I felt I made my point, but I am a sucker so I’ll play along. First off you don’t need to be sensitive or of a particular political affiliation to find your initial comment irritating. But let’s not make this about you or your opinion. Any discussion of those topics will quickly deteriorate as you have shown. Anyway… I read the article. For the reasons previously stated, I found the examples of Hussein and Chavez troubling. Further, the examples of countries showing “disloyalty to the dollar” were bothersome. Each instance was clearly politically driven, not economic. In one line the author concedes: “There is little doubt that this was a deliberate attempt by Saddam to strike back at the US.” So in short, the examples of Iraq, Iran, and Venezuela failed to convince me of the economic sense of dropping the dollar. Wikipedia is your friend: “A currency is attractive for international transactions when it demonstrates stability, a well-developed financial market to trade the currency, and acceptability to others. While the euro has made substantial progress, a few challenges undermine the ascension of the euro as a major reserve currency. Persistent excessive budget deficits of some member nations, economically weak new members, conservatism of financial markets, and inertia or path dependence are important factors keeping the euro as a junior international currency to the U.S. dollar. However, at the same time, the USD has increasingly suffered from a double deficit and has its own concerns.” IMO the author spent too much time fawning over Iran, Chavez and Saddam and not enough time outlining why the euro fulfills those requirements. That and he might have misstated one of them: “The purely economic arguments for OPEC converting to the euro, at least for a while, seem very strong. The Euro-zone does not run a huge trade deficit nor is it heavily endebted to the rest of the world like the US and interest rates in the Euro-zone are also significantly higher.” Is excessive more or less than huge? It is ok to make a case for the euro as a new reserve currency. This author just failed to outline the economic sense and instead chose to take a recent fashionable path: The US is the real evil and they can’t wait to invade you. “The fear for Washington will be that not only will the future price of oil not be right, but the currency might not be right either. Which perhaps helps explain why the US is increasingly turning to its second major tool for dominating world affairs: military force.” I call BS.
btw, sorry i called you papsmear. lol. i agree it was immature. i never resort to that on the forum and i regret it. really. but it was funny to me in a 5th grade kind of way. so i read the article. and i disagree with it for every reason that slouiscar so eloquently outlined above. not kissing up really, but he laid it out exactly how i saw it… i’ll go back to worrying about my level 2 results.
Yeah, wasn’t purposely sucking up, but sometimes slouiscar’s pretty hard to beat in terms of laying out a sweet case.
thanks guys.
buddham Wrote: ------------------------------------------------------- > As somebody in the thread pointed out, the > economic framework of developed countries, > capitalism, is finally taking roots in a lot of > countries including BRIC. They are reaping fruits > of it. While the transition is causing some pain > in some sectors in US, in the long run, all of > this globalization is going to help US if it can > still compete by innovation and leadership. Of > course, the society has to change to use the > borrowed money to invest in growth and adding > value just like a corporation rather than > consuming it and destroying value. > > As for “Weakening” dollar does not really mean > anything by itself. “Weakening” of dollar (or any > currency) is an incorrect replacement of > depreciation. As we have learnt in Level I and > Level II, it is just a correction for mismatches > in inflation, interest rates, economic growth > rates. Also remmeber the PPF (Production potential > frontier), as the world has opened its markets and > loosened some of the protectionist laws, PPF is > being allowed countries to use the production > advantages. This is all good as the world in > general will produce goods optimally. > > As for using another currency as world currency, > people want stability in the common currency. > While the temporary depreciation has caused people > to discuss that EU may be used as world currency, > I think US $ is still most stable in the long > term. Just think about it. US has been an union > for more than 200 years, EU is still a patchwork > on union and has been there one for less than 50 > years. > > As for BRIC, while they have used most of the > know-how developed in the developed countries, > mostly in US, they are still copies and US still > holds a competitive advantage in innovation. For > example, who do you think is going to make us move > from oil to some other atlternative energy source > that can replace. Most probably, it is going to be > US. Just let the oil price keep rising and the > world, I hope, will be relieved of oil and its > dictators. I agree with everything you wrote except with the last paragraph. Just because a country is a dominant player does not mean it has a monopoly on innovation. For instance, the primary reason America surpassed the U.K as the world dominant industrial country. Occured in the era which is commonly referred to as the second industrial revolution. At this time U.S manufacturers developed the concept of standardisation and improved production methods such as the assembly line while the UK relied on more expensive skilled trades. This improved the price competitiveness of US manufactures. Also its important to realize that necessity is the mother of all invention, countries like China and India are facing energy constraints far greater then those of the united states. they also have the human capital and technological know how to overcome these challenges. Any country could come up with the next great invention that revolutionizes the world. I hear Iceland is in the process of developing an economy based entirely renewal power and denmark and india are the two largest suppliers of wind turbines, so its really up for grabs.
amoynahan Wrote: ------------------------------------------------------- > ] “domestic manufacturing”? what exactly does > that mean? please explain.tain global growth. > > Lots of stuff. Start with airplanes. Boeing makes > a nice airplane with their 777s and 787s. And > with the exchange rate the way it is it seems like > all airlines should choose Boeing over Airbus. > Look, the GAO is making some stuff up to kill a > contract for a high priced Euro tanker plane. thats one instance, how many people are going to continue buying domestic cars when the price of oil is over 135 a gallon, the big three will get slayed just on that alone. Also, it takes a long time to rebuild a manufacturing base, in that time alot of people will be suffering.
gm has a great lineup of fuel efficient cars and last year buick tied lexus for highest reliability, big 3 are ready
SeanC Wrote: ------------------------------------------------------- > buddham Wrote: > -------------------------------------------------- > ----- > > As somebody in the thread pointed out, the > > economic framework of developed countries, > > capitalism, is finally taking roots in a lot of > > countries including BRIC. They are reaping > fruits > > of it. While the transition is causing some > pain > > in some sectors in US, in the long run, all of > > this globalization is going to help US if it > can > > still compete by innovation and leadership. Of > > course, the society has to change to use the > > borrowed money to invest in growth and adding > > value just like a corporation rather than > > consuming it and destroying value. > > > > As for “Weakening” dollar does not really mean > > anything by itself. “Weakening” of dollar (or > any > > currency) is an incorrect replacement of > > depreciation. As we have learnt in Level I and > > Level II, it is just a correction for > mismatches > > in inflation, interest rates, economic growth > > rates. Also remmeber the PPF (Production > potential > > frontier), as the world has opened its markets > and > > loosened some of the protectionist laws, PPF is > > being allowed countries to use the production > > advantages. This is all good as the world in > > general will produce goods optimally. > > > > As for using another currency as world > currency, > > people want stability in the common currency. > > While the temporary depreciation has caused > people > > to discuss that EU may be used as world > currency, > > I think US $ is still most stable in the long > > term. Just think about it. US has been an union > > for more than 200 years, EU is still a > patchwork > > on union and has been there one for less than > 50 > > years. > > > > As for BRIC, while they have used most of the > > know-how developed in the developed countries, > > mostly in US, they are still copies and US > still > > holds a competitive advantage in innovation. > For > > example, who do you think is going to make us > move > > from oil to some other atlternative energy > source > > that can replace. Most probably, it is going to > be > > US. Just let the oil price keep rising and the > > world, I hope, will be relieved of oil and its > > dictators. > > > > I agree with everything you wrote except with the > last paragraph. Just because a country is a > dominant player does not mean it has a monopoly on > innovation. For instance, the primary reason > America surpassed the U.K as the world dominant > industrial country. Occured in the era which is > commonly referred to as the second industrial > revolution. At this time U.S manufacturers > developed the concept of standardisation and > improved production methods such as the assembly > line while the UK relied on more expensive skilled > trades. This improved the price competitiveness > of US manufactures. > > Also its important to realize that necessity is > the mother of all invention, countries like China > and India are facing energy constraints far > greater then those of the united states. they also > have the human capital and technological know how > to overcome these challenges. Any country could > come up with the next great invention that > revolutionizes the world. I hear Iceland is in the > process of developing an economy based entirely > renewal power and denmark and india are the two > largest suppliers of wind turbines, so its really > up for grabs. Kind of agree, but these countries still will need to focus on infrastructure. China, due to its communist regime, can bring bear a lot of resources to develop some new technology. India will be mired for next few decades in social and class issues. When I am thinking about alternative energy source, I am not thinking about wind or terrestrial-solar power, I am thinking about things like fuel cells or something in that line that is different from mechanical way of generating power. Mechanical way of generating power through wind, water, nuclear, and solar panels will take us only so far. Our energy needs are huge. For this kind of science and technology, you need a lot more sophistication, mature human resources, and capital resources to make this happen. Looking at the US govt investment into these things does not give us whole lot of hope, but if the price of gas keeps rising, the corporations may find it profitable do these things. By the way, as we move towards globalization, we are going to gradually move away from the peripheral issue of which country does this. Globalization is brining a lot of people to bring their heads together or at least lots of people are putting their effort, so the possibility to solve the energy problem is very high. Thinking selfishly, I am more interested in when will it happen? Will it happen well within our life time or not?
slouiscar, ^“disloyalty to the dollar” were bothersome. Each instance was clearly politically driven, not economic. Forget about those clowns (Chavez and others) that just talk, and check the list of countries that actually do it. I don’t think it is political move: Italy, Sweden, Switzerland, Jordan, Philippines, Russia, Singapore, and list of the countries that actually “diversified/ing” their reserves (read sold/selling USD) goes on. You can use google this time, or may be bloomberg (no sarcasm intended, I just think bloomberg’s info credibility is higher than wiki) ^While the euro has made substantial progress … the euro as a junior international currency to the U.S. dollar. However, at the same time, the USD has increasingly suffered from a double deficit and has its own concerns. So, what are you saying here? This statement does not support your argument of strong or strengthening dollar. Also, let me add that the %age of USD in foreign reserves substantially declined from 77% to about 65% over the past 2 years. When I read this article I ignored political stuff, not really interested in it. But would like to hear your response on depreciated dollar and almost unchanged deficit in my comment above. I skipped economics for both L1 and L2 exams, so really don’t know which theory explains that phenomenon. What should happen to the dollar to reverse that deficit? No doubt, US economy will come out of this crisis stronger and more efficient. However, it will take time. I see world’s reliance on single currency&economy as a real threat; it is like single engine aircraft. As far as consequences for USD near future (the world relies/ed too much on it): “He who sows the wind shall reap the whirlwind”. There is a hope though if China does not “diversify” it reserves (Let’s hope if they do, they will do it slowly). PS. I really did not want to offend anyone with my first comment. It was rather a joke with sarcasm. I would love to edit it but this thread does not have edit option. If it did not sound like a joke then there is a simple historical fact: empires rise and fail. So, nothing to be irritated about here. In addition, English is my third language (I think it was obvious) and I am a quant not a writer. So, very often my comments may appear rude, I can assure you it is unintentional. My apologies.
my favorite part of this is how prab or whoever posted the original article, realized what he started and ran, haha, ah well, no hard feeling’s all around just a lot of idle time causing tension on the board.
Black Swan Wrote: ------------------------------------------------------- > gm has a great lineup of fuel efficient cars and > last year buick tied lexus for highest > reliability, big 3 are ready and i wouldn’t buy a single one of them over a honda, toyota or even Nissan equivalent.
buddham Wrote: ------------------------------------------------------- ^ For this kind of science and technology, you need a lot more sophistication, mature human resources, and capital resources to make this happen. Tell us you did not refer to chinese, russian, japanese, german, etc intellegence? 
papasita Wrote: ------------------------------------------------------- > buddham Wrote: > -------------------------------------------------- > ----- > ^ For this kind of science and technology, you > need a lot more sophistication, mature human > resources, and capital resources to make this > happen. > > Tell us you did not refer to chinese, russian, > japanese, german, etc intellegence? My wording was misleading. I don’t have any doubt in an individual’s intelligence. What I really meant is the collective, collaborating intelligence of a society or country. There is no comparison in quality and quantity of innovation that has come from US vis-a-vis any other country. Chinese, Japanese - still just copy cats unless you go back to days when China was doing amazing things coming up with paper, seismo…, gun powder, …
Someone correct me if I’m wrong, but denominating oil in EUR can be performed by purchasing an FX contract with the same delivery details (i.e. notional, date, etc.) as the oil futures, making at least part of this authors case invalid. With the FX contract, one does not need to be in posession of any USD at the time of purchase and individual traders/corporations/nationals can make the switch to the EUR at their disposal and do not need to wait for the EU to make that decision for them.
Aren’t you still tied to US , whether US transfer hands or not, through the FX contract between US and EUR. The FX contract rate will be still be governed by expectations about US . Can some expert shed more light on this please?
papasita Wrote: ------------------------------------------------------- > slouiscar, > > ^“disloyalty to the dollar” were bothersome. Each > instance was clearly politically driven, not > economic. > > Forget about those clowns (Chavez and others) that > just talk, and check the list of countries that > actually do it. I don’t think it is political > move: Italy, Sweden, Switzerland, Jordan, > Philippines, Russia, Singapore, and list of the > countries that actually “diversified/ing” their > reserves (read sold/selling USD) goes on. You can > use google this time, or may be bloomberg (no > sarcasm intended, I just think bloomberg’s info > credibility is higher than wiki) > > ^While the euro has made substantial progress … > the euro as a junior international currency to the > U.S. dollar. However, at the same time, the USD > has increasingly suffered from a double deficit > and has its own concerns. > > So, what are you saying here? This statement does > not support your argument of strong or > strengthening dollar. Also, let me add that the > %age of USD in foreign reserves substantially > declined from 77% to about 65% over the past 2 > years. > > > When I read this article I ignored political > stuff, not really interested in it. But would like > to hear your response on depreciated dollar and > almost unchanged deficit in my comment above. I > skipped economics for both L1 and L2 exams, so > really don’t know which theory explains that > phenomenon. What should happen to the dollar to > reverse that deficit? > > No doubt, US economy will come out of this crisis > stronger and more efficient. However, it will take > time. I see world’s reliance on single > currency&economy as a real threat; it is like > single engine aircraft. As far as consequences for > USD near future (the world relies/ed too much on > it): “He who sows the wind shall reap the > whirlwind”. There is a hope though if China does > not “diversify” it reserves (Let’s hope if they > do, they will do it slowly). > > > > > PS. I really did not want to offend anyone with my > first comment. It was rather a joke with sarcasm. > I would love to edit it but this thread does not > have edit option. If it did not sound like a joke > then there is a simple historical fact: empires > rise and fail. So, nothing to be irritated about > here. In addition, English is my third language > (I think it was obvious) and I am a quant not a > writer. So, very often my comments may appear > rude, I can assure you it is unintentional. My > apologies. First off, no one, has disputed the weakening of the dollar. That would be insane. Stay on point, that fact is not what the article was about. And we are here to discuss the article. So to recap, the article attempted to make two claims. First, switching from dollars to euros makes economic sense. And second, that the US dominates the world using its military to impose policies designed to benefit US interests at the expense of everyone else. This second point is hinted at in the title “Oil, Currency and the War on Iraq” and scattered throughout until the big finish: “the US is increasingly turning to its second major tool for dominating world affairs: military force.” I cited wiki to remind you of exactly what makes a currency attractive for international transactions, not to research historical exchange rates. The wiki excerpt outlines challenges that “undermine the ascension of the euro as a major reserve currency.” …challenges the author was quick to ignore in relation to the euro even though he cited them to make his case against the dollar. I included the last line of the wiki excerpt not by mistake, but because I am not here to present a biased agenda. IMO the recent instability might be the strongest argument to support the author’s message, yet it was largely ignored. Again as noted, I agree that the first claim may be quite valid. However, I had some trouble with the examples the author cited and the reasons he offered to support this claim. As for the second claim, well as I said, IMO it is long on fashion and short on truth. I mean look, the thread asked for comment on the article. That is what I did. I can’t read it and just “ignore the political stuff” as you suggest. That “stuff” is a big part of the message the author was attempting to send. Oh and that “stuff” is: 1.) the author’s personal opinion, 2.) presented without proof that military force is used to ensure that the dollar remains the world’s reserve currency of choice, 3.) not really related to the potential economic advantages of using euros over dollars, and 4.) frankly it is rabble-rousing garbage.
slouiscar Wrote: ------------------------------------------------------- > papasita Wrote: > -------------------------------------------------- > ----- > > slouiscar, > > > > ^“disloyalty to the dollar” were bothersome. > Each > > instance was clearly politically driven, not > > economic. > > > > Forget about those clowns (Chavez and others) > that > > just talk, and check the list of countries that > > actually do it. I don’t think it is political > > move: Italy, Sweden, Switzerland, Jordan, > > Philippines, Russia, Singapore, and list of the > > countries that actually “diversified/ing” their > > reserves (read sold/selling USD) goes on. You > can > > use google this time, or may be bloomberg (no > > sarcasm intended, I just think bloomberg’s info > > credibility is higher than wiki) > > > > ^While the euro has made substantial progress … > > the euro as a junior international currency to > the > > U.S. dollar. However, at the same time, the USD > > has increasingly suffered from a double deficit > > and has its own concerns. > > > > So, what are you saying here? This statement > does > > not support your argument of strong or > > strengthening dollar. Also, let me add that the > > %age of USD in foreign reserves substantially > > declined from 77% to about 65% over the past 2 > > years. > > > > > > When I read this article I ignored political > > stuff, not really interested in it. But would > like > > to hear your response on depreciated dollar and > > almost unchanged deficit in my comment above. I > > skipped economics for both L1 and L2 exams, so > > really don’t know which theory explains that > > phenomenon. What should happen to the dollar to > > reverse that deficit? > > > > No doubt, US economy will come out of this > crisis > > stronger and more efficient. However, it will > take > > time. I see world’s reliance on single > > currency&economy as a real threat; it is like > > single engine aircraft. As far as consequences > for > > USD near future (the world relies/ed too much > on > > it): “He who sows the wind shall reap the > > whirlwind”. There is a hope though if China > does > > not “diversify” it reserves (Let’s hope if they > > do, they will do it slowly). > > > > > > > > > > PS. I really did not want to offend anyone with > my > > first comment. It was rather a joke with > sarcasm. > > I would love to edit it but this thread does > not > > have edit option. If it did not sound like a > joke > > then there is a simple historical fact: empires > > rise and fail. So, nothing to be irritated > about > > here. In addition, English is my third > language > > (I think it was obvious) and I am a quant not a > > writer. So, very often my comments may appear > > rude, I can assure you it is unintentional. My > > apologies. > > > First off, no one, has disputed the weakening of > the dollar. That would be insane. Stay on > point, that fact is not what the article was > about. And we are here to discuss the article. > > So to recap, the article attempted to make two > claims. First, switching from dollars to euros > makes economic sense. And second, that the US > dominates the world using its military to impose > policies designed to benefit US interests at the > expense of everyone else. This second point is > hinted at in the title “Oil, Currency and the War > on Iraq” and scattered throughout until the big > finish: “the US is increasingly turning to its > second major tool for dominating world affairs: > military force.” > > I cited wiki to remind you of exactly what makes a > currency attractive for international > transactions, not to research historical exchange > rates. The wiki excerpt outlines challenges that > “undermine the ascension of the euro as a major > reserve currency.” …challenges the author was > quick to ignore in relation to the euro even > though he cited them to make his case against the > dollar. I included the last line of the wiki > excerpt not by mistake, but because I am not here > to present a biased agenda. IMO the recent > instability might be the strongest argument to > support the author’s message, yet it was largely > ignored. > > Again as noted, I agree that the first claim may > be quite valid. However, I had some trouble with > the examples the author cited and the reasons he > offered to support this claim. As for the second > claim, well as I said, IMO it is long on fashion > and short on truth. > > I mean look, the thread asked for comment on the > article. That is what I did. I can’t read it and > just “ignore the political stuff” as you suggest. > That “stuff” is a big part of the message the > author was attempting to send. > > Oh and that “stuff” is: 1.) the author’s personal > opinion, 2.) presented without proof that > military force is used to ensure that the dollar > remains the world’s reserve currency of choice, > 3.) not really related to the potential economic > advantages of using euros over dollars, and 4.) > frankly it is rabble-rousing garbage. Well, there is no doubt that democratizing/invading Iraq could have been intended to stabilize more supply of middle eastern oil to the U.S. However, that is only how far the second claim could have been valid. Yet, the democratizing/ invasion of Iraq and stabilization of oil supplies are two different issues eventually…
omoobagberume, did you really have to quote the whole thing to respond with 3 sentenses? slouiscar, well I agree with your last 4 points and for that reason I ignored that rubbish, which was clearly final 1/3 portion of this article (so it was easy for me to skip it); somehow I did not notice IRAQ and US in the subject of this thread and WAR in the name of the article, so I was only speculating/strategizing on the future of US currency, global financial system and economy evolution based on few true facts in the first 2/3rds of the article.
omoobagberume Wrote: ------------------------------------------------------- ^invasion of Iraq and stabilization of oil supplies are two different issues eventually… yeah, US “secured” oil supply alright … [sarcasm]
The Big Mac price index shows that the Euro is overvalued by around 18.6 percent. So short the Euro future and go long on the burger.