The Real Reasons for the Upcoming War With Iraq

[Skylimit]

well, as good it sounds, the truth is that the collapse of american economy couldn't bring many advantages to europe..

remember the saying: when us economy gets a cold, the world gets a pneumonia...

bn

I never said it would be a good thing ... I just think it is inevitable.
And I don't think it is wise to start wars over this (and oil), since this is an internal affair of the US, which is the result of a wrong policy for decades ... We will all be dragged into this, I'm sure...
Moreover, the German economy is also in a bad shape ... the DEM was very strong when the euro was created, and the Germans now suffer from this historical exchange rate. Also the integration with East-Germany has cost more than expected.

Also France and Italy now have a deficit of more than 3% which is not allowed by the stability pact.

I am not describing my wishes here ... only facts

[Guest]

USA plans to have military bases in Iraq. This isn´t any surprise. The new iraqi goverment may only be a puppet. For example I don´t think this new goverment could then really make any real decisions about oil etc.
http://www.timesonline.co.uk/article/0, ... 08,00.html:

US military officials are looking at four bases that they believe will help the next diplomatic, and possibly military, challenges that President Bush has set for the region: ending the terrorist links and nuclear ambitions of Syria and Iran.

But the real problem is to keep the Iraqi people happy. The population is growing rapidly so it will be difficult. http://www.timesonline.co.uk/article/0, ... 81,00.html

The oil won’t pay for it

Iraqi oil is not going to foot much of this bill, at least at first. True, it sits on what may be the world’s second-largest reserves, but its oil exports under sanctions have brought about $14 billion a year, spent on food and necessities.

The bottom line is clear. Even if the huge investment takes place to double or treble Iraqi oil production, the income will take years to pay for the oil industry’s own modernisation, never mind that of the whole country.

Not a rich country
The bitter pill for the US is that almost however much is spent, adult Iraqis will feel that their standard of living is lower than it was 20 years ago.

Anthony Cordesman, of the Centre for Strategic and International Studies in Washington, points out that Iraq’s oil wealth is less than a tenth of its peak in 1980, because of the fall in the oil price and the huge rise in population. There were only 9.1 million Iraqis in 1970, but there were nearly 23 million in 2000 and are projected to be 37 million in 2020.

Its annual oil income is now worth about $700 per Iraqi, compared to $6,000 20 years ago. Saudi Arabia has seen the same precipitous fall, for the same reasons, but its oil income is still worth about $2,500 per person, compared to $24,000 in 1980.

To those Iraqis old enough to remember 1980, Iraq does not feel like a rich country. The US would have to spend more than it appears to intend to shake that perception.

[airis]

My post.

[Antti]

Correct me if I'm wrong but isn't it also correct to think this way:
People here want to drive down the dollar and then make euro the world currency. This, of course, sounds good at first, but think what will happen, the dollar is now the world currency and it's falling, what will then make the euro so stable it won't? Eventually (maybe sooner we might think) it will come down as well. Then What? Isn't this also a bit short-sighted?

[Olivier]

German economy is also in a bad shape ... the DEM was very strong when the euro was created, and the Germans now suffer from this historical exchange rate. Also the integration with East-Germany has cost more than expected.

Also France and Italy now have a deficit of more than 3% which is not allowed by the stability pact.

I am not describing my wishes here ... only facts

True... That's why the enlargement is a good thing for Europe: new markets, a lots of things to build, to renew...

The internal european market will be large enough to stimulate the economy! It's only the third of the Chinese market, the half of the Indian one... and the people of Europe have a greater standard of living!

When the euro is used by all this people, Europe will have a stable and peaceful market... The best is to come.

[Olivier]

Correct me if I'm wrong but isn't it also correct to think this way:
People here want to drive down the dollar and then make euro the world currency. This, of course, sounds good at first, but think what will happen, the dollar is now the world currency and it's falling, what will then make the euro so stable it won't? Eventually (maybe sooner we might think) it will come down as well. Then What? Isn't this also a bit short-sighted?

Antti, I don't want the dollar to be fallen down. I personnaly have more interests in a strong US economy since Canada mostly exports its goods in the USA. If the US dollar collapses... I will just have to come back to Europe, because I am sure I won't keep my job in Canada...

I just read some facts about the debt and the deficits and I have understood that the value of the dollar is now totally out of the reality, because of the US big influence in the world affairs since the second World War, Bretton Woods and the end of convertibility of dollar in gold..

I joke about the dollar, but I think it's more a topic of fear. Crisis have occured in the past, the most spectacular one in 1929... and had dramatic consequences in the whole world. It could happen very soon again!

I just hope that the USA will react: not by engaging the country into permanent wars but by reducing the debts and do all is needed to give back to the dollar its real value.

The euro is a good thing for Europe. For me it's also another symbol of unity. It can also be a good way to prevent our societies not to suffer from bad economical US policies if nothing is done to prevent a announced financial crack.

The euro has become a financial protection for Europe.

[John S]

I am a bit puzzled by this statement.
If your thesis is, that one of the reasons for invading Iraq because it was selling oil in Euro's, ..., with Venezuela and Iran, and eventually the Opec, also playing with the idea, then the invasion clearly took away the Euro-momentum that could swing the pendulum in the Euro direction.

Maybe not. That may be what the US is thinking. But, it doesn't have to work out that way. When the EU countries had their own currencies it would have been easy for the dollar to end the momentum of any of those currencies. But, the euro is different. It would take a lot more that just switching Iraq's oil currency back to dollars.

My point was that if the US over prints dollars as a means of promoting dollar hegemony further, it runs the risk of seeing those dollars lose value relative to the euro and all other major currencies, something we are presently witnessing. The result being that weak dollars will result in a domino effect of more sell offs, more printing, more weakness, more selloffs. A form of hyperinflation.

If officially the dollar becomes the currency of Iraq, then forever the Iraqis will be obliged to sell their oil in dollars, because it is their currency.
It does not only take away momentum, it also is a natural dollar strongholder, because as long as all oil-producing countries sell their oil in dollars, all world economies must hold massive dollar reserves ....

There is no move to make the dollar the currency of Iraq. The US is paying some Iraqi workers in dollars becaue the Iraqi dinar is not worth much. The proposal is for a new dinar, backed either by the dollar alone or a basket of currencies. If the EU makes a strong enough case it can insist that the new dinar have euro backing along side of dollar backing.

Nevertheless, the neighbouring countries of the Eurozone, sell dollars, and buy Euro's .... especially the 10 new member states, but very important is Russia, ...
I don't know if you know this but in russia all prices are marked in dollars
(the don't call it dollar -> but it is the roebel/dollar unit) But since the introduction of the Euro, all these dollars are being sold ... and prices are indicated in Roebel and Euro now.
it is the largest quantity of dollars abroad.

The Asian Tigers are also reshaping their portfolio, and so does China and Japan.

I don't know what is happening in the Magreb countries and in Africa.
I guess pretty much the same.

Combine this with the weakness of the American economy, and the deficit and debt, and the dollar must go lower. (which it has ... 83 cents to 1,085 is a long way) I don't know if the alliance Bush has with the Marshall and Fiji Islands will change must to these facts ...

It is all these factors you mention above is what will keep the pendulum from reversing. If the dollar and the dollar economy were strong, then the euro would be in trouble. But, the dollar isn't, and that in itself will keep it from ascending too high.[/quote]

[John S]

Correct me if I'm wrong but isn't it also correct to think this way:
People here want to drive down the dollar and then make euro the world currency. This, of course, sounds good at first, but think what will happen, the dollar is now the world currency and it's falling, what will then make the euro so stable it won't? Eventually (maybe sooner we might think) it will come down as well. Then What? Isn't this also a bit short-sighted?

It is not desirable that the euro completely replace the dollar. It is desirable that the euro, the dollar and other strong currencies or currency blocks, share proportionally the wealth of the world.

Prior to the introduction of the euro, the dollar was used to settle accounts between countries, as well as be the back-up currency of every nation's central banks about 80 % of the total. The other 20 % was invested in other major currencies.

I'm not sure at this time how much the euro has taken away from the dollar, but the goal should be to reduce dollarisation to 45 % and increase euroisation to 45 %, and the remaining 10 % can be used for currencies like the Yen, Yuan (china), and other such currencies.

The US made a big mistake when it promoted dollar hegemony. What was needed in order to make it work, was to export most of its manufacturing base and create service jobs. This almost immediatly made the US a deficit economy. As the euro grows in strength, the EU must resist the temptation to run the EU economy in a deficit mode. If it does resist, the euro will stay strong and so will the EU economy. I believe that as the euro strengthens, the EU will evolve more to handle the increasing power of the euro and to share its potential wealth with all regions of the EU.

[John S]

well, as good it sounds, the truth is that the collapse of american economy couldn't bring many advantages to europe..

remember the saying: when us economy gets a cold, the world gets a pneumonia...


bn

That was the result of dollar hegemony and the dependance of the world economies on the US. If you end dollar hegemony and have international control of resources and have a variety of currencies or currency blocks used to back those resources, then one nation does not have that strong of a control over everyone else and everyone else does not get sick just because the US does.

[John S]

Maybe not as bad as it sounds.

For the Americans...

Not necessairly. See my other postings, where I explain that it can be bad for the dollar if the US over prints them for use in Iraq and elsewhere.

Even the Bank of Canada has sold 12% of its reserves (in US dollars) to buy euros.

That may be one of the reason the Canadian dollar is also rising. With Canada backing its own dollar with other currencies, it is not pulled down by the weak US dollar.

[Olivier]

I am a bit puzzled by this statement.
If your thesis is, that one of the reasons for invading Iraq because it was selling oil in Euro's, ..., with Venezuela and Iran, and eventually the Opec, also playing with the idea, then the invasion clearly took away the Euro-momentum that could swing the pendulum in the Euro direction.

Maybe not. That may be what the US is thinking. But, it doesn't have to work out that way. When the EU countries had their own currencies it would have been easy for the dollar to end the momentum of any of those currencies. But, the euro is different. It would take a lot more that just switching Iraq's oil currency back to dollars.

I wonder of the Americans simply care about the euro. You see, it's been so "natural" that the US dollar is accepted everywhere... I wonder if they have realised any Euro-momentum.

About Irak, the value of the dinar is getting critic. Irak also has to deal with a huge debt. It can't be worse for the Iraki to et US dollar than dinars...

BTW, I am not sure there are enough bills in the world to give to the euro an international position...

[Olivier]

My point was that if the US over prints dollars as a means of promoting dollar hegemony further, it runs the risk of seeing those dollars lose value relative to the euro and all other major currencies, something we are presently witnessing. The result being that weak dollars will result in a domino effect of more sell offs, more printing, more weakness, more selloffs. A form of hyperinflation.

It's true, but at the same time, I don't know how much dollars will be used in Irak. It may not represent much, compared to the global amount of dollars which are already used (and kept) around the globe.

If officially the dollar becomes the currency of Iraq, then forever the Iraqis will be obliged to sell their oil in dollars, because it is their currency.

I am not convinced neither by the dollarisation of the iraki economy. The US dollar is not only a currency but also a symbol of the US domination. The Irakis are proud people and already ask for a fast retreat of the US military.

[Skylimit]

If the EU makes a strong enough case it can insist that the new dinar have euro backing along side of dollar backing.

If we are unable to block a major event like an invasion without UN support, then how will we stop "minor" events like this ? Even the British have nothing to add to the US policy for Iraq

I'm not sure at this time how much the euro has taken away from the dollar, but the goal should be to reduce dollarisation to 45 % and increase euroisation to 45 %, and the remaining 10 % can be used for currencies like the Yen, Yuan (china), and other such currencies.

Don't you think that the Yen and the Yuan deserve a higher share than 10%. China last year prevented the world from going into recession, with a growth rate between 8 and 10%. China is the coming economy.

Japan has completely collapsed, set an example for the US long ago : collapsing stock exchange and an interest rate of zero percent, followed by deflation, and the next thing you know is major banks going bankrupt and a collapse of the real estate market.
The US must watch out not to come in the same scenario. They could take the whole world with them. Everybody has already been bleeding either directly or indirectly from the burst of the bubble. Maybe, the worst is yet to come.

For months the media said that the stock went down because it was not clear who had won the elections, 2 months before 9/11 the stock was still falling rapidly - some media even said afterwards that it was in anticipation of 9/11, then we had the attack on the twin towers, of course the stock went down, then it was uncertainty about an upcoming war in Afghanistan, stock still was going down further between Afghanistan and Iraq, then it was because of the uncertainty about an upcoming war with Iraq, ..., now the war is finished, there is still no real recovery,
now it is SARS, or whatever they can think of next - Maybe Korea, Syria or Iran

I don't think financial markets work that way ... American stock is still overvalued ... (Don't misinterpret this : I hope I'm wrong)

[Olivier]

If the EU makes a strong enough case it can insist that the new dinar have euro backing along side of dollar backing.

If we are unable to block a major event like an invasion without UN support, then how will we stop "minor" events like this ? Even the British have nothing to add to the US policy for Iraq

The European Union can have influence if the money comes from Europe !?