[R-G] FW: [ratch-the-pterodactyl] Global Financial Markets Bailing Out of U.S.?
u_majeed at straight.com
Tue Jul 29 01:05:00 MDT 2003
From: Jon Frederick [mailto:smiile at psynet.net]
Houston, July 28 (RTP)-- A number of developments in the global financial
markets have reflected a growing international discontent with the United
An article in this week's issue of Germany's Der Spiegel reports that
European Union Commission President Romano Prodi said he expects Russia to
soon handle its crude oil and natural gas exports to the EU in euros,
instead of dollars. Russian President Vladimir Putin wants to "drastically
upgrade relations to Europe," Prodi said, referring to close contacts he
has to Russian policy-making circles. Hints in this direction have
repeatedly been made, earlier, in Russian media, but this is the first
time a leading European Union politician has confirmed it.
This announcement comes while Venezuela is considering switching to the
Euro, and many Islamic oil-producing nations are considering switching to
a gold-backed Dinar. Among Saddam Hussein's many acts of defiance toward
the United States was his switch to the Euro for Iraq's international oil
The strength and stability of the U.S. dollar is derived largely from it's
preeminence as a reserve currency by foreign central banks. The current
account deficit of the United States during the first quarter of 2003 was
a record 136 billion dollars. This means that the rest of the world is
exchanging about 1.5 billion dollars worth of real commodities every day
for pieces of paper, that are backed only by international confidence that
they can be exchanged again later for real commodities.
In a related development, a report by the Bloomberg news service says that
the European Central Bank is eliminating its holdings of debt issued by
Freddie Mac and Fannie Mae, the two biggest U.S. providers of mortgage
financing, and has recommended that its national central banks do the
Meanwhile, the price of gold, known historically as an inverse indicator
of the strength of the dollar, closed at $364.30/ounce today on the New
York spot market, approaching a seven-year high of $380/ounce.
Every time a forest falls; every oil spill, every time a cancer patient
is diagnosed, the "gross domestic product" goes up. Is this how we
measure economic progress? Economists must learn how to subtract.
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