In Case You Think Bernanke Has any Real Power
“We don’t want the dollar to collapse instead of doing something good for Opec”. - Saudi Prince Saud Al-Faisal. See below. This kind of thing has to make you nervous if you have any savings in the dollar or U.S. stocks. I’m telling you, it’s not that hard to open a Swiss bank account (or so I’m told-if anyone out there wants to open one for me, go right ahead.)
SOURCE
Saudi minister warns of dollar collapseSaturday, 17th November 2007
The dollar could collapse if Opec officially admits considering changing the pricing of oil into alternative currencies such as the euro, the Saudi Arabian foreign minister has warned.
Prince Saud Al-Faisal was overheard ruling out a proposal from Iran and Venezuela to discuss pricing crude in a private meeting at the oil cartel’s conference.
In an embarrassing blunder at the meeting in Riyadh, ministers’ microphones were not cut off during a key closed meeting, and Prince Al-Faisal was heard saying: “My feeling is that the mere mention that the Opec countries are studying the issue of the dollar is itself going to have an impact that endangers the interests of the countries. “There will be journalists who will seize on this point and we don’t want the dollar to collapse instead of doing something good for Opec.”
After around 40 minutes press officials cut off the feed, which had been accidentally broadcast to the press room.
Prince Al-Faisal added: “This is not new. We have done this in the past: decide to study something without putting down on paper that we are going to study it so that we avoid any implication that will bring adverse effects on our countries’ finances.”
Iran and Venezuela have argued that the meeting’s final communique should voice concern about the level of the dollar, which has recently fallen to new record lows against the euro. They are pushing for oil to be denominated against a basket of currencies.
The greenback also weakened slightly against the pound, although sterling’s own recent weakness has pushed it down from $2.10 to $2.0457 during the week.
Nigerian finance minister Shamsuddeen Usman said that Opec could declare in the communique that: “While underlining our concern for the continued depreciation of the dollar and its adverse impact on our revenues, we instruct our finance ministers to study the issue exhaustively and advise us on ways to safeguard the purchasing power of our revenues, of our members’ revenues.”
Chancellor Alistair Darling will today urge his fellow finance ministers at a major G20 summit to increase investment in oil production and refinement.
If you have US cash, like Federal Reserve Notes, bank accounts, money market funds, or CD’s, they are indeed wasting assets. The same cannot necessarily be said for US stocks. Large cap industrial and tech stocks in companies that export to Europe and Asia will probably do quite well. During the Weimar Republic monetary meltdown, the price of stocks went up right along with everything else, until such time as people were fueling their furnaces with paper money.
Nice point and correction by Jive Dadson. Should have been more specific . . . you’re right on.
Yes, but will those few companies be able to hold the remainder of the stocks; enough to give investors the perception that the market is, at the very least, stable? After all, the market, to a large extent, is all about perception.
And what’s to say that, as an investor, I don’t just put some of my money into export and move the rest to China where it’s Yahoo all over again…except this time with all stocks.
The market is about supply and demand. Perception just adds ripples. But China is the next wave. Today I bought Petro China and a couple of companies that are building hamburger joints in China, BKC and YUM.
Crashes are about perception though; don’t you think?
I agree with KirkT, it is all about perception. Supply and demand determine market outcomes, but the perceptions (expectations) of both supplers and consumers shape the actual outcome. Tulipomania. The houseing bubble. The great depression (should be called the great panic). Most people are stuck thinking about only short term consequences and not the long term costs and benefits. The world is full of ups and downs…you just have to learn how to ride through them.