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Dollar hegemony - Dec 19

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The end of Dollar supremacy

Al Jazeera Magazine
The Iranian government has finally developed a new weapon that can destroy the financial system underpinning the American Empire. The U.S. dollar dominance is coming to an end.

A hundred years ago the U.S. currency’s dominance was refered to as “dollar diplomacy”. After the end of the Second World War, and the fall of the Soviet Union in 1989, that policy evolved into “dollar hegemony.”

But after all these many years of great success, this “diplomacy” or “hegemony” seems to be coming to an end soon.
(19 Dec 2006)


Why China Is Rising And The U.S. Is Declining

Lester R. Brown, Earth Policy Institute via New West Bozemam
I know Santa Claus is Chinese because each Christmas morning after all the gifts are unwrapped and things settle down I systematically go through the presents to see where they are made. The results are almost always the same: roughly 70 percent are from China. After some research, it seems that my one-family survey is representative of the country as a whole.

...Underneath the American Christmas spirit and good cheer is a debt-laden society that appears to have lost its way, marred in the quicksand of consumerism. As a society, we seem to have forgotten how to save so we can invest in a better future. Instead of leaving our children a promising economic future, we are bequeathing them the largest debt burden of any generation in history.

...If China’s leaders ever become convinced that the dollar is headed continuously downward and they decide to dump their dollar holdings, the dollar could collapse.
(16 Dec 2006)


Venezuela, Oil Producers Buy Euro as Dollar, Oil Fall

Energia.gr
Venezuelan leader Hugo Chavez is directing a growing share of the country's oil profits into euros as the dollar and crude prices fall.

The dollar, down 9.5 percent against the euro this year, may face more pressure in 2007 because Venezuela and oil producers from the United Arab Emirates to Indonesia plan to funnel more money into the single European currency.

``The U.S. dollar has suffered a long process of deterioration,'' Domingo Maza Zavala, one of seven board members at the central bank of Venezuela, said in a Dec. 14 interview. ``The diversification strategy started this year.''

...Bank Indonesia is boosting euro holdings, said Senior Deputy Governor Miranda S Goeltom in a Dec. 13 interview in Jakarta.

...OPEC members and Russia increased the percentage of their foreign-exchange deposits held in euros to 22 percent in the second quarter from 20 percent, the BIS said.
(19 Dec 2006)


Dollar dropped in Iran asset move

BBC News
Iran is to shift its foreign currency reserves from dollars to euros and use the euro for oil deals in response to US-led pressure on its economy.

In a widely expected move, Tehran said it would use the euro for all future commercial transactions overseas.

Analysts said Tehran had been steadily shifting its foreign-held assets out of dollars since 2003 and that Monday's announcement was unlikely to affect the value of the dollar, which has weakened significantly in recent months.
(18 Dec 2006)


Chief banker says Iran to use all currencies in int'l exchanges

IRNA
Iran's top banker said on Monday that Iran will use all currencies, and not just the euro, in its international transactions.

"We are going to use many currencies, and not just the euro, in our system of payments in line with national interests," said Governor of Central Bank of Iran (CBI) Ebrahim Sheibani in the seminar of `A Survey of Islamic Banking Challenges'.

Sheibani said that some foreign banks too have called on Iran to use the euro as well as other currencies in the country's
transactions.
(18 Dec 2006)


Dollars, Debt and the Trade Gap, Thoughts on the Dropping Dollar

Menzie Chinn, Wall Street Journal
...China clearly doesn't have an interest in seeing the dollar decline quickly. So I'm certain that -- in part -- explains why the PBOC is tightly managing the yuan's appreciation against the dollar. But even if PBOC and other holders of large dollar reserves don't want the dollar to depreciate rapidly, they also don't want to be the last one out the door. That's why I view the current equilibrium as balanced on a knife's edge. Any decline in the dollar might be enough to prompt some central banks to try to diversify their holdings. The big question will be how China will respond once the dollar decline takes off.

So, while I used to worry a lot about China, now I worry a lot about China and the oil exporting countries. As Brad Setser points out, the oil exporters of the Persian Gulf maintain a much more rigid peg against the dollar than does China. The pace of reserve accumulation is certainly of a comparable magnitude, and when one adds in Russia, the oil exporters probably weigh more heavily in this dimension.
(19 Dec 2006)


Debut of the 'Amero'

Judi McLeod, Canada Free Press
The People's Republic of China, long lauded by America's enemies as the world's next economic power, will be the country that will force the creation of the `North American Union' (NAU).

Kofi Annan's former pointman, Canadian Maurice Strong, has been boasting from Chinese soil that China soon would be replacing America as economic king, using the jingo that's the official language at Turtle Bay.

The billions of dollars China has invested in the flagging American economy will be worthless. They will have to negotiate the exchange rate to the new amero. This will then force the creation of the North American Union.

... “People in the U.S. are going to be hit hard,” says Bob Chapman publisher of The International Forecaster newsletter. “In the severe recession we are entering now, Bush will argue that we have to form a North American Union to compete with the Euro.”

“Creating the amero,” Chapman explained, “will be presented to the American public as the administration's solution for dollar recovery. In the process of creating the amero, the Bush administration just abandons the dollar.”
(14 Dec 2006)
Canada Free Press, while claiming to be independent, promotes some somewhat dubious institutes and thinktanks such as once-Philip Morris front group junkscience.com. This article quotes Jerome Corsi who is also a peak oil denier. So take this with a grain of salt.

Tangental thought: Apparently the phrase 'take with a grain of salt' meaning 'take with skepticism' comes from the use of salt in the past in preventative medicine, when it was believed to help counter minor poisons. In the recent James Bond film our severly poisoned hero swallows a whole shaker full of salt in order to induce vomitting. There may or may not be some merit in this article, so choose your own salt dosage...
-AF

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