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ReQuote: A smooth dollar collapse?

June 15, 2009

The following paragraph is being requoted,reproduced and reblogged in its entirety because of the ramifications of dollar, crude,economics and the lesser mistress politics. With some of the right wing non observing fellows coming left,right and square at me and asking me how I should join their band of Obama bashing  for his Cairo speech.

Read it, its good:

With California entering bankruptcy and Brazil, China and Russia unleashing the whip on the reserve currency and treasury bulls, a new financial age has begun.

The sole reserve currency status was mainly maintained by the low oil price and an artifical oil-peg which could be viewed as an oil standard, indeed. Rather than Gold, the Dollar was backed by foreign oil. But this relationship is very fragile. And how fragile it has become was demonstrated by President Obamas attempt to smooth tensions with the Arab world within his speach given in Kairo.

But it revealed that politics now enter a phase of extreme difficulty. The same conflict which had been maintained in order to control oil producing countries, the same conflict now turns against the policy it was created to support. How difficult things are was shown by the actions taken by President Obama during the last weeks. For the first time in many years, an US president was slightly critizising his allies; a very difficult task, especially as many of his supporters at home might have been offended by this move. In order to make up for this, he had to visit Buchenwald, in Germany, and give a new speach in order to gain acceptance from his home support base. But when he visited Germany, he did not reach out hands nor did he visit Germany! Many Germans were deeply offended by President Obama, and they asked themselves how a president who keeps torture camps in Guantanamo and Afghanistan, how the same president could dare to educate the world about the “bad Germans”. Some asked how US citizens would feel, if the German Chancellor would visit a native american reservation, without visiting Washington. Certainly they would not be amused.

Now, turning back to the viewpoint of economy it shows the dilemma for the US eonomy. The existing alliances do not serve any longer in order to stabilize the US Dollar. That will increase geopolitical tensions as existing Alliances will be broken and new ones will be created. In the midst of this crisis, the oil peg starts to fail and so does the US Dollar. China, Brazil and Russia are now strating to sell off treasuries and soon the marketplace will be oversupplied and become illiquide.

The last days of the sole reserve currency have started. The free fall of the Dollar will come along with it. Will it be smooth? Or will it come overnight? that is the last question, to which no one has an answer, yet.

via The Financial Crisis Blog

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