Blame The Arab Oil Producers Not China
China keeps the currency composition of its $1,430 billion foreign exchange reserves a state secret. It is estimated by some analysts that more than two-thirds are probably held in dollars. China is understandably nervous about its dollar reserves because the dollar isn’t a safe haven because most of the problems facing the world economy are coming from America. Nevertheless, the power to influence the fate of the dollar lies increasingly with the oil producers ─ not China. China’s dollar reserves are so huge that it will find it hard to reallocate them without causing mayhem in the markets and becoming the biggest loser of all. It is not in China’s interest to devalue its dollar reserves. If anything it will revalue the yuan to protect its dollar holdings.
Kuwait, the country rescued from Saddam Hussein’s military conquest and brutality by America during the Gulf War, showed it’s gratitude in May 2007 by becoming the first OPEC country to switch from a dollar peg to a basket of currencies. Saudi Arabia, the United Arab Emirates and Qatar understandably got nervous as a result, worrying that others will follow and sell their U.S. treasuries and revalue first leaving them behind to lose the most. The fate of the dollar is in the hands of the Gulf Co-operation Council which includes Saudi Arabia, the UAE, Qatar, Oman, Bahrain and Kuwait. They are meeting formally and informally to decide the fate of the dollar. GCC countries are using their financial power fueled by oil to advance their political ambitions ─ and America their protector to date be damned.
According to the International Monetary Fund, oil exports from GCC countries reached $400 billion in 2007 and $450 billion in 2008. A study by McKinsey meanwhile estimates that over the period 2005 to 2020, the Gulf is likely to have a three trillion dollar oil surplus. An amount that could dwarf China’s foreign reserves ─ especially if it dumps its dollar holdings!
It is time career politicians in America address the economic mess they have created with their misguided banking and oil industry financial backers. They have been allowed to run U.S. economic and foreign policies amok because of their self interest at the expense of We the Apathetic People. It is time to put the blame where it belongs. China can no longer continue to be blamed for America’s woes. Oil and the Arab oil producers can and must.
Kuwait, the country rescued from Saddam Hussein’s military conquest and brutality by America during the Gulf War, showed it’s gratitude in May 2007 by becoming the first OPEC country to switch from a dollar peg to a basket of currencies. Saudi Arabia, the United Arab Emirates and Qatar understandably got nervous as a result, worrying that others will follow and sell their U.S. treasuries and revalue first leaving them behind to lose the most. The fate of the dollar is in the hands of the Gulf Co-operation Council which includes Saudi Arabia, the UAE, Qatar, Oman, Bahrain and Kuwait. They are meeting formally and informally to decide the fate of the dollar. GCC countries are using their financial power fueled by oil to advance their political ambitions ─ and America their protector to date be damned.
According to the International Monetary Fund, oil exports from GCC countries reached $400 billion in 2007 and $450 billion in 2008. A study by McKinsey meanwhile estimates that over the period 2005 to 2020, the Gulf is likely to have a three trillion dollar oil surplus. An amount that could dwarf China’s foreign reserves ─ especially if it dumps its dollar holdings!
It is time career politicians in America address the economic mess they have created with their misguided banking and oil industry financial backers. They have been allowed to run U.S. economic and foreign policies amok because of their self interest at the expense of We the Apathetic People. It is time to put the blame where it belongs. China can no longer continue to be blamed for America’s woes. Oil and the Arab oil producers can and must.
posted by Peter de Krassel's Custom Maid Politics at 10:50 PM
0 Comments:
Post a Comment
<< Home