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Nickelless
Penny Hoarding Member
USA
817 Posts |
 Posted - 07/03/2008 : 15:58:00
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I got to thinking, what keeps OPEC from switching from the dollar to, say, the euro right now, given the dollar's weakness? Can the U.S. really put any pressure on OPEC to keep oil prices tied to the dollar? I realize of course that if in fact OPEC were to switch from the dollar, it would be seen as a no-confidence vote against the dollar and would have catastrophic consequences around the world because of how widely held dollars are around the world, but is switching from the dollar to any other currency a real option for OPEC, and if it were to do so, what would happen?
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Bid your heart out on my copper cent auctions : http://search.ebay.com/_W0QQsassZyellowbanks42301 |
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Ardent Listener
Administrator
USA
2212 Posts |
Posted - 07/03/2008 : 16:06:10
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| I don't really know, but OPEC must be holding a lot of dollars now and to do so might shoot themselves in the foot.........so to speak. |
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Delawhere Jack
Penny Pincher Member
USA
247 Posts |
Posted - 07/03/2008 : 16:24:47
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I've read that the Saudis alone hold $1.5-2 trillion. I agree with Ardent, switching to Euros would hurt their interests, but with the dollar declining they may just decide to bite the bullet. They've already seen the value of the dollars they hold lose approx. 60% of their value this century.
With the vast majority of that wealth in the hands of only a few thousand people, they can easily take the hit. How many 200 room palaces and personal 747's can they buy anyway. |
"Can the liberties of a nation be sure when we remove their only firm basis, a conviction in the minds of the people, that these liberties are a gift from God?" - Thomas Jefferson |
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fb101
Penny Collector Member
USA
491 Posts |
Posted - 07/03/2008 : 17:58:30
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| If they ever do, our silver will be worth about $750 an ounce. |
A taxpayer voting for Obama is like a chicken voting for Frank Perdue |
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legacypac
Penny Hoarding Member
Canada
877 Posts |
Posted - 07/03/2008 : 18:25:45
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quote:
Originally posted by fb101
If they ever do, our silver will be worth about $750 an ounce.
Or your dollars worth about 3 cents Canadian (Canada - the northern oil exporter) |
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scooter
Member
81 Posts |
Posted - 07/03/2008 : 19:08:30
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| that why bush is hugging and shaking there hands constantly. |
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swusc
Penny Collector Member
420 Posts |
Posted - 07/03/2008 : 19:50:07
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You can't just look at the purchasing power of dollar. It is only one side of the issue. Yes the dollar has lost a lot of purchasing power since say 40s. Does that matter if their investments increased enough to totally offset that loss, so net, net they are still ahead.
Let me start out with my knowledge of the Saudis is very limited. What I have read (the authors could be full of crap) ---- Saudis don't have a lot of economic resources outside those oil reserves. When they run out, then they are going to be living on that massive amount of investments. $2 trillion sounds like a ton of money. Heck it is a ton of money. Yet, to run a country for a long time...it is nothing. Look at it this way. Let's say they can make 8% and dollar based inflation is 4% (I am not sure about taxes for foreign governments investments inside the U.S. but I will assume they don't have to pay any) That is 4% net that they can consume or $80 billion (in 2008) dollars. They have currently around 27.5 million people. $3000ish a person in investment income. Their GDP is around $21,000 a person, but 45% of that is from oil. When the oil runs out, then that country is in trouble. They need to find away to grow the economy outside oil.
Our Grandkids might get to see a middle east that doesn't matter in the world big picture. The rest of the world will let them fight and not really care. Just like Africa right now. No other country's interest will be at stake, and they will just let them make it or not on their own.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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starwarsgeek171
Penny Hoarding Member
USA
564 Posts |
Posted - 07/04/2008 : 08:52:31
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For now, we have common interests that will be protected by the full might of the U.S. military. The Saudis will not jeopardize that relationship.
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misteroman
Moderator
USA
1159 Posts |
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Ponce
Penny Pincher Member
Cuba
171 Posts |
Posted - 07/04/2008 : 11:38:54
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Everything is born and then it dies..........why not the dollar?
Would you bet on a dying or sick horse? that's the dollar. |
"If you don't hold it, you don't own it"...Ponce |
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pencilvanian
1000+ Penny Miser Member
1857 Posts |
Posted - 07/04/2008 : 18:26:16
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Food for thought:
http://tinyurl.com/3ortoh
The people in the Middle East exchange their oil for US Dollars, the US thinks it is getting a bargian (getting oil for depreciating paper money)
Smart people in the Middle East exchange their depreciating paper US Dollars for gold, (maybe they realize the oil will someday give out and they will need something of real value to see them through when the oil is gone and the US Dollar is viewed as little more than scrap paper.)
Besides, the oil producing countries can exchange their US Dollars for Euros, and there is the concern that if the US goes down economically, there goes their best customer. Why ruin your best customer? Most likely the oil producers will keep accepting US Dollars to exchange for food and commodities ad will onlydo a switchover to Euros or some other currency when the US is no longer the #1 consumer of oil.
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fb101
Penny Collector Member
USA
491 Posts |
Posted - 07/04/2008 : 18:49:15
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quote:
Originally posted by pencilvanian
[Most likely the oil producers will keep accepting US Dollars to exchange for food and commodities ad will onlydo a switchover to Euros or some other currency when the US is no longer the #1 consumer of oil.
That will be pretty soon. China and India with their populations will soon make us trivial as consumers. Their populations are increasing and ours are declining. |
A taxpayer voting for Obama is like a chicken voting for Frank Perdue |
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swusc
Penny Collector Member
420 Posts |
Posted - 07/04/2008 : 20:04:41
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Well I don't think these countries are buying gold/silver with those dollars. A store of value is not going to work. They need investments that produce income. If they just wanted a store of value, then why not just leave the oil in the ground? You are doing a lot of work if all you wanted was a commodity (since you already had one).
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Ponce
Penny Pincher Member
Cuba
171 Posts |
Posted - 07/05/2008 : 10:57:54
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| If they were to swich from the dollar it would be like if they were shooting themselves on the foot...........however.........better than shooting themselves in the head if they don't swich. |
"If you don't hold it, you don't own it"...Ponce |
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If OPEC were to switch from the dollar...
