Two Things to watch out for re: the economy

[justinsb]

There are two big triggers that haven't been pulled yet - but could be at any point

1) The instability of the dollar causes OPEC to shift the trading currency of Oil from the US Dollar to the Euro: Because right now oil is purchased in US dollars every country that wants to buy oil needs a stockpile of Dollars, the instability may cause increased pressure to make the switch:

http://en.wikipedia.org/wiki/Petroeuro#Currencies_used_to_trade_oil
http://www.energybulletin.net/123.html
http://www.economyincrisis.org/articles/show/1200

2) The falling dollar causes US Creditor nations (China/Saudi Arabia) to start divesting themselves of US debt and/or stockpiles of US currency. If anyone blinks there will be a 'run on the bank' so to speak and a mad rush to unload US currency/debt

If either of these happens the bottom will drop out of the US dollar causing skyrocketing inflation and making it very difficult for the US to secure further loans.

Just a heads up.

[RFK_Democrat]

1. Did you mention debris?

That and looters. Watch out for those.

[Pale Blue Dot]

2. Both, I fear, are inevitable.

This is very, very bad. I've seen this coming for awhile now, and honestly, right now I'm terrified for myself, my friends, my family and everyone I love.

[tekisui]

3. The US Creditor Nations have A LOT to call in, too.

THey own us. There is not much the US puppet masters can do, at this point. It is in the foreign debtor's hands.

[superkia]

10. The great thing for the eilte is, bushie signed one of those...

executive orders that could have us all in work cams during martial law. Economy crashes, martial comes to our door step and the elite still live life as usual as we continue to run the country except we don't get paid, we live off of a welfare type program and they save the day for us. :sarcasm:

Makes you wonder why he decided to sign the executive order just last year that gives him the power to be dictator in crisis and mentioned the ECONOMY as one of the reasons for martial law. The people that everyone calls conspiracy theorists and nut jobs have been saying that the goal was to put us all into poverty as a way to have global enslavement and the way things are going, this isn't just going to hurt the people in our country. I hope FEMA's detention camps are at least comfortable.

[tekisui]

16. I hope you like formaldehyde.

[hootinholler]

13. What will they do?

At some point if you get the bank to loan you enough, your failure is not an option for the bank.

-Hoot

[tekisui]

17. China's surplus was down 60% last report.

If they start losing money, they won't buy our debt anymore, and then start calling for it back.

[HuffleClaw]

4. Iran and Venezuela have already done the euro switch?

i would guess the real nail in the coffin would be if saudi arabia did?

[prolesunited]

5. That must be why we call

them terrorists.

[justinsb]

11. Not so much Saudi Arabia

as OPEC on the whole. Iraq tried and well..you know what happened.

But it's not a coincidence that Iran and Venezuela are also on the sh*t list

[HuffleClaw]

6. Iran and Venezuela have already done the euro switch?

i would guess the real nail in the coffin would be if saudi arabia did?

[unblock]

7. the impact of a switch to euro for oil trading is VASTLY overrated

it is more a milestone in the long saga of the decline of the u.s. economy than it is a disaster in and of itself.

[justinsb]

14. The thing is

That countries around the world have trillions of US dollars in reserve for oil purchases - if there were to be a switch they would need reserves of Euros and the markets would be flooded with US dollars causing a rapid decline in their value.

[unblock]

15. but this is just a one-time effect

first, they won't dump everything; part for diversification and part for politics.
second, even if they do dump everything, then they're done, they can't sell any more dollars.

it's the ongoing effects of low interest rates and recession or worse here in the u.s., and the lack of enough manufacturing infrastructure to benefit from a declining USD that is of much greater concern.

[gordianot]

8. Another variable, you cannot eat oil, you can covert your surplus grain to ethanol.

Recession now, depression tomorrow is not impossible.

[MindMatter]

9. So far, there is not much motivation to switch oil currencies

That is probably mostly a red herring. It doesn't much matter what currency any international transaction is transacted in. You have to use a hedging strategy no matter which currency you use. As long as they can keep increasing the $/bbl as the dollar loses strength, the Saudis don't have a big problem.

The real problem for the US is WHY the dollar is cratering. That has a whole lot to do with Bush's ecnomic policies, which are to spend like a drunken sailor and leave the bill to the next generation. Along the way, the Saudis and Chinese have picked up that tab, but that has huge consequences.

[spag68]

12. US economy

I don't know who you doom and gloomers are, but I ask this, have you forgot that we are the breadbasket of the world? I will be the first to admit that we are in trouble, but without us buying and feeding the world, what good would all the money do them? No matter what else happens, this country will survive. We all may have to downsize our lifestyle, but after all the panels are on everyone's roof, and all the new cars get 100 miles to a gallon, the world will be better off for what we do. So give this gloom and doom a rest, and go out and elect progressive thinkers from local to state and national offices. Stop whining and get it done. The hippies were right, we have the power unless you willingly give it up we will win.

[unblock]

18. you're right. and also wrong.

sure, the u.s. economy will survive. it will merely be somewhat smaller than it was. and we will all adapt.
i'm not worried for my 22-month old son in that sense.

but it will be a very painful adjustment period. many people will lose jobs, many people will lose homes, many people will go bankrupt. and many, many more will tighten their belts and make do on less.

in the long run we'll be fine. but the next year or two will not be fun.

[Elwood P Dowd]

19. The problem with you logic is.....

the American people are not logical. Got to fight them tearests, gays & lesbens, al kader, and amerker haters. Plus, we don't own the voting machines. The 2008 election should not be close, but you can bet it will be close. We are one fucked-up country.

[Skittles]

23. YOU KNOW IT, ELWOOD

I despair at what has happend to America

[Eurobabe]

22. Oh let's just put our heads in the sand

The US is FUCKED. Plain and simple.

You're doin' a HECKUVA JOB Georgie!

[Warpy]

20. I'd add 3) The Chinese allow the Yuan to float against the dollar

That last one is going to make every single thing we used to make but now import very, very expensive. Don't even think about reopening factories here; the machinery that wasn't shipped to overseas factories has long since been sold as scrap.

[OneBlueSky]

21. "If" either of these happens? . . . don't you mean "when"? . . . n/t

,

[Kip Humphrey]

24. Its true that the Petro-Dollar is the gold standard for the USD. But guess what? 1) & 2) have

already begun! Venezuela and Iran trade oil for Euros with more nations soon to follow suit (watch for Brazil, Russia, Dubai, and UAE next). China already trades in Euros and is in the process of "rebalancing" its currency reserves away from dollars into a "basket of currencies" (mostly Euros).

Once the Petro-Dollar falls (I forecast QTR3 '08) WATCH OUT!...