War, Energy, Banks & USDollar

…The tight relationship between the crude oil price and the USDollar valuation is historically well known, firmly in place for over three decades. While the United States owns control of the world reserve currency, a delicate PetroDollar linkage factor remains in force. Since large oil purchases are conducted in US$-based transactions, entire banking systems are designed accordingly so as to handle those transactions. Some Persian Gulf nations like the United Arab Emirates and Qatar have diversified more of their reserve assets away from the USDollar and its related (in)securities. Instability in the region is very likely to deliver some additional instability to the USDollar itself. What the current hellbent political leaders seem to ignore is the potential for continued and amplified economic and financial retribution and vengeance on the most vulnerable facade to the United States monolith, its faulty financial flank.


The risks to the USDollar are rising from both liberal monetary forces and desperate energy forces, not to mention geopolitical backlash forces. The US has isolated itself irresponsibly. Prudent decisions and adept leadership have taken a back seat to private profiteering and the rule of law. One could defensibly claim the public till has been ravaged, with enormous weaknesses having been made more vulnerable. Too bad Thomas Jeffersion, George Washington, and James Madison could not sit as permanent immortal special prosecutors in a triumvirate tribunal. Instead, dissenters are more likely to be imprisoned, to disappear, or to be buried. Maybe Harry Schultz is right. Descriptions nowadays of certain figures are closer to Adolph than Winston, closer to Beelzebub than to any Prophet in my book.

An aside, when crude oil contract rollovers occur, the publicity is loud and shrill of a 57 handle on the oil price on CNBC and other networks & publications. But when the rollover is complete, the new month contract takes root, the talk is minimal of the new 60 handle. With a little push up in the oil price today, the handle is 61. My gut tells me that oil is rising with the euro exchange rate and even the Canadian Dollar, in response to the more obvious next US Federal Reserve move being a rate cut, not a rate hike. But again, this is just language, mere words. Expect the USFed to lie through its teeth in the next couple months in defense of the USDollar. Lies cost nothing but credibility, an empty bag for most matters pertaining to the US financial system. Given the financial conditions measured by current account deficit, trade gaps, foreign dependence on USTBond purchases, foreign dependence for commodity & energy supply, credit growth, derivative mushrooms, absent manufacturing base, one must conclude the USGovt is in worse shape than the highly publicized cancer-ridden subprime mortgage lenders. As cited recently in the alternative news sources, the USGovt is the ultimate quintessential subprime borrower! How better the armada of leaking vessels known as subprime lenders would fare if they owned high tech military weapons to defend against barbarians at the gate!

321 Energy