not about oil but .. save the wells, page-12

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    Sorry if this has already been posted but it does have some relevence to this thread

    cheers


    By Geoffrey Heard
    Melbourne, Australia

    Summary: Why is George Bush so hell bent on war with Iraq? Why does his
    administration reject every positive Iraqi move? It all makes sense when
    you consider the economic implications for the USA of not going to war
    with Iraq. The war in Iraq is actually the US and Europe going head to
    head on economic leadership of the world.

    America's Bush administration has been caught in outright lies, gross
    exaggerations and incredible inaccuracies as it trotted out its litany
    of paper thin excuses for making war on Iraq. Along with its two
    supporters, Britain and Australia, it has shifted its ground and
    reversed its position with a barefaced contempt for its audience. It has
    manipulated information, deceived by commission and omission and
    frantically bought UN votes with billion dollar bribes.

    Faced with the failure of gaining UN Security Council support for
    invading Iraq, the USA has threatened to invade without authorisation.
    It would act in breach of the UNs very constitution to allegedly
    enforced UN resolutions.

    It is plain bizarre. Where does this desperation for war come from?

    There are many things driving President Bush and his administration to
    invade Iraq, unseat Saddam Hussein and take over the country. But the
    biggest one is hidden and very, very simple. It is about the currency
    used to trade oil and consequently, who will dominate the world
    economically, in the foreseeable future- the USA or the European Union.

    Iraq is a European Union beachhead in that confrontation. America had a
    monopoly on the oil trade, with the US dollar being the fiat currency,
    but Iraq broke ranks in 1999, started to trade oil in the EU's euros,
    and profited. If America invades Iraq and takes over, it will hurl the
    EU and its euro back into the sea and make America's position as the
    dominant economic power in the world all but impregnable.

    It is the biggest grab for world power in modern times.

    America's allies in the invasion, Britain and Australia, are betting
    America will win and that they will get some trickle-down benefits for
    jumping on to the US bandwagon.

    France and Germany are the spearhead of the European force - Russia
    would like to go European but possibly can still be bought off.

    Presumably, China would like to see the Europeans build a share of
    international trade currency ownership at this point while it continues
    to grow its international trading presence to the point where it, too,
    can share the leadership rewards.

    DEBATE BUILDING ON THE INTERNET

    Oddly, little or nothing is appearing in the general media about this
    issue, although key people are becoming aware of it - note the recent
    slide in the value of the US dollar. Are traders afraid of war? They are
    more likely to be afraid there will not be war.

    But despite the silence in the general media, a major world discussion
    is developing around this issue, particularly on the internet. Among the
    many articles:
    Henry Liu, in the Asia Times last June, it has been a hot topic on the
    Feasta forum, an Irish-based group exploring sustainable economics, and
    W. Clark's The Real Reasons for the Upcoming War with Iraq: A
    Macroeconomic and Geostrategic Analysis of the Unspoken Truth has been
    published by the Sierra Times, Indymedia.org, and ratical.org.

    This debate is not about whether America would suffer from losing the US
    dollar monopoly on oil trading - that is a given - rather it is about
    exactly how hard the USA would be hit. The smart money seems to be
    saying the impact would be in the range from severe to catastrophic. The
    USA could collapse economically.

    OIL DOLLARS

    The key to it all is the fiat currency for trading oil.

    Under an OPEC agreement, all oil has been traded in US dollars since
    1971 (after the dropping of the gold standard) which makes the US dollar
    the de facto major international trading currency. If other nations have
    to hoard dollars to buy oil, then they want to use that hoard for other
    trading too. This fact gives America a huge trading advantage and helps
    make it the dominant economy in the world.

    As an economic bloc, the European Union is the only challenger to the
    USA's economic position, and it created the euro to challenge the dollar
    in international markets. However, the EU is not yet united behind the
    euro - there is a lot of jingoistic national politics involved, not
    least in Britain - and in any case, so long as nations throughout the
    world must hoard dollars to buy oil, the euro can make only very limited
    inroads into the dollars dominance.

    In 1999, Iraq, with the world's second largest oil reserves, switched to
    trading its oil in euros. American analysts fell about laughing; Iraq
    had just made a mistake that was going to beggar the nation. But two
    years on, alarm bells were sounding; the euro was rising against the
    dollar, Iraq had given itself a huge economic free kick by switching.

    Iran started thinking about switching too; Venezuela, the 4th largest
    oil producer, began looking at it and has been cutting out the dollar by
    bartering oil with several nations including America's bete noir, Cuba.
    Russia is seeking to ramp up oil production with Europe (trading in
    euros) an obvious market.

    The greenback's grip on oil trading and consequently on world trade in
    general, was under serious threat. If America did not stamp on this
    immediately, this economic brushfire could rapidly be fanned into a
    wildfire capable of consuming the US's economy and its dominance of
    world trade.

    HOW DOES THE US GET ITS DOLLAR ADVANTAGE?

    Imagine this: you are deep in debt but every day you write cheques for
    millions of dollars you don't have - another luxury car, a holiday home
    at the beach, the world trip of a lifetime.

    Your cheques should be worthless but they keep buying stuff because
    those cheques you write never reach the bank! You have an agreement with
    the owners of one thing everyone wants, call it petrol/gas, that they
    will accept only your cheques as payment. This means everyone must hoard
    your cheques so they can buy petrol/gas. Since they have to keep a stock
    of your cheques, they use them to buy other stuff too. You write a
    cheque to buy a TV, the TV shop owner swaps your cheque for petrol/gas,
    that seller buys some vegetables at the fruit shop, the fruiterer passes
    it on to buy bread, the baker buys some flour with it, and on it goes,
    round and round - but never back to the bank.

    You have a debt on your books, but so long as your cheque never reaches
    the bank, you don't have to pay. In effect, you have received your TV
    free.

    This is the position the USA has enjoyed for 30 years - it has been
    getting a free world trade ride for all that time. It has been receiving
    a huge subsidy from everyone else in the world. As it debt has been
    growing, it has printed more money (written more cheques) to keep
    trading. No wonder it is an economic powerhouse!

    Then one day, one petrol seller says he is going to accept another
    person's cheques, a couple of others think that might be a good idea. If
    this spreads, people are going to stop hoarding your cheques and they
    will come flying home to the bank. Since you don't have enough in the
    bank to cover all the cheques, very nasty stuff is going to hit the fan!

    But you are big, tough and very aggressive. You don't scare the other
    guy who can write cheques, he's pretty big too, but given a 'legitimate'
    excuse, you can beat the tripes out of the lone gas seller and scare him
    and his mates into submission.

    And that, in a nutshell, is what the USA is doing right now with Iraq
 
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