nelson Hultberg of AFR.org. One that could, hopefully, lead this Country back toward a more limited government as envisioned by our Founders.

    That site plus his book, “Breaking the Demopublican Monopoly” are both worth a read. He describes a 2 pillar strategy involving a “gold oriented” monetary system and an “equal rate” tax. It may be this Country’s last best chance to reduce the scope of our out of control government, whether one refers to it as corporate fascism or socialism.. I encourage ALL to check it out, it is an easy read and quite thought provoking.

    My FEAR is that your alternatives will win out, but my HOPE is that the masses will find a way to, once again, embrace the vision of our Founders!!

    Best…Dan

  17. cornhusker March 8, 2006 6:08 am

    “Healthcare, utilities such as gas, water and electricity (and increasingly, broadband) should not be offered as for profit services, but rather by government.”

    Michael, I used to greatly enjoy your writings, but now I’ve determined that you’re nothing but a socialist idiot. I won’t even try to sway you over to my way of thinking as I’ve run into your type before and it’s never worth the effort.

    Please explain one thing to me- I get why you think healthcare, utilities, gas, etc. should be paid for by the government machine, as that’s what most socialists ask for, but broadband? Please. By saying broadband is a necessity that the goverment should subsidize is crazy. Why not ask for free HBO while you’re at it?

  18. Michael Nystrom March 8, 2006 7:15 am

    Hey Cornhusker,

    Keep up with the times, because they are constantly changing. It may be a heretical notion to those who worship at the altar of the free market, but not every industry works well under the model of unfettered capitalism. Just as a hammer is a great tool, the market is good for some things, but not for everything.

    I live in the Northeast, where it is COLD, and where the gas and electric utilities were deregulated several years ago because the “market” is supposedly more “efficient.” But guess what? Utilities are a natural monopoly, because everyone needs to stay warm when it is 0 degrees outside. There is no competition from where I can buy my gas - a former government monopoly utility with regulated prices has simply been replaced with a private monopoly utility with UNregulated prices. What is the mandate of every for-profit business? INCREASE REVENUE. How do they do that? By raising my gas rates, and those of everyone in the city. What alternative do we have? THERE IS NO OTHER GAS COMPANY. Start burning firewood in the apartment?

    Here are a couple of articles for those interested on how deregulation has been BAD for consumers.

    http://www.latimes.com/business/la-fi-montana7mar07,1,3190591.story?coll=la-headlines-business

    http://www.roanoke.com/editorials/wb/wb/xp-55389

    There are more out there, if you care to investigate the world you live in, rather that repeat tired old platitudes that are broadcast daily on the corporate-controlled press. “Capitalism good. Socialism bad.” Of course privatization is good - for the corporations!

    Look up in the corner of the website - see where it says, “THINK!”? What is the difference between HBO and water, heat and electricity? I can do fine without HBO, thank you very much. Water, heat and electricity are necessities for modern life. The same is becoming true for broadband. TIMES ARE CHANGING. American workers and schoolchildren have to compete with South Koreans – who are among the most advanced in the world when it comes to Broadband access. In Taipei, where I used to live, the city is constructing a city-wide, broadband network that is free for everyone.

    Contrast: Under the private model, you have fatcat companies charging as much as they can to maximize their revenue. They could care less how many people get service – they care how much revenue they make. If they had 10,000 customers, and it brought them more revenue than having 100,000 customers at a lower price, they would naturally serve fewer customers. Think about it - that is how private business works. It is not about quality, it is not about service, it is not about public good.

    There are many ways to compete – and in this increasingly borderless world, we are competing against the citizens that do have progressive governments that understand the real power of the internet and its role in business, innovation and global communications. Becaue of the excessive rent seeking that is going on by private corporations at every turn, America is falling further and further behind. The internet is more than an entertainment device – it is more that about surfing porn - it is much more than HBO.

    And so this is what it comes to, “Michael, I used to greatly enjoy your writings, but now I’ve determined that you’re nothing but a socialist idiot.” Must it be in this country that everyone must agree with you, or they are an idiot? Why resort to name calling, when you haven’t even the courage to leave your real name, or a real email address? Tsk. Tsk.

    “I’ve run into your type before and it’s never worth the effort.” Amazing how clairvoyant you are, that you know my “type” from a few statements I made that you happened to disagree with.

    So, Cornhusker, my question to you is this: Our government has a $3 trillion budget, an $8 trillion debt, and an annual $500 billion deficit. What should we as citizens get of value for our tax dollars and our debts? If we don’t deserve affordable healthcare, and reasonably priced basic utilities for our money, then what do we deserve for our hard-earned tax dollars that are extracted from us by the government each year?

    I’m all ears.

  19. steve March 8, 2006 8:12 am

    Since financial markets are expert discounting mechanisms, it might be interesting to see what the charts are suggesting for upcoming changes in currencies and crude oil.

    A monthly bar chart of the US dollar index appears to be tracing-out a head and shoulders bottom, beginning in early ‘04, and continuing into the present. A measuring implication based upon the distance from the head to neckline, projected above the neckline, is 104, versus the current price of 90.79. This is a forecast increase of 14.6%!

    Conversely, the EURO index seems to be forming a head and shoulders top over the same period as the dollar. Downside measuring implication is 97, or a forecast depreciation of 18.4%!

    Crude is rather double-toppish, long-term, with a downside price objective of 42, which is a forecast decline of 31.8%! After all, didn’t the OPEC folks declare that the world was awash in petroleum at their conference in Vienna, yesterday? Also, crude appears to be quite weak on both short- and intermediate-term indicators as well.

    Gold — that safe-haven from central bank excess — looks as though it is in the process of correcting to 520, and possibly as low as 485.

    What all of the above is suggesting to me is that: 1) the markets are not anticipating structural difficulties with the dollar, anytime soon; 2) the intermediate-term movement of EURO fx will be down, not up; 3) supply/demand principles laid-down by Lord Marshall in the 1890s are still operative in today’s oil market in that high prices bring out supply; and 4) there is not currently a flight to the safety of gold in anticipation of an end-of-month upheaval upon the final demise of the dollar and American global hegemony.

    The Iranian Oil Bourse, like so many other wonderful ideas which have been hatched in the middle east over the past thirty years, is a non-starter. American power and influence (both geopolitically and financially, whether rightly or wrongly) is just too overwhelming at this stage in history to be challenged — much less overthrown — by a bunch of guys with attitudes, wearing turbans and scratchy robes!

  20. Jeremiah Arn March 8, 2006 9:17 am

    Great site and blog, Michael. It’s all about dialogue - and that’s what you are doing well.
    I gotta say I agree with Cornhusker’s sentiments if not his choice of words. The system is perhaps irrepairably broken and adding more government services like healthcare and broadband in order to compete with socialist nations is going in the wrong direction. There is no such thing as a level playing field. Everyone and every nation are different and must learn to thrive with their own unique character.
    You know, when I was growing up during the Cold War, we were always told that America was different. That was a good thing. We didn’t have a birthright to success or free-market economics. Rather we were a shining city on a hill for the world to model.
    No doubt we have fallen far from that situation with massive debt creation through unrestrained spending and monetary inflation and constant meddling with society - even outside our borders. Each of us bear responsibility for that failure to a degree. But the direction for successful return to pre-central bank times is not to increase the need for government spending and intervention. It’s to pull down those institutions that are creating the inequalities - or at least hedge ourselves as they rot from the inside out.
    One day, America will be ripe for reform but it won’t come until the teeter totter falls the other way and the McMansion-era ends.
    Take some time to read The Real Lincoln by Thomas DiLorenzo. Central planners like Lincoln and Hamilton - not the Federal Reserve - were the beginning of the end. The Federal Reserve was a natural step once the people were fooled. And now, the end of a democracy comes when those $3 trillions and $8 trillions are spent just on interest for the debts from all prior spending. There is no value to be had, Michael, just because there are liabilities.

  21. Scott March 8, 2006 9:24 am

    Listing broadband as a potential government service seems to be so far over the top that I can hardly take the rest of the argument seriously.

    I am NOT saying socialism is bad. A socialist society can be productive. I’m only saying it is bad for the enterprising or hard working individual to move up in economic position, because his efforts must also support others who are not as dedicated to moving up financially. That’s why it is called socialism.

    There is no better way to make someone miserable than to take away his ability to achieve.

    Sweden is not some production panacea. What is their per capita GDP? Well, they have a lower per capita GDP than 45 of the states in the USA. And if you go so far to the extreme like North Korea and Cuba you find they are pretty much so insignificant they are off the chart. Too bad North Korea could not be like their neighbors to the south. So much lost potential.

  22. Michael Nystrom March 8, 2006 10:12 am

    Hey Jeremiah,

    I appreciate the comments, and appreciate your perspective.

    I guess I should clarify what I mean, and what I don’t mean. I agree that the current system is broken, and is rotting from the inside out. I don’t mean to suggest that the Bush Administration should provide USA Broadband, or healthcare. That would clearly be a disaster. The current federal government is big, bloated and misguided.

    The orginal point of government was to provide services for the PUBLIC good, those kinds of services that everyone needs and could potentially enjoy, but that simply would not be produced by private parties. The classic examples are roads, sewer systems, bridges, etc. We all need them, we all use them, and having them contributes to a better life for everyone.

    This is a form of cooperation that some here may call socialism. However, humans are social creatures, and we need one another to live and survive, not just to sell things to and to collect rent from.

    To Scott, who believes that socialism means the productive must support the non-productive, I give American Capitalism’s shining star: Walmart, America’s largest retailer. Walmart makes a profit of $1B per month, and it says it cannot afford to provide healthcare to its employees. Even it claims it needs “government” help. What would Walmart be without its employees? And yet it simply cannot spare the change from its $12B annual profits.

    What is wrong with the more fortunate, the more able, helping out those who are less able? Is there something so wrong with that?

    “There is no better way to make someone miserable than to take away his ability to achieve.” I agree with that. I also imagine that employees of Walmart, who make poverty level (minimum wage) salaries, are not provided healthcare and cannot afford to buy it, who cannot afford a decent place to live or healthy food to eat — yes, I imagine those people agree with it, too.

  23. Anon March 8, 2006 10:51 am

    Why do the anti-walmartites have a problem with healthcare coming from taxes instead of higher prices for products at stores? Why not push for bigger government that will raise taxes instead of forcing businesses to act as an arm of the welfare state?

  24. Anon March 8, 2006 11:08 am

    It has to do with responsibility. Walmart profits from the workers, yet it wants to socialize the costs of taking care of them. Shame, shame, shame.

  25. cornhusker March 8, 2006 11:47 am

    Michael,

    I apologize for the “idiot” comment…you’re obviously an intelligent guy, but SOME of your altruistic beliefs are naive at best.

    Nobody “deserves” affordable healthcare. The healthcare fix is simple…dissolve the insurance industry and over a 35-year period, dissolve Medicaid, Medicare, & Social Security. The quality of healthcare will soar and the costs of healthcare will plummet. Charge everyone a flat 15% federal tax on ALL forms of income. Problem solved.

    You see Michael, most, if not all of our country’s financial woes can be tied to socialist programs…programs that had great intentions, but don’t work in a economically progressive, productive society. Take the government teat away and watch us go. Nothing can stop the completely unbridled man (or woman), economically speaking, of course.

  26. cornhusker March 8, 2006 11:57 am

    Hey Michael,

    On Post#18 you cut & pasted your first paragraph from that Roanoke article you advised me to read. That’s weak, man.

    FYI…plagarism is a quick way to lose all credibility on the web. If you copy someone else’s work you should add a disclaimer.

  27. Scott March 8, 2006 12:50 pm

    I love the fact that whenever people talk about corporate abuses, they always always mention Walmart. That is in spite of Walmart’s profit margins being about the lowest of any corporation out there. Sitting right around 3.6%. Compare that to Citigroup at 32%. Or Target in the same industry category with profit margins around 4.3%. The $1B per month statistic means nothing except in the proper context.

    So, whenever I hear Walmart mentioned, I am not hearing original thought, just party line opinion. I’m just not sure what that party is.

    And to turn the question, what’s so wrong with Walmart providing the lowest prices to low income households? If you’ve been in a Walmart, you know that low income persons shop there. And rightly so, they have the lowest prices made possible by a miniscule profit margin.

    Statements that make it sound as though Walmart never provides health care are dishonest. Walmart does provide health insurance to its employees. Full time employees must work there for six months before being eligible. That guideline is absolutely reasonable.

    The pre-packaged Walmart argument has become extremely tedious, because Walmart provides affordable food and clothing and job opportunities with health care options, period.

  28. Administrator March 8, 2006 5:58 pm

    Cornhusker,

    Thanks for the apology. And you’re right that I cut and pasted that first line from the other article. I’m glad someone is paying attention. You’re right I should have put it in quotes, too. My fault.

    Scott, the reason I use Walmart as a target is because it is America’s largest employer. This, by definition, gives it a leadership position in setting standards of how all of America’s workers are treated. It has nothing to do with profit margins. Walmart also “ranks #1, among all companies in America, with the highest total number of workers without company health care insurance”*

    In light of this, whenever I hear Walmart being mindlessly defended, I am also “not hearing original thought, just party line opinion.”

    I actually have some personal experience: When we moved to Cambridge we made the mistake of doing some shopping there to set up our lives, because it is “cheap.” The result - just about everything that we bought there - less than 6 months ago - is now broken. Silverware, rusted. Teflon peeling off the frying pans. TV has a strange green spot on the screen. So everything has to be bought again - but certainly not at Walmart - never again. This is just another example of the exploitation of the lower income bracket — the terrible quality of the stuff they sell. What good is stuff if it breaks? What good is a job that doesn’t pay the bills?

    * “At the end of 2005, Wal-Mart ranked #2 on the Fortune 500 with sales of $312 billion and net profits of $11.2 billion, and was America’s largest employer with 1.39 million workers. However, because Wal-Mart
    fails to provide company health care to over 775,000 of its workers, Wal-Mart ranks #1, among all companies in America, with the highest total number of workers without company health care insurance and is the #1 abuser of taxpayer funded public health care in 18 of the 19 states where statewide data has been reported.”

    http://www.wakeupwalmart.com/feature/healthcrisis/

  29. King George March 9, 2006 5:27 am

    Michael,

    I’m with you 100% (no. 18). Where I live (AZ) would never have developed without Federal power and water projects.

    These people who think we are still living in 1800 make me laugh. I notice they don’t complain when driving on Interstate Highways. Could private enterprise have built the Atomic bomb which saved American lives by ending WW2?
    Study how the railroads were built, would have never happened without the Feds giving away millions of acres of land. When you give medicine to your child do you expect it to be what is claimed on the label? Perhaps we would be better off with “Enron” running the FDA? LOL

    I could go on and on but you get my drift.

    Good morning to all,
    George

  30. Scott March 9, 2006 8:04 am

    You know, I really want to make certain that Walmart is not abusing the state’s Medicare programs. And by abusing I mean unecessary use to simply reduce health care’s impact on Walmart’s profit margin.

    But I simply have a hard time following any points made that are based on deceptive statements, facts taken out of context, or statements made to make a situation sound apocalyptic. Where are both sides to the story? That’s why I feel the need to moderate, not because I am a Walmart lover. I do not really care about Walmart. But I do appreciate the reference to me or my posts as being “mindless”. Whatever comments you have had towards cornhusker about his argument degrading into name calling suddenly seem to lose their credibility.

    The anecdotal evidence you have toward buying not quality products is fair, but you might just ask yourself why you purchased goods that were most likely made in China. I also have purchased products from Walmart that ended up broken. They too were made in China. The cause is ultimately, however, market (consumer) demand.

    What does it mean for Jim’s Networking to net $500K? Nothing unless you know how big the company is. That’s why percentage profit margin is a fair measure.

    Highest total number of people without health care of any company in America? Right, but in context, the company is the largest employer in the country. That makes such a statistic only a logical conclusion.

    The wakeupwalmart site also must be honest. How about starting with an exact qoute? “On average in 2005, 73% of all associates were eligible for Wal-Mart plans and 43% of all associates chose to enroll.” -That’s the actual quote and wakeupwalmart did not quote it exactly. All I can ask is why?

    Why am I frustrated with politics? And let’s be honest, this is politics. Is it because agenda comes first, honesty comes second?

    Finally, there are services that I and all Americans require Government to perform. The government must provide proper roads, national defense, police, fire, etc. Utilities ARE different from most competitive industry. There must be well defined regulation for them because they are not pure competition. That does not mean the government buys people broadband. While we travel down that road, we might as well provide people with gasoline for their vehicles. Maybe we should buy everyone a car. I mean, people can’t get to work without transportation. Seems to make it a necessity, right? I hope not.

  31. Scott March 9, 2006 8:10 am

    I’m sorry, I meant Medicaid.

  32. Rich March 9, 2006 11:58 am

    On the issue of Walmart, my perspective is a little different.

    The megastore is killing our culture, pure and simple.

    The privately-owned corner stores close down, the local and regional supermarkets close down, the big guys move in and we all drive to the massive car park and shop in the megastore for the cheapest stuff we can get our hands on.

    We are all indulging our material needs at a frenzied pace while we simultaneously cannibalize our own culture.

    To me that is the issue of WalMart. Sure it provides massively cheap goods and tens of thousands of them, but it’s like steroids - - you pay the price later when your body no longer needs the help and your bones have been weakened.

    WalMart is stripping western culture of a part of it’s bone marrow both from a cultural perspective (we just indulge in consumerism mindlessly) as well as in ripping away a part of the middle class business ownership base..

    Cheers Rich

  33. Scott March 9, 2006 12:17 pm

    Thanks, Rich. I totally agree that consumerism is harmful to us all.

    Consumerism in our transportation habits.
    Consumerism in our eating habits.
    Consumerism in our purchasing habits.
    et cetera.

    Listen to this approach in producing long lasting, quality products from the Swedish company Gransfors Bruks:

    “3. More sensible production demands less natural resources at the same time as the quality and durability of the axe increases. Also, increased durability will decrease the total consumption of natural resources and decrease waste. 4. We have an unlimited responsibility for Total Quality. Working conditions, product quality and concern for nature are some parts of the Total; humanity and ethics are as important.”

    This is from http://www.gransfors.com/htm_eng/index.html.

    Not to mention that if you buy quality, then you may indeed spend less in the long run.

    But, Walmart is not stripping western culture of anything. Target does the same business. Kmart is also in the same business. For a glimpse at who might be the true culprit, I suggest we all, including myself, look in the mirror.

  34. Michael Nystrom March 9, 2006 1:15 pm

    Hey Scott,

    First let me apologize about the mindless comment. I am currently reading Ellen Langer’s book “Mindfulness” in which she makes the distinction between mindful v. mindless thoughts and behaviors - mindless meaning a lack of originality. I did not mean it in any other way.

    I believe that at root, we are in agreement on many issues, but through the crude use of this medium, small and relatively insignificant disagreements can be blown into larger, less productive arguments. As such, I appreciate your continuing the dialogue.

    I still feel that it is justified to single out Walmart simply BECAUSE it is the largest employer. Yes, we all take the blame - I agree with that. But when I say all, I mean that includes the corporations. They are people, after all, too. Considering they have rights, we should also hold them to their responsibilities.

    Yes, Walmart is a scapegoat, but as I pointed out, because of its size and position, it has a natural leadership role. If pressure is successfully applied to the leader, resulting in a change of behavior, then the rest of the followers will also be forced to change. If the largest retailer were like Gransfors Bruks, I can imagine that the smaller companies would try to emulate that business model.

    I did not purposely misrepresent any facts about Walmart. You’re right that this is a lot like politics. I only know what I read, and I imagine that the reason why only 43% of the 73% of Walmart employees who are eligible for healthcare opt for it is because they still have to pay for it out of their own pockets. I am pretty sure that the Walmart healthcare plan is not completely free to them - some amount comes out of their paycheck. I’m not sure how much. However, I can imagine that whatever amount may seem like a small sum to you or I, these workers are in an entirely different economic reality. They’d rather have the cash up front.

    Regarding broadband - I believe it is a natural monopoly, like the other utilities I mentioned - gas, water, & electric (and telephone, which I did not mention). The infrastructure is expensive to build, and there is no need for competing providers. The next question is whether broadband is a “necessity”? Some may wish to debate this, but I believe the answer yes.

    Regarding the road/highway/car/gas analogy, I believe we are in agreement. Roads, built by the government, provide a service that everyone can enjoy. I would certainly not expect the government to buy people cars or furnish them with gasoline. I believe that broadband is part of a new infrastructure, and should at least be regulated so that consumers do not become victims to unscrupulous monopolists. I would not, however, expect the government to buy everyone a computer.

  35. Zorro March 9, 2006 7:46 pm
  36. Rich March 9, 2006 9:20 pm

    Hey Scott.

    We agree on most of the debate it seems. However, does the public get what the public wants, or does it get what it’s given?

    Do you feel that your purchasing power, and the collective will of other like-minded individuals as yourself, could really push say, the military industrial complex to stop needlessly spending trillions on more weapons of mass destruction?

    I suggest to you that we get what we are given for the most part. The fact that the opium of the masses serves many of society very well, whether it be sport, pharmaceuticals, wealth creation, porn, religion, etc. doesn’t mean that these diversions are pushed on us by a corporatist/statist quasi-governmental system with designs of its own, and mastery of mass manipulation!

    I know…..it all sounds so damned conspiratorial, well guess what…it is.

    Cheers Rich

  37. cornhusker March 10, 2006 7:00 am

    Michael,

    This post likely falls within the “small and relatively insignificant disagreements…” section you mentioned in post# 34, but this broadband stance of yours has likely been fostered from your considerable background in I.T.

    I’m a self-employed business consultant who consistently grosses over two-fifty per year and I use dial up…a 56K modem to be exact. My kids do their school work on a 56K modem and it’s never been an issue…they’re all 4.0 students too. Last year I paid close to eighty grand in taxes, yet you believe my tax dollars should be used to subsidize broadband in the ‘hood. As I alluded to in my previous posts, this is the socialist-hogwash mentality that makes most of your recent arguments difficult to swallow. This country, with all of her ugly scars, is still the absolute best place on the planet to pick yourself up and do something with your life.

    This may sound a bit cliched to you, but I come from NOTHING. Growing up, my parents were dirt poor and I really didn’t have any role-models to speak of. I dropped out of college after two years because I was LAZY. I got into sales, did that for twelve years, and then later started my own business. NOBODY gave me a handout and I didn’t ask for one. My children have told me that in addition to have always been a loving father, I am an inspiration to them…they WANT to be like me. That’s my reward, not the money, but my children’s admiration. Tell me again, how would my life be better had I not struggled on my own? How would government handouts have helped me to succeed? I AM THE AMERICAN DREAM BECAUSE I WAS GIVEN THE FREEDOM TO MAKE SOMETHING OF MY LIFE! Most citizens of other countries would give anything to have the opportunity to express themselves like we have, whether through starting their own business, or just being able to speak their mind without fear of reprisal. I believe we take way too much for granted living here. No, it’s not perfect, but it’s the best game in town, by far. Sorry for the length of this, but I felt it had to be said.

  38. Scott March 10, 2006 7:41 am

    Rich, I’m sorry. If we can’t have a logical and reasonable conversation that is not based on a vivid imagination, then I am not sure what to tell you. But since you are conviced about certain things without sound evidence, I just hope you are never in a jury of my peers.

    Do we get what we want or no? Listen, I try not to buy Chinese. By supporting Chinese industry, whom we all have no direct control over, we support the excesses, waste, and environmental abuse that is rampant there. Will they someday blame America for poluting their landscape? I hope not, but they might possibly be partly right in doing so. What’s interesting is that the slide towards a Chinese trade imbalance did not happen overnight, American retailers have responded for over a decade to consumer demand for Chinese products over those made in America. The problem is that I do not see a change in the pace of trade imbalance.

    Walmart does have co-pays and other fees as does almost every health care plan. That the cost of health care is almost free to people with insurance is certainly not helping the health care crisis in America. Overuse, excessive tests, quick-fix drug seekers, non-compliance are all part of the problem. A huge percentage of patients seen at urgent care come in for colds or the flu - viruses for which there is no cure and hold no health consequence except for the elderly who might contract pneumonia. People who come in for these things waste resources and cost money simply because of their quick fix mentality. And who routinely gets the blame? The insurance companies. Those fascist organizations who cover health costs for a collective group of people who would be otherwise unable to afford it individually. Do you think people would take better care of themselves if they got to keep an extra $10K per year? Maybe we hope that life can be fair. Is it fair that states have legislation that limits insurance companies from offering lower premiums to those individuals who take care of their bodies?

    Yes corporations must also take some responsibility since they are people. The focus on Walmart ONLY still makes zero sense. Executives of other large retailers will certainly take advantage of Walmart’s reduced position for a larger market share. So why Walmart exclusively? What if Walmart were split into 50 smaller corporate entities, would they still not be as culpable individually as they were collectively?

    Military-industrial complex. What is your solution for keeping a specialized military industry viable? How many companies are capable of manufacturing the JSF, CVX, or SSN-21? Even today, on the Dubai Ports World deal, news reported that there aren’t too many US companies capable of the task. I understand the concerns, but where are the solutions?

    Michael, I understand your points, but I do not see consistency. How can you possibly make an argument for broadband while arguing against government support of subsidized gasoline? Transportation is a far more certain necessity. I don’t think the government should provide either of them.

  39. Cannuk March 10, 2006 10:00 am

    America’s liberty tourch was once the bright light of a great society. Immigrants were encouraged to reach it’s shores and reach their dreams. That was the American dream. Many have achieved such a dream but somehow the dream was re-defined by the subsequent generations. They re-defined the American dream as an ever increasing salary and standard of living rather than just a fresh start. The vast opportunities became almost intoxicating and as a result the human hearts of the subsequent generations would not be satisfied the same way their parents were. They would not be content to have left opression and poverty behind they sought the gold at the end of the rainbow rather than enjoy the light of the rainbow. This hunger would be feed by consumerism obtaining the latest and greatest product not because it was a necessity but because it was a societal right. It meant you were part of the new class of Americans known as the consumer. Greed is what has destroyed America. Greed is now considered an atribute by corporate America. This is Americas undoing.

    In her zeal to invite these destitude souls from all over the world America failed to export this same generosity. America was a fortress of commerce and like the days of the great plantations she prospered on the backs of the poorer nations of the world rather than exporting her ideals of human dignity and human rights. This was done to feed her millions of hungry consumers this new social class that demanded more and more as they built their own oasis in the desert of nations.

    America has been a great experiment and there have been great successes yet she went adrift during the troubled times of the 1960’s. Had she truly embraced human rights and regarded all men as equeal the world would be a different place today and America a very different country.

    This was not her destiny as evil plans extinguished the flame of liberty and virtue she tried to hold up to the world. Great leaders did come forward but their ideals were murdered buy opposing forces.

    Until great men and women come forward again America will be destined to follow the inevitable course she is now on.
    She is being led to her own end by powerful forces that do not share the ideals of her founding fathers. Their agenda is a selfish power hungry ambition known as greed. They do not obtain more so that the wealth can be redistributed to the less fortunate they obtain wealth in order to rule.

    Hope still remains that we can forge a new nation. So many of its citizens have already suffered through the furnace of refinement. It must be a new government represented not by self made men but by selfless men and women who seek to live out the true nature of its creed. “One Nation Under God”. America needs to turn to God for it is He who is soverign over the nations of mankind and it is He who decides who is to rise or fall. Turn your hearts to God America and repent.

  40. Breck Breckenridge March 10, 2006 10:37 am

    Hi all. After Dan (some ways up!) mentioned Nelson Hultberg I visited his website, afr.org, and was VERY impressed with his vision. I even ordered his book and joined the “Liberty Party” (that’s how much I was moved). This guy writes very clearly, even elegantly. And finally! someone who has some very good brain cells left. Nelson certainly stepped outside of the box and back a bit and took a good long look at the “way things are” and came up with an original idea. I was particularly impressed with the way he pointed out the reason other 3rd parties have failed. Thanks Dan! Breck

  41. Breck Breckenridge March 10, 2006 10:58 am

    And now to the other thread! Walmart, et al. Is it the guy in the mirror or Walmart that is bad (’the fault dear Brutus lies not in the walmarts but in ourselves’?). Hey it’s all of a piece! It is all connected. Walmarts would not exist if they were not patronized. Americans would not patronize them if they had a culture which values…well…value, or quality, or even taking care of one’s own (a social contract if you will).

    I suspect the reason Sweden (and probably several other nations-cultures) have the kind of quality of life they have, and the guiding principles as mentioned in the quote (above), is because of many other aspects of their national life: schools, the family, leadership, etc. Truly Walmart is “the messenger”. Don’t shoot it! Well you can if you want to there is no love lost between us!

    I dunno, America is a young country, relatively speaking. Maybe some of the European nations that seem to me to have found a way to have a high quality of life and a modestly high standard of living, have these because they have learned how NOT to do it. One look at Australia shows you what America was like a few generations ago. We aren’t quite that rough-edged anymore. And before the Aussies start after me, I like Australia for what it is. It is honest and genuine. Which is also like America once was.

    No, I think for America, it is going to take the proverbial “Two By Four”. And that is coming! Remember “the great unwashed masses”, who have no idea of what we are talking about and don’t even read….anything! Dick Cheney was right when he said, “Americans don’t read”.

    There’s more to all this of course. Like I said, it is relative and all connected. My webmaster who runs my site, i.e. http://www.gasteria.org, is in Sweden, he’s about 27 years old, unmarried, and last year he went to Brazil to visit his girlfriend (don’t ask) for FOUR months! I have a very dear friend in Praha (my age, mid-50s) who, after the revolution, went to work for Olympus-Europa, and he and his wife travel every year to a new place here in the Western Hemisphere on plant field trips. I cannot afford to do any of what they do. And they are not rich people. But they do have governments that are not wasting their money.

    The amount of wastefulness of this country is simply UNBELIEVABLE. That alone should consign us to the lower levels of Hades. It is against everything civilized and decent to squander as much money and wealth as we have. And the Universe is very just. As we will see.

  42. Scott March 10, 2006 12:08 pm

    Breck, I am glad you visited afr.org. The outlook expressed here seems to be a departure from your previous post 13.

    I am not sure about the quality of life in Europe (Sweden), but I suppose it depends on what your definition is. I did not mean to make it sound as though it were a panacea. They have far fewer computers, washing machines, video cameras and so on which we have come to recognize as useful tools.

  43. FeelingWeird March 10, 2006 1:52 pm

    Cannuk. Amen Brother!!

    I think we American’s are so spoiled, and this has been our export to the world, in the past 3 or 4 decades. To think that someone could think that broadband should be a basic American(world) right. What exasperating indulgence!! When there are people in this world just trying to live to see tomorrow, or more importantly, to see their children live till tomorrow.

    WE ARE SPOILED ROTTEN BRATS!!! And we had better wake the hell up, because we all know what happens to spoiled brats…..

    Robert NW Ohio

  44. King George March 10, 2006 2:34 pm

    It is all very simple. After WW2 the U.S. was the only game in town and this resulted in a high standard of living for its citizens.

    60+ years passed by.

    People in other countries are willing to work for a fraction of what U.S. workers make and this combined with the very low cost of transportation (1,200 foot container ships) make these goods cheaper.

    Common sense tells us that we cannot go on forever spending more than we make.

    Now if you think your god is going to save you from the drop in our standard of living you are dreaming!

    George - Retired seaman who for 25 years saw container ships sail to Asia half full and return loaded to the gills. (Same thing for tankers, except the tankers sailed from the U.S. empty).

  45. Zorro March 10, 2006 8:56 pm

    Another interesting article.

    http://www.spectator.org/blogger.asp?BlogID=2198

    By the way thanks for your great website!!!!!!!!!!!
    Zorro

  46. Breck Breckenridge March 11, 2006 8:46 am

    Dear Scott Says, actually there is no difference betw. my views in #13 and the later two. If you see some let’s talk. Although I am woefully ignorant, I am consistent!

  47. Breck Breckenridge March 11, 2006 8:53 am

    Thus far there has not been much specifically directed to Michael’s topic. I’ve enjoyed the other topics!, but still that original one was a great one. It appears that most of you do believe that America is in desparate straits, and that it is only a matter of time before the whole economy comes crashing down. What I’d really like to know is whether you all believe that there will be some kind of “event” which will act as a “tripwire”, and this was, I believe, what Michael’s topic was about. More than one prognosicator I’ve read believes that the Iranian Oil Bourse will be that tripwire. Others say, “Nonsense”. Does it matter if petroleum is sold only in dollars or not? Did the U.S. take out Saddam because he dared to do it, or not? Will the Oil Bourse lead to a military attack on Tehran?

  48. Dan March 11, 2006 11:24 am

    Breck,

    U.A.E. is located just south of Iran, and on the opposite bank of the strategic Straight of Hormuz. A few weeks ago, Robert Mchugh (technicalindicatorindex.com) offered up a possible scenario. Essentially, that the ports deal was a behind the scenes quid pro quo deal that would allow the U.S. to place troops, war planes and naval vessels over there, in case we go to war with Iran.

    Also, Martin Weiss (martinweiss.com)recently offered up 2 possible scenarios involving how the Fed MAY react to fears of a collapsing housing market. The first that has the Fed opening up the money floodgates that leads to an inflationary binge. Remember, the Fed will no longer make the M3 figure available to the public as of 3/23. The second is where the Fed in an attempt to show “resolve” in fighting inflation, continues to raise rates. This leads to an actual collapse in the housing market and a deflationary crises.

    Who knows if any of these 3 scenarios will play out, but it seems as if any could certainly act as a “tripwire”

    Glad to hear you liked afr.com. Welcome aboard, and spread the word!!

    Best….Dan

  49. ron March 11, 2006 4:27 pm

    Here in the U.S. our economy is becoming more centrally planned all the time. Think about the prison industry,national marketing,media consolidation, etc…Most of our federal taxes find thier way to the pentagon.
    Co-operative economies don’t require central planning any more than ours does.Although broadband and health care would be good candidates.

  50. Cannuk March 15, 2006 12:32 pm

    Javier Solana will decide the fate of the American economy.
    He is positioning Americas enemies against American interests. Google him to check out his activities and you will see he is playing the ends against the middle east and Americas friend Isreal. The EU will bring down the American economy. That’s how I see it.

  51. Rich March 16, 2006 4:05 pm

    Just found this article on the Iranian Oil Bourse, seems there was not a lot of truth behind the reality of this theory:

    Launch of Iranian oil trading hits wall
    Oil exchange unlikely to begin till at least midyear

    JOHN PARTRIDGE

    INVESTMENT REPORTER

    As the nuclear standoff pitting Iran against the West continues, some conspiracy theorists are more focused on another plan that the Middle Eastern nation is pursuing.

    But they are jumping the gun if they still figure Iran is within days of launching a new international oil exchange that would sell its own and other Middle Eastern oil producers’ black gold in euros rather than U.S. dollars — and which, the theory goes, could ultimately torpedo the greenback and the U.S. economy.

    Despite repeated reports over the past 18 months or so that the planned bourse would finally open for business on March 20, 2006 — and go head to head with the New York Mercantile Exchange and the ICE Futures Exchange in London — the start date has been postponed by at least several months and maybe more than a year.

    “In the middle of 2006, we are able to start the bourse,” Mohammad Asemipur, special adviser on the project to Iran’s Oil Minister, said when reached in Tehran. The plan is to trade petrochemical products first, with a crude oil contract coming last, a rollout that likely will take three years, he said.

    “Oh, crikey, it’s at a much earlier stage than people would think,” said British consultant Chris Cook, who claims credit for coming up with the idea for the exchange in the first place and is a member of the consortium headed by the Tehran Stock Exchange that is charged with bringing the project to life.

    “You can rest assured, there will not be a crude oil contract, Gulf-based, in my opinion, within a year — and that would be really pushing it,” Mr. Cook, a former director of ICE’s predecessor, the International Petroleum Exchange, said when reached in Scotland.

    The electronic exchange is to be located on Kish Island in the Persian Gulf, an Iranian duty- and tax-free zone.

    There has been far less talk about the planned bourse in the mainstream media than on the Internet, particularly on websites aimed at gold bugs and other economic conspiracy theorists.

    The theory is that all trades through the new bourse would be made in euros, not the U.S. dollar, which for decades has been the world’s primary reserve currency, as well as the one in which oil and most other commodities have been priced. As a result, European nations and other countries, especially Middle East oil producers, tired of having to buy billions of now weakening greenbacks to pay for their energy purchases, would no longer have to do so.

    This, the conspiracy theorists contend, would knock the stuffing out of the U.S. currency and hasten the decline and fall of the American Empire, all the while allowing Iran to stick it to the Great Satan.

    But, the theory continues, Washington will pre-empt all this by using Iran’s nuclear ambitions as a pretext for attacking the country.

    Kamal Daneshyar, chairman of Iran’s Majlis [parliamentary] Energy Commission reportedly told the Iranian Students News Agency in December that the exchange would at first operate in both dollars and euros, but gradually move to the European currency exclusively. He was also quoted as saying that this would enable Iran to get even with the U.S. for the economic damages it has inflicted on the Islamic republic.

    Dr. Asemipur, meanwhile, was noncommittal on the currency question, saying market participants, not the Iranian government, would make the decision. He also denied the planned bourse could harm the U.S. economy.

    Mr. Cook dismissed the idea that Iran’s goal is to use the bourse to sabotage the greenback. “I have a technical term for that,” he said. “Bollocks!”

    As for trading oil in euros, he said the Iranians likely would find it very difficult, at least in the next several years. “Basically, there aren’t enough euros in circulation, and nor are there likely to be,” he said.

    Mr. Cook cited a recent article on Hong Kong-based Asia Times Online by William Engdahl, who specializes in the geopolitics of oil.

    “For the euro to begin to challenge the reserve role of the U.S. dollar, a virtual revolution in policy would have to take place in Euroland,” Mr. Engdahl wrote. “First the European Central Bank . . . would have to surrender power to elected legislators. It would then have to turn on the printing presses and print euros like there was no tomorrow.”

    A full challenge to the U.S. dollar as the world central bank reserve currency, Mr. Engdahl added later, would entail a “de facto declaration of war on the ‘full-spectrum dominance’ of the United States today,” and that is something no country or group of countries is yet willing to launch.

    http://www.theglobeandmail.com/servlet/story/LAC.20060314.RIRAN14/TPStory/Business

  52. Olive Weller April 3, 2006 1:49 am

    On 03/15/06 there were many articles that quoted Chris Cook as saying the Iranian Oil Exchange would not open during March and in fact was no where near ready to open.

    Yesterday Pravda.Ru ran an article stating that the Iranian Oil Exchange had opened on 03/21/06 as planned and had been trading for a week.

    http://english.pravda.ru/world/asia/21-03-2006/77628-oil-0

    Did the Oil Exchange open for trading or not?

    Someone is obviously giving out misinformation, but whom?

    Regards

    Olive Weller

  53. Richard the Lionheart April 10, 2006 6:24 am

    Anyone know the answer to the last post? Should not be that hard to find out if someone is connected. I am not that someone.

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