Oil money - Jan 13
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Why Iran is Next
Noel Gibeson, Free Market News Network
In the petrodollar wars, stage one was Iraq and stage two is Iran. Both dared to propose to use the euro instead of the U.S. dollar (USD) to buy Middle East oil. That was a big mistake because it jeopardized the solvency of the USD, a fiat currency; and, therefore, the very heart of the U.S. economy itself. Big business will not stand for that.
What is a fiat currency? A fiat currency in the case of the USD is a currency that is NOT based on gold, silver, or anything else of tangible value; but rather it is "a promise to pay." Essentially, it is an IOU ("I owe you") note that is based on the good faith and credit of the issuer that it will be redeemed at the face value of the note, a USD in this case. This is its weakness for holders of the note, but its strength for the issuer of the currency, in this case the U.S. government who simply continues to print as much money as it wants to in hopes that it will never have to redeem these dollars at their face value all at one time. It is much like an international Ponzi scheme. In reality, it is play money or monopoly money.
(11 Jan 2007)
Iran oil exchange to have short-term trial
Initiation of oil bourse is in line with the Kish Charter approved by the Economic Council earlier, the head of Tehran Stock Exchange Organization noted, MNA reported.
According to the Clause 58 of Securities Laws, an oil exchange may at first be established on one-year basis, Ali Salehabadi continued, setting the terms on three and five-year bases.
“In the short-term, trading will be held in petrochemical products such as various types of engine oils or gas condensate,” he said, adding that final approval lies with the Oil Ministry which is yet to give the go-ahead.
The organization is merely an overseeing body and is not in charge of running or regulating this sort of business, he stipulated further.T
(7 Jan 2007)
End of article
The false promise of liberalisation
Dani Rodrik, Economic Times (In)
Something is amiss in the world of finance. The problem is not another financial meltdown in an emerging market, with the predictable contagion that engulfs neighbouring countries. Even the most exposed countries handled the last round of financial shocks, in May and June 2006, relatively comfortably.
Instead, the problem this time around is one that relatively calm times have helped reveal: the predicted benefits of financial globalisation are nowhere to be seen. Financial globalisation is a recent phenomenon. One could trace its beginnings to the 1970s, when recycled petrodollars fuelled large capital inflows to developing nations.
(12 Jan 2007)