Has a Global Economic War Started?

[erdogs]

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.

[Gard]

The one who decides what currency oil trades in is OPEC and as of their last vote on it this past spring, they voted to keep the dollar. The only two countries that voted to change it were the usual culprits, Venezuela and Iran. Russia isn't a member of OPEC and more or less sets its own agenda. China would be screwing themselves by going to say, the Euro, because they have their currency pegged to the dollar and unpegging is unlikely so as long as the US remains its largest export market. On top of that, the Chinese aren't going to support anything that could risk more upheaval with the dollar, which could harm their own economy, given all the cash they have tied up in US securities. In short, I highly doubt the Chinese would be willing to rock the boat. Saudi Arabia, as does a number of Arab countries, holds vast amounts of US dollars and if the currency would change, they too would take a major hit. As for gold prices rising, they ALWAYS rise in the midst of a recession, because gold is seen as a very safe commodity to invest in, so there isn't anything abnormal there. It has recently reached record prices, but we have also reached a recession not seen since the Great Depression, so a rush to buy gold can be expected.

To sum it up, I think, like many of the commenters on the article, that the article is nonsense.

[dxartist]

The one who decides what currency oil trades in is OPEC and as of their last vote on it this past spring, they voted to keep the dollar. The only two countries that voted to change it were the usual culprits, Venezuela and Iran. Russia isn't a member of OPEC and more or less sets its own agenda. China would be screwing themselves by going to say, the Euro, because they have their currency pegged to the dollar and unpegging is unlikely so as long as the US remains its largest export market. On top of that, the Chinese aren't going to support anything that could risk more upheaval with the dollar, which could harm their own economy, given all the cash they have tied up in US securities. In short, I highly doubt the Chinese would be willing to rock the boat. Saudi Arabia, as does a number of Arab countries, holds vast amounts of US dollars and if the currency would change, they too would take a major hit. As for gold prices rising, they ALWAYS rise in the midst of a recession, because gold is seen as a very safe commodity to invest in, so there isn't anything abnormal there. It has recently reached record prices, but we have also reached a recession not seen since the Great Depression, so a rush to buy gold can be expected.

To sum it up, I think, like many of the commenters on the article, that the article is nonsense.

[Gard]

quite honestly, it would be very wise of China to dump to dollar, and they eventually will. They can easily comsume whatever they produce for themselves. It really makes no sense for China to lend the U.S. money just so the U.S. can buy Chinese imports. Cutting credit off to US will help everyone. Our mostly consumption based economy without any productions or savings basically killing us. Sure, China has money tied in the US, but realistically our country (the taxpayers) can't pay China or the rest of the world back what is owed to them. At least not with the way our goverment keeps piling up debt and printing money.

As the dollar keeps getting weaker, I'm guessing OPEC will eventually move away from the dollar to something else as the oil currency.

[dxartist]

Yes it would be wise, but they aren't going to, because at this point they would loose too much money doing so because they bought so many securities when the dollar was worth much more than it is. The Chinese, according to economist, would loose 3 TRILLION dollars if they dumped all their US holdings today. The Chinese simply can't take such a dump, hence why they continue to ask what Obama will do to keep their holdings from declining in value any further. So, the Chinese just lend even more to prop up the US so the dollar doesn't devalue even more and cause them to loose more money. They are basically trying to put out a forest fire with a bucket of water.

The US and the Chinese are like two drunks leaning on each other; one drunk on getting easy credit and the other drunk on massive exports. The Chinese economy is very dependent on exports and at this time, they can't consume even close to what they produce. This is clearly shown by the massive number of layoffs in the factory sector of China due to lack of business. The Chinese people don't have easy credit like we have had here in the past and their incomes aren't nearly as high as they are here, so most of what they even produce to export is expensive (and in some cases even prohibited by the government from buying) for them, even as we consider them cheap. If they could consume everything, that wouldn't be an issue and the Chinese wouldn't have to keep pumping money into their own economy through stimulus programs to keep people employed. So really what you have is a viscous cycle that is very hard to stop.

If you think our debt is in bad shape, you should take a look at many other countries in the world. Out national debt right now is roughly 62% of our GDP. Japan, by comparison, is 198% of GDP and Italy, 104%. The first thing we need to do it quit raising the debt ceiling every time we get near it. What good is a debt ceiling if you just raise it when you get too close!?!?! I don't know if Obama can veto a debt ceiling raise, but if he can, he should, or at the least be critical of it. We need to get our house in order, NOW.

On a side note, anyone else disgusted by the $11 million spent on going to Copenhagen to promote Chicago for the Olympics? That was completely unnecessary IMO and the Olympics actually cost more than they bring in economically. Montreal, for instance, just got done last year paying off its tab for the 1976 Olympics. Could you imagine what it would cost today with all the security enhancements to pay off the Olympic tab? I'm actually quite happy that Rio got the Olympics and was hoping they would, as it will be the first one ever held in South America and we won't have the cost of it on our shoulders.

I'll get off my soap box now...I could on on forever about fiscal irresponsibility in this country...