Follow the Oil Slick Road
Do people realize the importance that the UAE has on the American economy? Do people understand why Bill Clinton and Jimmy Carter have somewhat supported the port deal? Do people know why there was such secrecy surrounding its approval?
Petrodollars! Right now, the stock exchanges price oil according to an index of Texas Crude, Norwegian Crude, and you guessed it, UAE Dubai Crude. So why should America give a windfall port deal to a terrorist nation?
Petroeuros! Right now, oil is sold using dollars. If the UAE switches to euros, our economy would be in a world of hurt. So let the UAE secure our ports so that there’s no more mention of using euros to buy oil. Guess which nation wanted to switch to euros before?
Iraq! The Oil for Food Program that the neo-cons so vehemently despised because of corruption allowed Saddam Hussein to sell oil in exchange for euros. Trust me, it wasn’t the corruption that scared the neo-cons. If Saddam Hussein had his way, petroeuros would be right around the corner. Guess which nation wants to switch to euros now?
Iran! Right now, oil is sold on two American controlled exchanges. One is in the U.S. One is in Great Britain. Hmm, why did Great Britain have a beef with Saddam? Iran, however, wanted to establish the Iranian Oil Bourse to compete with this exchange and sell oil using euros or yen. So why would the U.S. spend $75 million to harass and bribe Iran into backing away from the exchange?
Foreign Reserves! If the world began selling oil with euros or yen, the U.S. economy would collapse. For years, central banks have been accumulating dollars as a result of oil purchases. About 70% of foreign reserves are held in U.S. dollars. If countries all of a sudden needed euros to buy oil, they would start to sell our dollars in exchange for euros. But where are the dollars actually held?
Treasury Bonds! Central banks don’t just have our dollars sitting there. They have lent them back to us in exchange for Treasury bonds. We pay foreign countries interest each year, they help maintain our currency and fund our negligent spending habits, and everyone’s happy. If these countries needed euros to buy oil, they would potentially sell out of $2 trillion worth of U.S. Treasuries.
The euro would go up. The dollar would go down. We would have to raise interest rates significantly to attract people to buy our bonds. And the $700 billion worth of trade deficit would come crashing down upon us.
Well, that is unless you give a sweet port deal to UAE Dubai to ensure they continue trading in dollars. And you start a war with Iraq to ensure that Iraqi oil is sold for dollars. And surround Iran with U.S. troops on both sides to ensure that the Iranian Oil Bourse fails. And continue our deficit spending to ensure foreign countries have a will be able to put their dollars into U.S. Treasuries and earn interest.
|
March 3, 2006 |
Jenson Hagen
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Comments
Posted by: Kari Chisholm | Mar 3, 2006 8:51:16 PM
Just because two 9/11 hijackers were from the UAE doesn't make that country a "terrorist nation" --- any more than having John Gotti and Al Capone here in America, makes us a "mafia nation".
Iran is a state sponsor of terrorism. Syria is a state sponsor of terrorism. Lebanon harbors terrorists. But the UAE is a close ally of the United States.
There's much to criticize in the Dubai Ports World deal, but let's not get hysterical and misstate basic facts.
Posted by: Karl | Mar 3, 2006 9:28:00 PM
I thought Dubai got into doing these port operations because they were about out of oil. Am I wrong?
Posted by: Jenson | Mar 4, 2006 2:25:39 AM
UAE may or may not be a terrorist nation, but it doesn't change the fact that we rely heavily upon their cooperation in pricing oil. And it doesn't matter whether the oil comes from them or Iran or Iraq. The world over uses Dubai oil as a benchmark because of its quick conversion which allows for up-to-date market pricing. If the UAE wanted to switch to euros, OPEC would be more than happy to switch along with them.
Norway isn't a bastion of oil either. It's just that if they started selling their oil in euros, it would set a major precedence. Even though Norway switched to the euro in 2004, the country still exchanges oil in dollars.
Skol!
Posted by: Marvinlee | Mar 4, 2006 3:50:04 AM
Jenson Hagen's post is a reminder of how very vulnerable we are to imported oil. At present, we still have a reasonably large oil supply. But as the supply dwindles, oil producing nations will acquire extraordinary pricing power. With pricing power will come growing political power.
As an opinion, I think that we should be devoting far greater efforts to controlling our energy consumption, controlling our rate of population growth, and seeking alternative sources of energy, even if inferior in some respects to oil.
Posted by: Beware the Ides of March | Mar 4, 2006 11:45:30 AM
Is the Federal Reserve Preparing for Iran?
Iran, oil and euros: The war scenario
http://www.mmorning.com/ArticleC.asp?Article=3338&CategoryID=5
Posted by: Greenspan | Mar 4, 2006 11:48:30 AM
Beware the Ides of March
http://futures.fxstreet.com/Futures/content/100480/content.asp?menu=review&dia=2722006
Posted by: Bijan Zanganeh | Mar 4, 2006 12:16:19 PM
The real concern is not the Iran Oil Bourse,
The real concern is whether the Iran-India-Pakistan pipeline deal
success or not.
Iran do not need an Oil Bourse if it could sell its oil to other country directly.
http://spiritofchennai.com/news/national-news/a0266.htm
Posted by: Pat Ryan | Mar 4, 2006 2:55:13 PM
The UAE is also a central clearing house for money changing and laundering. Here's an excerpt from an '01 article in USA Today:
he transfer system, known in Pakistan as hundi, is a money pipeline for the 3 million overseas Pakistanis sending pay home to relatives in this poor country. Hundi dealers — called hawala — can be found in the USA and in the Persian Gulf countries of Saudi Arabia, Kuwait, Bahrain and the United Arab Emirates, all of which have large numbers of Pakistani workers.
In a typical transaction, a hawala in New York receives dollars from a Pakistani who wants the money sent home to relatives. After taking a small commission, the dealer calls or e-mails a hawala in the customer's hometown. The local dealer delivers the money in Pakistani rupees or makes it available for pickup by family members.
The practice, a modern version of a centuries-old method of moving money, involves few or no records. Hawala operating with one another rely on trust and usually know most of their customers. Hawala around the world balance accounts with each other in Dubai, a tiny Gulf enclave in the United Arab Emirates with strict secrecy rules.
This system has proven very useful to.......er.......freedom fighters, or whatever, for centuries throughout the middle east and south asia.
**********
The tiny confederated dictatorships are also gian investors in The Carlyle Group AKA the Bush Family Cookie Jar (which has its mideast HQ in Dubai.
**********
Kari, with due respect, the dictators throughout the Gulf States are buddies with the Bushes and send millions of their oil dollars out to fund aybody that opposes Israel.
I'm aware that this is a complex situation label-wise, but still........
Posted by: The_Iran_War | Mar 4, 2006 9:09:04 PM
The Brinkmanship Of Energy Geopolitics
http://www.countercurrents.org/po-maavak030306.htm
How will a war with Iran play out when
Japan, South Korea and Taiwan import all their oil, of which 75 percent is from the Gulf.
India imports 75 percent, of which 80 percent is from the Gulf.
China imports 35 percent, of which 60 percent is from the Gulf.
Imports into India and China are expected to grow by 8 percent to 10 percent a year.
By 2010, a higher percentage of China's imported oil will come from the Middle East, perhaps as much as 90 percent.
Beijing will face industrial collapse and social anarchy within two or three months.
However, the paradoxically-named People's Liberation Army might opt for something incredibly stupid to "save face."
Any action has to be decided within days or weeks of a possible supply disruption from the Persian Gulf.
It can attempt to seize Taiwan, and prevail at a massive cost, and face the world later in a much weakened state.
Posted by: China_Iran_Relationship | Mar 4, 2006 9:35:01 PM
http://www.asiantribune.com/show_article.php?id=2998
China: Militarily China is far behind the United
States but in recent years its economic performance
has been miraculous. In order to sustain its high
growth rate, China is in search of secure and viable
energy resources, and a transit trade route to the
Arabian Sea that may be cost effective.
Although work on Kazakhstan-China pipeline has begun,
presently China's 60 per cent energy supplies come
from the Middle East.
Nearly 80 per cent of China's oil imports pass through
the Strait of Malacca.
China, therefore, would like Pakistan: To provide
transit facilities for its imports and exports via
the ports of Gwadar and Karachi; to offer naval
facilities in Balochistan to give it upper hand in
Arabian Sea and Strait of Hormuz; to block the way
of the United States and its policy to contain Beijing;
to curb the jihad culture before its spill-over effects
are felt in Xingiang; to normalize its ties with India
so that the two countries have to rely less on the
United States.
Apart from transit trade, the Gwadar port is very important for China in ensuring energy security. After it is fully developed, China would be able to use it as transit terminal for crude-oil imports from the Middle East and Iran to Xingjian. At present China feels insecure because 80% of its oil imports pass through the Strait of Malacca which is, like the Strait of Hormuz, under American presence.
Posted by: China_India_Relationship | Mar 4, 2006 10:21:50 PM
China, India and the land between
http://www.atimes.com/atimes/China/HC04Ad01.html
China in turn has rather neatly entered
into the South Asian power equation.
At last November's South Asian Association
for Regional Cooperation summit, China enlisted
help from Nepal, Bangladesh and Pakistan to
force India to accept China as an observer and
dialogue partner in the regional body.
The quest for oil is a strategic priority for
India and China, both of which rely on crude-il
imports for 70% and 40% of their needs, respectively.
Competition for overseas supplies has already seen
some ferocious bidding wars, most of which China has won.
This year CNOOC Ltd - of the state-owned China National
Offshore Oil Corp - beat out India's Oil and Natural
Gas Corp to buy a 45% stake in a Nigerian oil and gas
field for $2.3 billion. In the past two years,
China has trumped India in Kazakhstan, Ecuador,
Angola and, most recently, Myanmar.
China has already started to build a network
of roads and pipelines running south through
mainland Southeast Asia to help connect Western
China to the sea.
Along the East-West axis there is a strong strategic
desire to build pipelines so that oil and gas can
be piped into China and avoid passage through the
Malacca Strait.
China's leaders have said this is less a question
of cost and more about enhancing the security of
China's energy supplies, notably from a possible
US naval blockade.
Posted by: Whew | Mar 4, 2006 10:37:19 PM
Those sure are some big cookies!
Only the very greedy can afford to eat them, however.
-ancient Chinese proverb
Posted by: MartinWalker | Mar 4, 2006 10:38:10 PM
If not U.S. as world government, then who?
http://www.iht.com/articles/2006/03/03/arts/idlede4.php
imagine how awful the world could be if someone else
were to take the place of the United States as the
global hegemon.
Posted by: Time is Ticking | Mar 4, 2006 10:55:57 PM
http://www.washingtonpost.com/wp-dyn/content/article/2006/03/05/AR2006030500028.html
Chinese Foreign Minister Li Zhaoxing urged Iran on
Sunday to resume talks with Russia and the European
Union on its nuclear programme as soon as possible,
a day ahead of a key meeting of the UN atomic watchdog.
China imported 12 percent of its crude oil from Iran
in the first 11 months of 2005 and Chinese media has
reported that Beijing and Tehran could sign a multi-billion
dollar agreement on developing an Iranian oil field as
early as this month.
Posted by: GUS | Mar 4, 2006 11:04:39 PM
How much influence does China have on US policy?
http://www.chinadaily.com.cn/english/doc/2006-03/03/content_526249.htm
"China's foreign exchange reserve hit 818.9 billion
dollars at the end of last year but what China
really needs should be no more than 250 billion
dollars,"
economist Xiao Zhuoji told the Shanghai Securities Times.
Posted by: True or False | Mar 4, 2006 11:10:43 PM
Iranian oil bourse story.
http://www.energybulletin.net/13192.html
So let me explain why an Iranian oil bourse will not work for the foreseeable future.
Posted by: Bush | Mar 4, 2006 11:21:02 PM
Bush U-turn on Iranian pipeline
http://news.bbc.co.uk/2/hi/south_asia/4774312.stm
The US had previously stated it was "absolutely opposed"
to the gas pipeline, even indicating Pakistan and
India could face sanctions if the project got under way.
But in Islamabad, Mr Bush said: "Our beef with Iran
is not the pipeline, our beef with Iran is... they
want to develop a nuclear weapon and I believe a
nuclear weapon in the hands of the Iranians will be
very dangerous for all of us."
The $6bn project for the 2,600km (1,625 mile) pipeline
will bring Iran revenue, Pakistan transit fees and
India energy.
The nations hope to start construction in 2007, with
key talks due this month.
Posted by: Kristenko | Mar 4, 2006 11:35:05 PM
Russia keen to participate in the $7 billion Iran-India pipeline project
http://news.webindia123.com/news/showdetails.asp?id=172786&n_date=20051125&cat=Business
"Russia and Russian company Gazprom is interested and prepared to share the risk along the pipeline route to India.
We hope other stakeholders will be benign and willing to share the risks and benefit with Gazprom and among each other,"
Posted by: AL MARTIN | Mar 4, 2006 11:41:31 PM
Rumors About Iranian Oil Bourse is just nonsense.
http://www.conspiracyplanet.com/channel.cfm?channelid=49&contentid=3017
Why? Because the new Iranian oil futures market
is useless.
The oil isn't deliverable anywhere outside of Iran.
They don't have any mechanism to deliver it.
Posted by: Ramin Davoodi | Mar 4, 2006 11:47:40 PM
Attacking Iran
http://www.payvand.com/news/06/feb/1140.html
China could also use a growing quagmire
with Iran as an alleyway chance to finally
“annex” Taiwan once and for all
Posted by: Mr Chen | Mar 5, 2006 12:07:34 AM
China warns Taiwan of 'disaster'
http://news.bbc.co.uk/1/hi/world/asia-pacific/4757568.stm
China has warned that Taiwan's decision to scrap a council on reunification with the mainland could bring disaster.
Posted by: Michael Carl Leblanc | Mar 5, 2006 5:16:16 AM
You do not seem to know that Norway Bent Crude may be traded in Euro soon through either a Norwegian or Scandinavian Oil Bourse. Check it out! It's the European Union, the whole of it that you'll need to go to war against. The more you wage wars, and the more you aleniate the rest of the world, the more likely it is going to drop the dollar in favor of the Euro. The more you increase your national debt by waging wars, the more the backlash will be intense and consequences devastating. Cut your losses while you can.
Posted by: Heather Wokusch | Mar 5, 2006 12:58:14 PM
WWIII or Bust: Implications of a US Attack on Iran
http://www.dissidentvoice.org/Feb06/Wokusch20.htm
Attacking Iran could also tip the scales towards a
new geopolitical balance, one in which the US finds
itself shut out by Russia, China, Iran, Muslim
countries and the many others Bush has managed to
piss off during his period in office. Just last month,
Russia snubbed Washington by announcing it would go
ahead and honor a $700 million contract to arm Iran
with surface-to-air missiles, slated to guard Iran's
nuclear facilities. And after being burned when the
US-led Coalition Provisional Authority invalidated
Hussein-era oil deals, China has snapped up strategic
energy contracts across the world, including in Latin
America, Canada and Iran. It can be assumed that China
will not sit idly by and watch Tehran fall to the
Americans.
Russia and China have developed strong ties recently,
both with each other and with Iran. Each possesses
nuclear weapons, and arguably more threatening to the US,
each holds large reserves of US dollars which can be
dumped in favor of euros. Bush crosses them at his
nation's peril.
Yet another danger is that an attack on Iran could set
off a global arms race
Posted by: Zhaoxing | Mar 5, 2006 1:12:10 PM
China: Iran Should Start Meetings on Nuclear Program Immediately
http://www.zaman.com/?bl=hotnews&alt=&trh=20060305&hn=30503
China Foreign Minister Li Zhaoxing asked Iran
to resume talks with the European Union and
Russia as soon as possible.
The Chinese Minister, speaking at the China
National People’s Parliament’s yearly gathering,
asked the Beijing administration to restart meetings
over its nuclear program adding that it is important
to peacefully and properly resolve the problem
through diplomatic means.
Iran’s nuclear program will be handled again in the
International Atomic Energy Agency’s (IAEA) meeting
to be held on Monday in Vienna.
Posted by: Turkmenistan | Mar 5, 2006 2:39:01 PM
Putin seeks to ease Europe’s energy fears
http://www.ukrainianjournal.com/index.php?w=article&id=2269
Russian President Vladimir Putin sought to
ease energy security concerns in the Central
Europe by promising steady natural gas and
oil supplies to the region in the long term.
Putin on Wednesday complained that Russia
had been facing opposition to its plans to
expand its presence on the European energy
markets. “We do not dramatize this, but we
will seek to attain equality,” Putin said.
We will diversify transportation opportunities.”
Any alternative massive supplies of gas to
Europe would probably hurt Russia by reducing
its earnings from energy exports that may put
a serious strain on the Russian budget,
analysts said.
Limited pipe capacity
http://www.cbw.cz/phprs/2006022724.html
Another major problem facing Turkmen–
Ukrainian gas relations involves the
Central Asia-Center pipeline, which has
limited capacity and can only transport
some 34 billion cubic meters of gas a year.
The pipeline is owned by the countries
through which it passes: Turkmenistan,
Uzbekistan, Kazakhstan and Russia.
In December 2005, Gazprom unexpectedly
signed a contract with Turkmenistan to
purchase 30 billion cubic meters.
At that time, Ukraine already had a signed
contract with Niyazov for 40 billion cubic
meters.
How the Turkmen side will export that
amount of gas to Russia and Ukraine
remains a mystery.
There are plans to expand the capacity of
the pipeline. In 2004, RosUkrEnergo announced
that it would spend $2 billion on the
pipeline in order to enlarge its throughput
capacity by 30 billion cubic meters.
However, no money has been spent on this project.
Some oil industry analysts have speculated that
Gazprom, which controls part of the pipeline,
isn’t interested in seeing the pipeline expanded
at this time so that Turkmenistan would be forced
to sell gas only to Russia and leave the
Ukrainians at Gazprom’s mercy.
Posted by: IPI Or TAPI | Mar 5, 2006 2:56:39 PM
Energy and Investment prospects from UAE brighten
http://www.menafn.com/qn_news_story_s.asp?StoryId=126703
After a delay caused by Washington's advise
to India not to go ahead with IPI because
of Teheran's alleged nuclear plans, IPI is
moving ahead. Prime Minister Manmohan Singh
said to Jadoon "IPI gas pipeline is of vital
importance to India and Pakistan as it will
not only serve the economic development interests
of the peoples of the three countries, but also
serve to bring them closer together."
*Iran-Pakistan-India (IPI). All the three countries
are moving ahead. Ministers and experts feel that it
is likely to be the first of the three proposed
pipelines on which work will start. Experts of the
three countries will meet in Teheran on Mach 13-15,
to be followed by a meeting of Petroleum Ministers
of these countries, in April, also in Teheran, to
agree on all outstanding questions. IPI will provide
Pakistan 60 million standard cubic meters gas per day,
(mscmd) from 2010, and 90 mscmd to India, from Iran's
South Pars fields.
*Turkmenistan-Afghanistan-Pakistan-India (TAPI).
Islamabad has endorsed Indian's full membership of
this project. It will supply gas from Turkmenistan's
Dauletabad gas fields, the certification of the size
of which is awaited.
Posted by: Nuclear Non Proliferation Treaty | Mar 5, 2006 10:03:52 PM
For Iran The Nuclear Issue Is A Point Of National Pride
http://www.iran-press-service.com/ips/articles-2006/january-2006/iran_nuclear_19106.shtml
China and Russia have too many economic and political
interests in Iran to vote, unless under serious pressure,
in favour of economic sanctions. China has recently
signed billion dollar petrol deals with Iran.
But even for Europe, applying economic sanctions will
not be painless, especially for Italy and Germany who
are Iran's biggest trade partners.
Posted by: Sid Leader | Mar 6, 2006 12:38:25 PM
If The Greedy Old People and FoxyNudes want to go to UAE and do some interviews on terror... that'd be fun.
Imagine one of the cowards from KXL actually covering a war... or... even... fighting one?
Dogs will sleep with cats before that happens.
Posted by: Elias Akleh | Mar 10, 2006 4:41:24 PM
The US expects this invasion to take less than 100 days.
http://www.amin.org/eng/uncat/2006/mar/mar5-0.html
To avoid the expected oil crisis due to the shut-off of
Iranian oil the American administration is planning to
use its strategic petroleum reserve that has a supply
of oil equals to about 175 days worth of Iranian production.
Europe will also use its own strategic oil reserve.
These reserves would be replenished with fresh oil
after controlling Khuzestan. This war would give US
total control of the largest three oil resources of
the world; Saudi Arabia, Iraq, and Iran.
The Dollar’s global hegemony would be restored, and
participating European countries would have some
share of the cake.
Posted by: Preemptive_Strike | Mar 11, 2006 6:59:14 PM
The Future of American Military Strategy a Conference Report
http://politicom.moldova.org/stiri/eng/10503/
(9) U.S. preemptive action against Iranian nuclear
installations in response to increased Iranian support
for terrorism and their making blatant progress towards
a nuclear weapon. Iran’s reaction would likely be twofold:
(a) they will continue their nuclear program in a slower
manner with public support and
(b) doing something else such as fomenting “more trouble
inside of Iraq, to supporting more anti-Israeli terror,
to attacking our interests in the Persian Gulf.”
(9a) Iran shutting down the Strait of Hormuz.
This would require a more robust Navy presence in
the Gulf for an extended period of time with a lot
of quick response capacity to intercept ballistic
missiles, to try to intercept anti-ship cruise missiles,
and to be responsive against any submarines that would
try to do a quick ambush and then retreat.
Posted by: Petrodollar | Mar 12, 2006 4:53:46 PM
Why This Oil Boom Is Different
http://www.businessweek.com/magazine/content/06_11/b3975013.htm
Three decades ago, OPEC nations didn't know what to do with their oil money. This time, they're spending it
But maybe OPEC won't go on a shopping spree after all.
The opposing school of thought, voiced by economist
Paul Donovan of UBS in London, is that OPEC will actually
save a bigger share of its petrodollar income in coming years.
He and others argue that as OPEC nations gradually make headway
on their to-do lists, and create jobs for every potentially
restive 20-year-old who needs one, the urgency of spending
will diminish and they'll start socking away more money.
If that happens, the timing for OPEC could be propitious.
As growth accelerates in Europe and Japan, the global demand
for investment will rise and more OPEC savings would come in
handy. In fact, infusions of money from the oil sheikhs of
Saudi Arabia, Kuwait, and elsewhere could become highly
sought after in the West, including in the capital-hungry U.S.
If that's the case, then the controversy over Dubai's bid for
a port operator could be just a faint foreshadowing of things
to come.
Posted by: More Petrodollar to come | Mar 12, 2006 5:08:56 PM
How to Buy a U.S. Company
http://www.businessweek.com/magazine/content/06_11/b3975012.htm
A few helpful tips for global CEOs seeking approval from the Committee on Foreign Investment in the United States
Engage early. Contact CFIUS's staff at the U.S. Treasury well before you officially file for approval, preferably before you announce your deal. "It shows you're respectful of the process," says David M. Marchick of law firm Covington & Burling.
Establish your security credentials. All corporate buyers must show that they are serious about security, whether it's protecting U.S. information technology, preventing technology transfers, or guarding the U.S. homeland -- the hottest button of all. Concerns multiply if your company has ties to a foreign government or is based in a country considered a security risk. Dubai Ports hit the trifecta.
Negotiate security agreements. Most transactions nowadays require some security commitments from the purchaser. If it's a telecom deal, for example, CFIUS is likely to require that buyers submit to data searches by the CIA and FBI, that they store data in the U.S., and that American citizens hold key jobs.
Embrace the extra 45-day review. It's not always the best strategy to breeze through the hush-hush 30-day review. The Dubai Ports backlash indicates that many Americans view the short review as a rush to judgment. Let the government agencies know you have nothing to hide. That is, if you have nothing to hide.
Do opposition research on yourself. Scour your records and relationships to uncover your vulnerabilities, particularly on security. Be prepared for losing bidders or estranged business partners to throw monkey wrenches into the process, usually by stirring xenophobia on Capitol Hill.
Address Congress' fears before they blow up. Go out of your way to explain your deal to key members of Congress. Consider a PR campaign to preempt potential problems before they take on a life of their own.
Hire one of Washington's few CFIUS experts. A small band of legal wonks specializes in guiding companies through these sensitive international deals. Among the big names: Covington & Burling's Marchick, Christopher R. Wall of Pillsbury Winthrop Shaw Pittman, Joseph F. Dennin of McKenna Long & Aldridge, and Ivan Schlager of Skadden, Arps, Slate, Meagher & Flom.
Think twice before hiring a big-name lobbyist. Many foreign companies believe they can influence CFIUS by hiring a prominent politico or friend of the President. But these stars can bring bad publicity as well as cachet. "This is national security," says Stephen J. Canner, vice-president of investment and financial services at the U.S. Council for International Business and former staff director of CFIUS. "There shouldn't be any lobbying from the outside."
Keep abreast of the rules. In the wake of the ports brouhaha, some key lawmakers, including Senate Banking Committee Chairman Richard Shelby (R-Ala.) and House Homeland Security Chairman Peter T. King (R-N.Y.), are suggesting changes in the CFIUS review process. Make sure you're up to date on the law. Don't relive the last battle. Prepare for the next one.
Posted by: Where is the Petrodollar going | Mar 12, 2006 5:19:02 PM
Where's The Money?
http://www.forbes.com/home/energy/2005/10/24/dubai-petro-cash-invest-cz_rm_1025dubai.html
“The Middle East feels like New York or Silicon Valley in 2000," says Mahmoud Difrawy, head of J.P. Morgan's private bank in the region. “It really reminds me of the heyday of the dot-com era."
But smart money is smart money. “Over the last 12 to 18 months," says Mark Morgan, managing director of Citigroup's Global Wealth Management in the Middle East, “we've seen the more sophisticated investors taking profits off the table and looking to diversify away from the region."
Adds a U.S.-based investment adviser to private Saudi wealth, “There is a lot more focus eastward than there is westward, particularly toward China, India and to a lesser extent Japan." When Citigroup (nyse: C - news - people ) launched a $1.5 billion venture capital fund focused on the emerging markets of Greater China, India and Eastern Europe, Middle East money took up a “substantial portion" of the offering.
In the end, Nemir Kirdar, chief executive of the Bahrain-based Investcorp, seems to offer the most plausible take. Kirdar says if you look beyond the sensationalist headlines, you'll find the current government technocrats and private investors are far better informed than the 1970s generation. They are generally making sure this new excess capital formation is adequately diversified, not just geographically but also in different assets classes--from U.S. Treasurys to complex alternative investments.
Posted by: Trade Deficit | Mar 12, 2006 5:40:50 PM
Consider the consequences
http://www.philly.com/mld/inquirer/business/14061547.htm
Whether such fears had a basis in reality or not, they surely will have consequences. Dubai could retaliate for the blockage of the ports deal - maybe by canceling aircraft orders, or by restricting American military use of its own ports and airfields.
Investors in Dubai and its neighboring states could also take the hint that Arab money isn't welcome in the United States, and channel their current or future investments elsewhere.
That's no small matter: By the end of last year, oil-exporting nations in the Middle East and North Africa had $187 billion in foreign reserves, up from $107 billion three years earlier.
That represents money that has to be invested somewhere - and if it's held in dollars, it typically means investing in U.S. stocks, bonds, real estate, or the direct ownership of businesses here.
If foreign investors lose their appetite for such assets - or if their investments are restricted by Congress - we'll all feel the impact.
The dollar might tumble on foreign-exchange markets as investors convert their funds to yen or euros. U.S. interest rates could rise sharply, increasing the cost of mortgages, construction loans and other borrowing.
That in turn could send home prices lower, dampen consumer spending, and bring on a full-scale recession.
Worse, other countries could follow our lead and throw up their own barriers to global commerce. (Some of this is already happening in Europe, where national governments are blocking cross-border mergers for political reasons.) Follow this around and it begins to sound a lot like 1929 - or 1914.
And that's why the trade deficit's growth is bad news.
Not because it means we're in such bad shape today; but because it makes us so much more vulnerable to the consequences of our own fears tomorrow.
Posted by: Kari Chisholm | Mar 12, 2006 6:30:33 PM
Editor's Note: Probably stating the obvious here, but just about every single one of the most recent comments above (except Sid Leader) comes from the same IP address. Just one guy chatting with himself. We're turning off comments here.
Note: The presence of any individual above does not imply an endorsement by BlueOregon. The selection of faces shown is done by Facebook. Visit BlueOregon on Facebook.
Posted by: Justin | Mar 3, 2006 8:10:42 PM
Sweet! Almost makes you glad Bush & Co are in power, eh? Considering the 'leadership' coming from the left, we'd all probably be speaking European by now! Err, whatever.
Oops, gotta run - just heard they've got great deals on the Hummer H3!
[end sarcasm]