currency war

[scalf]

/images/graemlins/frown.gif will become hot topic wed/thur this week...

russia is going to price oil in euros,,,,the bush team will try to minimize thr significance of this, but

it has huge potential implications...why not price mideast oil also in euros, get away from the satans dollar...iraq/iran already ....remember, the central banks of all oil-producing and consuming countries would dump u.s. dollar and increase reserves in euros...

note high price of platinum; maybe euro change already in there, ray ain't there a platinum producer up in montana?

not neant to be a paranoid, the sku is falling, become a survivalist, but over time this will happen...

jmho gl /images/graemlins/diamond.gif /images/graemlins/smirk.gif

[RollaJ]

I think this may well be partially factored in to the price of the euro already. As for PL, all metals have been running up for wuite some time now. Jan platinum is up from about 605 to 715 in the past 6 months...... doesnt hurt for these metals that they are quoted in dollar terms, they of course would not be doing as well if they were quoted based on the euro

[Ray Zee]

its going to happen sooner or later that another currency like a world currency will step on the dollar. then our strength will start to decline as the world will see they do not need our cowboy mentality and control freaks.
no platinum producers i know, and see little reason to own any of the stuff. although paladium always gets a big tout as being needed for catalytic convertors. but it never really takes off as there must be alot more of the stuff than claimed.

[adios]

Excellent points in this post IMO. There's all kinds of discussion and speculation about Russia pricing oil in Euros so it isn't a secret. In fact if such an announcement were made I think it be a good time to bet against the Euro, buy on the rumor-sell on the news type thing. Another thing that strikes me about all the negative takes on the future dollar value is that it seems an awful lot like it's a foregone conclusion and I would be leary about that big time. Lastly how many times do governments make exactly the wrong move at the wrong time. Can't really back it up by anything more than an opinion but it seems that such a move by Russia would be akin to buying the top.

[Javelin]

Yes there is a currency war but its the other way around. The US is trying to weaken the dollar especially vs. the Asian currencies. Japan is doing everything it can to fight the appreciation of the Yen and everyone is watching to see what China will do. With an election to fight and a lousy job market there is already a lot of easy scapegoating and China is a convenient target.

Both the Chinese Yuan and the Japanese Yen are probably undervalued and there is no doubt that the dollar is still overvalued so this correction is healthy. I think the risks are that the dollar correction which has been smooth so far turns into a dollar crash leading to a flight of capital out of US assets (remember the US still has a massive current account deficit that needs to be financed by external money).

[Wildbill]

People reading way too much into this. I think this is simply the Russians doing a lot of their business with countries that are Euro or are closely tied to the Euro. People are trying to build this up to a lot more than it is. Whether you price it in Euro or Dollars makes no difference, in the end the customer will pay in Euro but if he has more dollars or use for dollars then likely he takes the money out of his dollar account and makes the exchange with his bank to send onto the Russian company he bought from. People make this huge mistake of thinking payment schemes have any noticeable effect, but the only thing that matters to the underlying strength or weakness of the dollar is the demand for dollars. If people don't want to sell their products to the US or wish to buy US products less, the dollar will fall. If the opposite occurs, the dollar should generally rise. To think the Euro gains from all this is crazy, I think its merely balance of payment movement because Europe is deathly afraid right now that the Euro is getting way too strong and this and much more movement on this issue could very well lead to serious intractable problems with deflation in Germany and France. If the US is growing and Europe is stuck in some bit of deflation, the dollar will come charging up again.

[brad]

i read somewhere that having US dollar as world reserve currency adds .5% or makes up .5% of US gdp or gnp or whatever.

when i read that i thaought, well, thats not much, but is there maybe a multiplier in there somewhere that could boost it up into say 1-2-3%?

[Wildbill]

Most money offshore is "dead" for US economic purposes, the economic activity it generates usually has no effect on the US economy. To take it to the extreme effect, a Russian gangster could acquire $100 from his prostitution ring, then spend it to buy some drugs from Afghanistan. He sells the drugs for $200 "creating" $100 in economic gain for himself that in no way affects the US economy. That is why it is so difficult to measure offshore dollars value on our economy. Eventually the $100 has to come back to the US to be spent, but it could be decades before it happens if the guy he bought the drugs from just stashes it away into his savings.

[scalf]

/images/graemlins/frown.gif not a very high rate of turnover of money there wb; if velocity were really that slow...back to stone ages...jmho...gl /images/graemlins/crazy.gif /images/graemlins/spade.gif

[Redhotman]

Ray you should have run for governer of California. I liek your liberal opinions, /images/graemlins/smile.gif

[brad]

thats true but that wasnt my opinion although i guess it is an opinion it was in some paper or someting maybe even WSJ, where they said having US currency as world reserve currency adds .5% to (or makes up .5%) to US gnp.