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In this scene, Yen Lo, the North Korean interrogator, visits his Russian counterpart, Zilkov, to discuss Soviet operations, capitalism, and lending money at interest. Yen Lo's dry wit should have been worth an Oscar nomination.

YEN LO

Attractive plant you have here.

ZILKOV

Thank you, doctor. It's actually a rest home for wealthy alcoholics. We were able to purchase it three years ago. Except for this floor and the floor above it -- which we have sealed off for security purposes -- the rest functions quite normally. In fact, it's one of the few Soviet operations in America that actually showed a profit at the end of the last fiscal year.

YEN LO

Profit? Fiscal year? Beware, my dear Zilkov. Virus of capitalism's highly infectious. Soon, you'll be lending money out at interest.

Yen Lo laughs heartily at his joke. Zilkov doesn't get it.

YEN LO

You must try, Comrade Zilkov, to cultivate a sense of humor. There's nothing like a good laugh now and then to lighten the burdens of the day.

(to Raymond)

Tell me, Raymond. Do you remember murdering Mavole and Lembeck?

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Tuesday, October 25

Rich Man's War

by mammon on Tue 25 Oct 2005 09:19 AM AKDT

Money – Songs and Poems Selection

Artist/Band: Earle Steve

Lyrics for Song: Rich Man's War

Lyrics for Album: Revolution Starts Now

Jimmy joined the army ‘cause he had no place to go

There ain’t nobody hirin’

‘round here since all the jobs went

down to Mexico

Reckoned that he’d learn himself a trade maybe see the world

Move to the city someday and marry a black haired girl

Somebody somewhere had another plan

Now he’s got a rifle in his hand

Rollin’ into Baghdad wonderin’ how he got this far

Just another poor boy off to fight a rich man’s war

Bobby had an eagle and a flag tattooed on his arm

Red white and blue to the bone when he landed in Kandahar

Left behind a pretty young wife and a baby girl

A stack of overdue bills and went off to save the world

Been a year now and he’s still there

Chasin’ ghosts in the thin dry air

Meanwhile back at home the finance company took his car

Just another poor boy off to fight a rich man’s war

When will we ever learn

When will we ever see

We stand up and take our turn

And keep tellin’ ourselves we’re free

Ali was the second son of a second son

Grew up in Gaza throwing bottles and rocks when the tanks would come

Ain’t nothin’ else to do around here just a game children play

Somethin’ ‘bout livin’ in fear all your life makes you hard that way

He answered when he got the call

Wrapped himself in death and praised Allah

A fat man in a new Mercedes drove him to the door

Just another poor boy off to fight a rich man’s war

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Monday, October 24

Behind Gold's Glitter: Torn Lands and Pointed Questions -- NYTimes

by mammon on Mon 24 Oct 2005 08:59 AM AKDT

http://www.nytimes.com/2005/10/24/international/24GOLD.html?ei=5094&en=999887177e20dafb&hp=&ex=1130212800&adxnnl=1&partner=homepage&adxnnlx=1130163198-jJ3cx1bLOYhAGNR2SXq/vg

Unlike past gold manias, from the time of the pharoahs to the forty-niners, this one has little to do with girding empires, economies or currencies. It is almost all about the soaring demand for jewelry, which consumes 80 percent or more of the gold mined today. For thousands of years, gold has lent itself to ceremony and celebration. But now old ways have met new prosperity. The newly moneyed consumers who line the malls of Shanghai and the bazaars of Mumbai sent jewelry sales shooting to a record $38 billion this year, according to the World Gold Council, the industry trade group.

The extravagance of the moment is provoking a storm among environmental groups and communities near the mines, and forcing even some at Tiffany & Company and the world's largest mining companies to confront uncomfortable questions about the real costs of mining gold. Consider a ring. For that one ounce of gold, miners dig up and haul away 30 tons of rock and sprinkle it with diluted cyanide, which separates the gold from the rock. Before they are through, miners at some of the largest mines move a half million tons of earth a day, pile it in mounds that can rival the Great Pyramids, and drizzle the ore with the poisonous solution for years.

The United States, the world's second-largest consumer of gold, is also the world's largest holder of gold reserves. The government has 8,134 tons secured in vaults, about $122 billion worth. The Federal Reserve and other major central banks renewed an agreement last year to severely restrict sales from their reserves, offering, in effect, a price support to gold. That price is not simply a matter of supply and demand, but of market psychology. Gold is bought by anxious investors when the dollar is weak and the economy uncertain. That is a big reason for gold's high price today.

Mountains have been systematically blasted, carted off by groaning trucks the size of houses and restacked into ziggurats of chunky ore. These new man-made mountains are lined with irrigation hoses that silently trickle millions of gallons of cyanide solution over the rock for years. The cyanide dissolves the gold so it can be separated and smelted.

[Also see posted photo of Montana Mine]

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Wednesday, October 19

William Bennett and Freakanomics

by mammon on Wed 19 Oct 2005 05:51 PM AKDT

William Bennett, education secretary under Ronald Reagan and drugs czar under the first George Bush, had this conversation with one of his callers on Wednesday's Morning In America 9/28/05:

BENNETT: All right, well, I mean, I just don't know. I would not argue for the pro-life position based on this, because you don't know. I mean, it cuts both -- you know, one of the arguments in this book Freakonomics that they make is that the declining crime rate, you know, they deal with this hypothesis, that one of the reasons crime is down is that abortion is up. Well --

CALLER: Well, I don't think that statistic is accurate.

BENNETT: Well, I don't think it is either, I don't think it is either, because first of all, there is just too much that you don't know. But I do know that it's true that if you wanted to reduce crime, you could -- if that were your sole purpose, you could abort every black baby in this country, and your crime rate would go down. That would be an impossible, ridiculous, and morally reprehensible thing to do, but your crime rate would go down. So these far-out, these far-reaching, extensive extrapolations are, I think, tricky.

This gaffe on "black babies" should have been "unwanted babies". What this gaffe implies is that Bennett associates black babies with unwanted babies, a Freudian slip of particular insight. Since he mentioned Freakanomics, here's the Freakanomics excerpt:

Freakanomics by Steven Levitt and Stephen Dubner, 2005

When the crime rate began falling in the early 1990s, it did so with such speed and suddenness that it surprised everyone. It took some experts many years to even recognize that crime was falling, so confident had they been of its continuing rise. A diverse army of experts now marched out a phalanx of hypotheses to explain the drop in crime. A great many newspaper articles would be written on the subject. Here, ranked by frequency of mention, are the crime-drop explanations cited in articles published from 1991 to 2001 in the ten largest circulation papers in the LexisNexis database:

1. Innovative policing strategies

2. Increase reliance on prisons

3. Changes in crack and other drug markets.

4. Aging of the population

5. Tougher gun control laws

6. Strong economy

7. Increased number of police

8. All other explanations [increased us of capital punishment, concealed-weapons laws, gun buybacks, and others]

One of the greatest measurable causes of the crime drop does not appear on the list at all, for it didn’t receive a single newspaper mention.

In the late 1960s, several states began to allow abortion under extreme circumstances: rape, incest, or danger to the mother. By 1970 five states had made abortion entirely legal and broadly available: New York, California, Washington, Alaska, and Hawaii. On January 22, 1973, legalized abortion was suddenly extended to the entire country with the U.S. Supreme Court ruling on Roe v. Wade.

The Supreme Court gave a voice to what the mothers of Romania and Scandinavia – and elsewhere – had long known: when a woman does not want to have a child, she usually has good reason. She may be unmarried or in a bad marriage. She may consider herself too poor to raise a child. She may think her life is too unstable or unhappy, or she may think that her drinking or drug use will damage the baby’s health. She may believe that she is too young or hasn’t yet received enough education. She may want a child badly but in a few years, not now. For any of a hundred reasons, she may feel that she cannot provide a home environment that is conducive to raising a healthy and productive child.

Before Roe v. Wade, it was predominantly the daughters of middle or upper class families who could arrange and afford a safe illegal abortion. Now, instead of an illegal procedure that might cost $500, and woman could easily obtain an abortion, often less than $100.

What sort of woman was most likely to take advantage of Roe v. Wade? Very often she was unmarried or in her teens or poor, and sometimes all three. One study has shown that the typical child who went unborn in the earliest years of legalized abortion would have been 50 percent more likely than average to live in poverty; he would have also been 60 percent more likely to grow up with just one parent. These two factors – childhood poverty and a single-parent household – are among the strongest predictors that a child will have a criminal future.

The most dramatic impact of legalized abortion was its impact on crime. In the early 1990s, just as the first cohort of children born after Roe v. Wade was hitting its late teen years – the years during which young men enter their criminal prime – the rate of crime began to fall. What this cohort was missing, of course, were the children who stood the greatest chance of becoming criminals. And the crime rate continued to fall as an entire generation came of age minus the children whose mothers had not wanted to bring a child into the world. Legalized abortion led to less unwantedness; unwantedness leads to high crime; legalized abortion, therefore, led to less crime.

It may be comforting to believe what the newspapers say, that the drop in crime was due to brilliant policing and clever gun control and a surging economy. We have evolved with a tendency to link causality to things we can touch or feel, not to some distant or difficult phenomenon. To discover that abortion was one of the greatest crime-lowering factors in American history is, needless to say, jarring.

What the link between abortion and crime does say is this: when the government gives a woman the opportunity to make her own decision about abortion, she generally does a good job of figuring out if she is in a position to raise the baby well. If she decides she can’t, she often chooses abortion.

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Tuesday, October 18

The Crime of 1873

by mammon on Tue 18 Oct 2005 07:42 PM AKDT

In the late 1800s, an ongoing battle between silver and gold for Legal Tender supremacy was being played out to conclusion. By this time, all other forms of money had been subdued to commodity status. In the bimetallic world, the value ratio between silver and gold was a moving target determined by the Market. Law continuously tried to legislate and fix the value, but since the Market ratio value was always in flux, arbitragers could, and did, make plays that allowed debtors to pay off debts at the expense of the lender. Lenders were gold based, and debtors were silver based. Both forms of money could not coincide as Legal Tender, one had to go.

The Crime of 1873 is poorly explained in existing web sites, and the esteemed economists Friedman and Galbraith make scant mention of it. Alexander del Mar (1836-1926) - a political economist, historian and author - fully explains the Crime. He was born in New York City, 1836. After graduating at the Polytechnic, he was educated as a Civil and Mining Engineer. He became the Director of the Bureau of Statistics of the United States of America and Mining Commissioner to the United States Monetary Commission of 1876. He was nominated by Mr. Greenley's friends for Secretary of Treasury.

In his book, History of Monetary Systems 1895, Alexander del Mar lists Laws that were passed to undermine the Legal Tender status of silver in the United States, Europe, Russia, Japan, India, and South America concurrently. This is the Crime of 1873. Gold and Law undermined silver, and gold became the singular form of Legal Tender throughout the world. Debt and taxes had to be paid in the form of Legal Tender, i.e.. gold only and no more arbitrage games. The Lords of Gold and Law now controlled Legal Tender in its entirety using Law as the vehicle of enforcement in all nations. Silver took on a commodity status and was greatly devalued, no longer directly accepted for debt and taxes. The Lords of Gold and Law pulled off a truly spectacular collaborative conspiring effort. And eventually, even gold had to drop out the Legal Tender race, not able to keep up with the exponential growth demands of Legal Tender, now a fiat form of money heading exponentially towards an eventual conclusion.

History of Monetary Systems by Alexander Del Mar, 1895

Crime of 1873

There is no mistaking the identity of that golden thread which runs through the Latin Union Codes of 1867, the British Mint Code of 1870, the German Mint Code of 1871, the New Mint Code of the United States of 1873, and the Codes of numerous other countries. It is of precisely the same issue in all of them.

France and the Latin Union - A conference between "the four states whose monetary system rests on a numeration by francs,": viz., France, Belgium, Switzerland and Italy, resulted in the Latin Monetary union of December 23rd, 1865. Accordingly, when the international delegates met again (June 17th, 1867), it discussed the entire monetary question, and carried a resolution in favor of what is called gold monometallism. This resolution was soon afterwards engrafted upon the legislation of the States which agreed to the Latin Union, in the shape of a New Mint Code. In 1873, France and the Latin Union limited the coinage of silver.

Great Britain - By the Act of 1816, the mints were closed to the private coinage of silver, and all silver coins, whether light of heavy, were limited in tender. In 1870, a New Mint Code was enacted.

Germany - On December 4th, 1871, an Act stopped the further Private Coinage of full legal-tender silver and ordered a new coinage of gold pieces of full legal-tender. The German Act of 1873 suspended the Private Coinage of silver. All new silver coins were limited in tender.

Portugal and Brazil - Portugal in 1854 copied the British System of 1816, suspended the Private Coinage of silver, limited the legal-tender of silver.

Scandinavia - On September 20th, 1872, a monetary union was adopted by Sweden, Norway and Denmark, which was followed by a New Mint Code. Under this code the private coinage of silver was suspended, and the legal-tender of silver coins limited.

Japan - In 1872 this state adopted a New Mint Code, forbade the Private Coinage of silver, limited the legal-tender of silver and adopted what is known as "the gold standard." In 1878 after "the gold standard" had duly departed from the country, the full legal-tender of silver coins was restored and Private Coinage again permitted. In 1894 the Private Coinage of silver was again suspended.

Holland - The laws of May 21st, 1873, limited the legal-tender of silver coins.

Italy - Under a renewal of the Latin Monetary Union dated January 31st, 1874, and the law of July 17th, 1875, the Crown limited the legal-tender of silver coins.

Spain - The law of August 20th, 1876, suspended the Private Coinage of silver, except as to metal produced by the mines of Spain.

Russia - The law of November 13-15, 1876, adopted gold coins as sole full legal-tenders, and reduced the legal-tender of silver coins.

Austro-Hungary - The decree of March, 1879, suspended the Private Coinage of silver, but did not limit the legal-tender of silver coins.

Turkey - In 1882 full legal-tender was limited to gold coins.

British India - An order Council, dated 23rd June, 1893, suspended the Private Coinage of silver.

Argentine Republic - The law of September 29th, 1875, authorized the Private Coinage of gold, admitted certain foreign gold coins to full legal-tendership, limited the legal-tender of silver coins and forbade the Private Coinage of silver.

Chili - Law of November 26th, 1892, stopped the Private Coinage of silver, limited the legal-tender of silver.

United States of America - The New Mint Code of February 12th, 1873, destroyed the Private Coinage of silver by indirection, in omitting the word "dollar" from the empowering clause relating to silver coins. December 1st, 1873, the Code Commissioners made an unauthorized and unwarranted alteration of the law by limiting the legal-tender of "all" silver coins, including the outstanding silver dollars, which had been full legal-tenders since the foundation of the Republic. Both these Acts (of 1873) were passed during a suspension of coin payments, and without eliciting public attention. This surreptitious legislation was not discovered, nor did it attract public attention until 1875-6.

Mr. Carlisle, since Secretary of the Treasury, said in the House of Representatives, February 21st, 1878, "The conspiracy which seems to have been formed here and in Europe to destroy by legislation and otherwise from three-sevenths to one-half of the metallic money of the world, is the most gigantic crime of this or any other age. The consummation of such a scheme would ultimately entail more misery upon the human race than all the wars, pestilences and famines that ever occurred in the history of the world." Mr. John Jay Knox, one of the officials who in 1869-70 lent his assistance to the preparation of the American Mint Code, when the matter was brought home to him acknowledged his part in it, and boasted that he was "proud of his work."

From the foregoing recital it will be observed that the practical political outcome of the Gold Movement of 1865-73 has been to concentrate the gold coins in the world banks of four or five principal States.

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Wednesday, October 12

Wizard of Oz Siver-Gold Metaphors

by mammon on Wed 12 Oct 2005 07:51 PM AKDT

History of Money by Weatherford, 1997, Excerpts

The most memorable work of literature to come from the debate over gold and silver in the United States was The Wonderful Wizard of Oz, published in 1900, by journalist L. Frank Baum, who greatly distrusted the power of the city financiers and who supported a bimetallic dollar based on both gold and silver.

After the cyclone violently rips Dorothy and her dog out of Kansas and drops them in the East, Dorothy sets out on the gold road to fairyland, which Baum calls Oz, where the wicked witches and wizards of banking operate. Along the way she meets the Scarecrow, who represents the American farmer; the Tin Woodman, who represents the American factory worker; and the Cowardly Lion, who represents William Jennings Bryan.

Marcus Hanna, the power behind the Republican Party and the McKinley administration, was the wizard controlling the mechanisms of finance in the Emerald City. He was the Wizard of the Gold Ounce - abbreviated, of course to Wizard of Oz - and the Munchkins were the simpleminded people of the East who did not understand how the wizard and his fellow financiers pulled the levers and strings that controlled the money, the economy, and the government.

In the end, all the American citizens had to do was expose the wizard and his witches for the frauds they were, and all would be well in the bimetal monetary world of silver and gold.

In the book, Dorothy’s magic silver slippers got her back to Kansas.

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Monday, October 10

Gold Rush Transforms San Francisco

by mammon on Mon 10 Oct 2005 09:25 PM AKDT

Lost Histories of San Francisco by Hilton Obenzinger, 1993, Fictional History

When I returned to San Francisco in April 1849, I found a city utterly transformed by the flood of Argonauts come from every corner of the earth. Hindoos, Englishmen, Chileans, Chinamen, Malays, Frenchmen, Americans - the streets were filled with a wild congress of nations, a dazzling circus of costumes, of sombreros, turbans, pigtails, a spectacle almost entirely composed of men - young men, lusty and filled with life, who sought their dreams in gold, along with the gamblers and other attendant sharks who fished for their own fortunes in the turbid, fantastical waters of those dreams.

Some counted no more than two dozen white women in the city, while the male population reached tens of thousands, with each day hundreds more gold seekers streaming off the ships that came from all corners of the earth. Perhaps the revolutions of Europe had shaken the world, but never had so many revolved around the globe in order to shore up the foundations of civilization with the mortar of gold. San Francisco sprouted like some weed on a tropic isle, although the sweet mint, the "yerba buena" of the little village, was long gone, stamped out by the tread of countless pilgrims. Shacks were built up overnight; the hills and sand dunes sprawled with tents; hundreds of abandoned hulks rotted in the harbor or were dragged to the shore to serve as stores and saloons, their crews having deserted to the gold country long before; the unpaved streets were so deep with mud that horses would lose their footing and nearly drown in the muck.

San Francisco became the city of desires, of hopes, of hungers, of lusts, a city bounded now by ancient glories and modern desperadoes, all etched with bold words - Argonauts, Midas, Mammon, Golden Calf - vibrant legends that stretched across the city like the crazy outline of its tents, saloons, bordellos, and gambling dens. San Francisco had become, overnight, a myth.

[See photo of Crocker's Spite Fence]

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Wednesday, October 5

Grain: Currency of Currencies - A Functioning Oligopoly

by mammon on Wed 05 Oct 2005 06:45 AM AKDT

Merchants of Grain by Dan Morgan, 1979, Excerpts

"Grain is the currency of currencies." Lenin

The five companies that are the subject of this book: Cargill, Continental, Louis Dreyfus, Bunge, and Andre. The stories of their growth and of America's emergence as a grain power are interwoven. [Written before the emergence of ADM].

The Big Five

The Big Five are at the center of the global system by which grain is distributed and processed. The grain companies invest in shipping, grain elevators, communications, and processing plants all the way from farmer to the consumer. Together, Cargill and Continental handle half of all the grain exported from the United States. The Big Five dominate the grain trade of the Common Market; the Canadian barley trade; the South African maize trade; and the Argentine wheat trade.

What distinguishes the grain multinationals from their corporate contemporaries is their uniquely private structure. Seven families are all-powerful: the Fribourgs at Continental; the Hirsches and Borns at Bunge; the Cargills and MacMillans at Cargill, and the Louis-Dreyfuses and Andres at the companies with those names. Members of these families not only own most of the stock or the companies, but also serve as board chairman, presidents, and chief executives at each of them. It is as if the Rockefeller family were still in absolute, day-to-day control of Exxon, or the Carnagies still dictated every major decision of US Steel. In the grain companies, it is possible to observe a social and economic phenomenon of some historical note: a functioning oligopoly that has survived right into the contemporary, post-industrial age.

The tradition of strong family control in the grain business has always made good economic sense. People with strong, extended families - Greeks, Jews, Scots, Yankees, and members of religious sects are naturally suited to the organizational requirements of the grain business.

The grain companies were able to finance their own growth and remain small, compact, family-controlled businesses. Their main assets were not their products or their holdings but their connections and their experience. These were some of the factors that gave the business its cliquish character. Loyalty was demanded, and defections to other companies were viewed as acts of betrayal. Nepotism flourished, because family members were considered to be more trustworthy than outsiders.

The descendants of nineteenth-century business barons have for the most part drifted away to New York City or Palm Beach, or into other pursuits altogether. But the grain families, like Greek shipowners, manage to stay in control. And every now and then, perhaps for the benefit of those employees who have been tempted to doubt their authority and staying power, they demonstrate it with a flair.

It is becoming harder and harder to stay in the shadows. Yet, for all that, there they are, in the late 1970s, one of the most remarkable phenomenons in the whole business world: the Hirsches, Borns, Louis-Dreyfuses, Andres, Fribourgs, Cargills, and MacMillans, all survivors and all still in control. Not that founding families have disappeared completely from modern corporations. But in no other major industry in the world are all the leading companies private, family-owned, family-operated concerns right down to the last few issues of voting stock.

Flour mills, corn-compounding plants, and soybean-crushing installations often are as much symbols of status and prestige for a country as an airport and an international hotel. But multinational companies rather than local governments are often in control of these facilities. They supply the capital, procure and install the technology, supervise the operation of the plants, control the procurement of the raw materials, and set up the local distribution systems for the dissemination of the processed products. Domination of the grain trade routes is to be found in the companies' investments in transportation, grain loading, shipping, grain processing, and grain distribution on all continents.

If the grain business was a half-brother of the shipping business, it was also a close relative of banking and finance. In a sense, the companies were like giant banks. Enormous amounts of cash flowed through their treasuries. Warehouse receipts, which represented grain in company inventories, were accepted as negotiable financial instruments at most banks. Grain was excellent collateral, since bankers could keep tabs on its value at all times simply by checking the futures quotations in the daily newspapers.

The list of countries in which the best land, the access to commercial credit, and the best services go either to large commercial farmers, government cooperatives, or plantations involved in the agricultural export trade (rather than production of wheat, beans, cassava, corn, or other human foods) is too long to recite here. Whether the country is Indonesia or Bolivia, similar sights can be seen: peasant hovels hugging the side of a barren hill while the fertile valleys are given over to export crops.

In all of these countries, American agricultural imports are an underpinning not only of the food system but of the power base of the regime. The interlocking interests of the regime, the grain trade, the locally based multinationals, and the American farm bloc are not difficult to untangle. Agricultural imports are, to begin with, a means of maintaining the status quo. The availability of the imports makes it possible to postpone radical domestic reform, land redistribution, and the redirection of credit to different sectors of the society.

As this suggests, food imports play a much more complex role than just feeding hungry people. The imports shore up a coalition of interests that include local political groups, US farm lobbies, agribusiness, the grain trade and other multinational companies, and banks; where US bases or strategic outposts are involved, it extends to the Pentagon as well.

Venezuela 'seizes' British ranch

http://news.bbc.co.uk/2/hi/americas/4375817.stm

Venezuela has declared a huge British-owned cattle ranch to be state property and handed out permits for local farmers to take over the land. Mr Chavez has vowed to push ahead with a "war to the death against large landed estates, regardless of who the alleged landholders are".

Revolution on Venezuela's estates

http://news.bbc.co.uk/1/hi/world/americas/4721961.stm

One of Britain's richest men, Lord Vestey, says he'll fight the Venezuelan government to stop hundreds of peasant farmers taking over land on his cattle ranches in South America. The Vestey meat group is one of a number of big land owners affected by President Chavez's controversial reform proposals, which he says are part of a package of measures designed to help the country's poor.

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Monday, October 3

Islamic Common Market a Step Closer -- Single Currency

by mammon on Mon 03 Oct 2005 08:45 AM AKDT

The ongoing globalization towards a single economy, single currency is continuing, now in the Arab states. This has dire implications for the US dollar. Currency Wars?

Islamic Common Market a Step Closer

http://english.aljazeera.net/NR/exeres/95E93539-27BF-443E-A3C1-863A01F85C87.htm

The first World Islamic Economic Forum has called for the establishment of an Islamic common market and floated a series of initiatives to boost business cooperation among Muslim nations.

http://www.guardian.co.uk/comment/story/0,3604,1270414,00.html

There were only two credible reasons for invading Iraq: control over oil and preservation of the dollar as the world's reserve currency.

In 1999, Iran mooted pricing its oil in euros, and in late 2000 Saddam made the switch for Iraqi oil. In early 2002 Bush placed Iran and Iraq in the axis of evil. If the other Opec countries had followed Saddam's move to euros, the consequences for Bush could have been huge. Worldwide switches out of the dollar, on top of the already huge deficit, would have led to a plummeting dollar, a runaway from US markets and dramatic upheavals in the US.

Moving Towards a Single Arab Currency

http://english.aljazeera.net/NR/exeres/6472D68F-7D5D-4F37-A7AE-C345CEF5117B.htm

There has been a fair amount of scepticism towards the proposed Corporation Council for the Arab states of the Gulf single currency. All six sovereign currencies are pegged to the US dollar. It seems that at present there is little appetite - at least publicly expressed - to move away from the dollar peg, let alone consider invoicing future oil sales in Gulf dinars. Reasons given for maintaining the status quo include the fact that the dollar is the de facto currency of international trade and that Opec oil sales are invoiced in dollars. It is also a fact that GCC governments hold vast sums of dollar-denominated assets, such as US Treasury bonds. A move away from the dollar would see more uncertainty as to the value of these assets.

However, the dollar peg is not the optimal choice for the region's economies. As GCC economies mature and attempt to diversify away from dependence on hydrocarbons, the utility of the dollar peg needs to be critically examined. One key problem with the dollar peg is that it effectively means that GCC central banks have outsourced their decision-making powers on interest rates to Alan Greenspan of the US Federal Reserve. Not having independent monetary policy tools can be problematic, particularly in terms of combating inflation and encouraging growth. As a consequence decisions on whether or not to cut, hold or hike rates are based on economic conditions in the US and these are not always the most appropriate for the GCC. It is often the case that the US economy will grow robustly when oil prices are low while GCC economies will either experience low levels of growth or stagnation.

There is also increasing concern over the size of America's federal debt, which is almost $8 trillion. Its budget deficit this year alone is expected to be $600 billion. In recent years the US economy has been characterised by substantial budgetary deficits. It consistently spends more than it earns. As a result, the US is becoming more and more dependant on foreign countries willing to hold dollars in their reserve accounts and buy its Treasury bonds. Essentially the US Federal Reserve prints paper - Treasury bonds and dollar bills - and swaps these for commodities such as oil and consumer items such as Chinese household appliances.

If GCC states were to start shifting some of their dollar-denominated assets into euro-denominated ones prior to currency union, it would provide a good hedge against the expected downward decline in the dollar. Even more significantly if, post-currency union, the GCC decided to allow the purchase of oil in euros along with the Gulf dinar and other currencies, they would see their euro assets appreciate massively, as a greater number of oil-importing nations would hold higher levels of euros in reserve and therefore increase its value.

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Saturday, October 1

Waiting Beat Snap Snap

by mammon on Sat 01 Oct 2005 11:25 PM AKDT

Money – Songs and Poems Selection

Ferlinghetti, I am Waiting

I Am Waiting

I am waiting for my case to come up

and I am waiting

for a rebirth of wonder

and I am waiting for someone

to really discover America