[MrBill]

$this->bbcode_second_pass_quote('Euric', '')$this->bbcode_second_pass_quote('Petrodollar', 'M')r Bill,

Anyhow, I'm probably wasting my time given your intrinsic euro-skeptism, desire for "status quo" despite the evidence of a techtonic shift towards the euro, a disdain for reading the history of petrorecycling using the typical defense mechanism of "conspiracy theory", along with a subsequent failure to comprehend how this phenomenon continues to impart major macroecononic effects on the global economy.

So, I will leave you to ponder these five quotes... (My guess is that you fall into the camp of the 2nd quote, but I think the 1st, 3rd, 4th and 5th quotes are likely to prevail by 2010)

[Zentric]

$this->bbcode_second_pass_quote('MrBill', '[')The value of the dollar is a matrix relative to other countries' matrices.

[DantesPeak]

Thanks for the clarification Mr. Bill. It seems you are more skeptical about the dollar regime than I first thought.

At present, there is no strong inclination in Congress to raise taxes further. Yes, in 2005, taxes were subtly increased - especially for corporations. Primarily this was done by letting special provisions expire at the end of 2004. However individual taxes were also increased faster than the rate of inflation - but there were not too many complaints because they generally affected the top third of all persons.

So we are back to interest rates supporting the US dollar. All I can say to sum up - it's going to be very hard, if not impossible, to reduce interest rates and not have the dollar fall.

[MonteQuest]

$this->bbcode_second_pass_quote('MrBill', '
')Yesterday it was someone talking about 'the carry trade' as being one of the reasons the Fed could not raise interest rates too quickly. Well, duh, borrowing low and lending high while simulataneously taking on a) interest rate gap risk, b) counterpart risk, or c) FX risk on your assets & liabilities is not a conspiracy, it underpins the foundations of banking. Banking is built of the concept of intermediation of risk.

So when some peaker proudly displays his lack of knowlege in these forums he may impress his buddies, but for me it is quite irritating. Why? Because peak oil the geological fact is a serious issue and the issue is being highjacked by those raging against the machine. Against capital markets which they simply do not understand. They do not even understand simple finance and economics.

[cube]

$this->bbcode_second_pass_quote('MrBill', '.')...
Central bankers were net sellers of US treasuries last week, but the dollar remains well bid against the euro and the yen.
...

[MrBill]

RE Central bank net sellers. Yes, central banks sold US treasuries last month. They were bought by private & institutional investors. If you want I can give you a breakdown, but as I have to look for the exact redemptions, what are you going to do for me?

RE Fed funds. Yes, they have indicated they will continue to raise rates uninterupted until they remove the stimulus. Many now think that will be at least 3 more rises to 4.75% with no pause and then they will reassess. If inflation is still >3% then I would expect them to continue. The ECB and BOE are also becoming noticably more hawkish. They are getting back to their original mandate. Inflation fighters. The politicans are howling because this means slower or no growth.

RE Peak Oil. The most serious, but not the only, problem facing us at this moment. As per IEA comments two days ago they see less than 25-years supply at current levels of consumption. Consumption is forecast to rise. Japan uses two thirds the energy per GDP as the G7 average. China uses 4X and wants to double their GDP in 10-years while ONLY increasing energy consumption by 2X. Yes, I think we have a real problem here. No easy solutions either.

RE USA. The world's largest and richest country and a country devoid of domestic leadership and showing no leadership in the world. Making enemies all over the world and losing the few friends & allies it once had. Need I say more?

Chance of a serious US lead recession in 2006 due to high energy prices, higher inflation, higher interest rates, slowing economy and falling house prices? Mixed at this point. Maybe 25% at the moment? Growth is still forecast to be 3.3% with inflation at 3.1%. But, these forecasts may be lowered as time goes by. I see the dangers. As of yet I cannot see the outcome?

[Euric]

$this->bbcode_second_pass_quote('MrBill', '
')
RE USA. The world's largest and richest country and a country devoid of domestic leadership and showing no leadership in the world. Making enemies all over the world and losing the few friends & allies it once had. Need I say more?

[bobcousins]

$this->bbcode_second_pass_quote('Euric', 'H')ow do you define largest? Are you referring to land area in square kilometres? If so, there are some countries that have more square kilometres of area then the US.

[Zentric]

$this->bbcode_second_pass_quote('Euric', 'T')o me wealth is a measurement of your surpluses, not your deficits. If you own on something you bought with credit and haven't paid the bill yet, how can you claim it to be yours? If you buy a home, it isn't really yours until the last cent is paid. Between the two times it is only partially yours. The other silent owner is the bank, or in the case of the US, Fannie Mae or Freddy Mac.

Americans are just lucky the creditors haven't yet come knocking on the door claiming what you think is yours is really theirs.

[threadbear]

Propping the dollar hegemon requires massive amounts of deficit spending for the military. This gives the impression of American control, but it's a form of financial cannibalism. Is this what paper tiger means?

As long as appearances can be maintained the dumb money will continue to support the dollar, as will foreign govts who may have ulterior motives.This is one of the reasons the govt of the US refuses to pull out of Iraq at the present time. Pulling out will shatter the confidence in the ability of the US to back their dollar with guns and then the game's over. If they don't bomb Iran, and it proceeds to scrap yankee bucks, a similar loss in confidence in the dollar will ensue.

When the US pulls out of Iraq, it might actually trigger a dollar and treasury bill dump. Interest rates will have to double or triple to stimulate any interest. It will look a lot like Argentina did a few years ago, just not as good.

Bob Cousins, I'd read your posts if they were shorter.

[jaws]

What do you expect? That you will wake up one day and your neighbor will be carrying his money in a wheelbarrow? These things don't happen suddenly and without warning. Tension builds up. Bad news comes out. People come out saying the bad news is overblown. Markets move down, then move up, then move down again.

The bad news is everywhere these days, but the tension isn't quite there yet. People are still confident in the dollar. Maybe it'll take some more bankruptcies to wake them up. When that happens, lots of people will come out saying there's nothing to worry about and the value of the dollar is safe. And gradually the dollar will lose value, more and more, and the loss of value will accelerate. Then people will start to be afraid and get out even faster, and it will accelerate some more. This will take at least months, even years, to play out.

[lakeweb]

$this->bbcode_second_pass_quote('Euric', '
')Americans are just lucky the creditors haven't yet come knocking on the door claiming what you think is yours is really theirs.

[threadbear]

forgiveness of debt, by the Chinese, in exchange for warm bodies. Might work

[Euric]

http://english.aljazeera.net/NR/exeres/ ... 08A6E9.htm

An interesting twist on the Iranian Oil Bourse. A british economist hoping the Iranians would give the buyers a choice of currencies. Being British and possibly anti-euro, she must be hoping the buyers would continue to choose the dollar.

[hull3551]

$this->bbcode_second_pass_quote('jaws', '.')..lots of people will come out saying there's nothing to worry about and the value of the dollar is safe. And gradually the dollar will lose value, more and more, and the loss of value will accelerate. Then people will start to be afraid and get out even faster, and it will accelerate some more. This will take at least months, even years, to play out.

[lakeweb]

$this->bbcode_second_pass_quote('hull3551', 'T')he US will need to either attack Iran prior to March 2006 (or somehow stall the IOB), or else risk inflation/hyperinflation and subsequent collapse of its (and the world’s) economy.

[Euric]

$this->bbcode_second_pass_quote('ElijahJones', '
') I don't think it takes einstienian prowess to realize that people are fed up with the status quo and that it won't take much to send American society over the edge.

[MrBill]

So, if the gains were illusionary and the apparent wealth of the real economy is a mirage, why does it matter if people then lose imagined wealth that never accrued to them in the first place? Is it better to live like a king for a day than to have never tasted affluence? If we are all regressing to the mean in some sort of pre-industrial revolution agrarian based economy then at least we used the past 200 years to do some interesting things, make some discoveries, do some research, print some books and amass knowlege that without the hydrocarbon revolution would not have been imaginable much less possible. Does society not gain from this accumulation of knowlege no matter what follows like our civilzation was built on the ancient ones that came before us? How can you weep for the end when you too have enjoyed the ride? According to your impecible logic had we never expanded beyond our means many of those alive today would not be. Therefore, we are just paying an overdue debt. How could it have ended otherwise?