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["Dan Wilson" <sipacate AT hotmail.com>]

I've been reading this Iraq stuff. Here is another point of view. 

 

Currently oil is traded in dollars and has been so for a long time. This has the effect of creating an artificial demand for US currency.  This is significant because the demand for our currency is what allows the US economy to run huge debt. It also stabilizes us as the de facto economic leader in the world. It is as good as the gold standard, without having to rely on gold.

 

See, if a country wants to purchase oil, and all of them do, they must have dollars. End of story.

 

 

(This might help explain why there isn't large government pushes to move away from petroleum. We'll get to that in a minute)

 

Iraq, saddled with the terms of the Oil for Food program cut a deal with its largest trading partners to sell oil in Euros. The Euro trades slightly higher which meant more profit, and helped Iraq move away from the Evil currency, the US dollar. Can you guess who the largest trading partners were?  Thats right, Russia, France and Germany. Coincidentally the same group who were against the war.

 

Since currencies float, meaning they are bought and sold and adjust according to market demand, movements in currency valuations can destroy a Countries economy.  If you want proof of that, have a look at the much beloved George Soros, of factcheck.com fame.  Thats right, George Soros made billions of dollars shorting British Pounds. This caused the devaluation of the British Pound and economic trouble for the British. But that wasn’t enough. He also shorted the Currency of Thailand (bhat) and the currency of Malaysia (ringgit). (see http://www.sorostrading.com/art_obrien.html for more details). These actions transferred wealth from the reserves of Thailand and Malaysia to Mr. Soros.  Incidentally, they caused economic collapse in those countries. Some say that economic crisis in Thailand and Malaysia kicked off huge fluctuations in Asia and triggered the Asian financial crisis.  Remember banks in Japan going bankrupt, Riots in Indonesia etc? (Check 1997-2000)   

 

So back to Iraq, had Iraq been successful in removing a share of Petrodollars from circulation the US would then find itself in a bad position.

 

1)       The country with the second largest petroleum reserves has moved to Euros.

2)      The Europeans aren’t as disliked in that segment of the world.

3)      The Euro is trading at higher levels than the dollar.

4)      The European Union isn’t running deficits like we are.

 

Had this trend been allowed to continue, the powerful US economy would have been ruined.  The stock market collapse of 2000-2002 coupled with the negative economic effects of September 11 already had the US economy shaken. A worldwide move from Petrodollars to PetroEuros would have sent this country down the tubes.

 

So faced with economic ruin, the United States decided to rely on military force to secure economic dominance. Remember, if all of a sudden, other nations don’t need to have reserves of the US dollar, the demand for US treasuries down WAY down. When we can’t sell US treasuries and have to devalue the US dollar the following occurs:

 

1)       The interest rates skyrockets.

2)       Federal spending must severely decline.

3)       Social programs are slashed.

4)       Jobs are lost in massive numbers.

5)       People o hungry.

While rather doomsdayish, I draw this from Thailand and Malaysia where recent rapid currency devaluation occurred.

 

 

When George Bush says “America is safer without Saddam Hussein in power”, he is absolutely correct. You can believe oil-producing nations will think twice before moving off the US dollar.

 

So talk about wrong war, wrong time. Talk about weapons of Mass destruction. Talk of links between Hussein and Bin-laden. A movement away from the US dollar in international transactions would cause a much worse calamity than any number of planes hitting the World Trade Center.

 

This partially explains why War with Iraq was bound to occur. Being defeated militarily hurt Hussein and he struck back with a much powerful weapon, international finance.