From: Ad 

Geo. wrote:
> "Gary Britt"  wrote in message
> news:4670583f$1{at}w3.nls.net...
>
>> WASHINGTON (AP) - Consumers brushed off rising gasoline prices and
>> slumping home sales to storm the malls in May, pushing retail sales up
>> by the largest amount in 16 months.
>>
>> The Commerce Department reported that retail sales surged by 1.4
>> percent last month, compared to April, double the increase that
>> analysts had been expecting. Retail sales had fallen by 0.1 percent in
>> April.
>
> Wow, 1.4% of which .9% is inflation. Oh and what are retail sales
> exactly, is that non-auto sales, you know, all that stuff that says
> "made in China"?
>
> Geo.

http://www.middle-east-online.com/english/?id=21098


"Wall Street, Iraq and the Declining Dollar

A mismanaged war, the oil crisis and a flood of US currency are setting the
stage for economic disaster, investment banker Ken Miller reports."

"And the Iraq War is at the heart of two alarming trends that are
likely to have a negative impact on America's position in the world: The
demand for oil is rising while the supply is declining, and the demand for
the US dollar is declining while the supply of dollars is rising."

"US oil and gas production peaked in the early '70s, and we are now by
far the world's largest energy importer. The largest oilfields in Saudi
Arabia, Kuwait, Iran, Syria, Yemen and Oman are in decline, as are most
oilfields in the former Soviet Union, Canada, Central and South America,
and on-shore Africa. New fields will be discovered and new technologies
brought to bear, but costs of production will be higher than in the past
and will require more expensive investments in equipment and technology.

Even as existing fields age, the new economies of India and China require
more and more oil to fuel their impressive growth. Although a worldwide
depression might result in a temporary drop in the price of oil and other
commodities, the long-term imbalance between growing demand and declining
supply will eventually reassert itself, creating price increases over time.

Contemporaneously with the supply/demand imbalance in oil and other hard
commodities, the Bush Administration's response to 9/11 has weakened the
position of the dollar in the world. The President's request that Americans
continue to spend has struck an all-too-sympathetic chord with the American
people. The trade deficits caused by that spending have created a current
account deficit equal to 6.2 percent of GDP, sending trillions of dollars
into the hands of foreigners.

While we continue to import goods of much greater value than those we
export, thus flooding the world with dollars, Bush has pursued a policy of
what some have dubbed "military Keynesianism" -- that is, the
combination of low taxes and high military expenditures. This dynamic
forces the Federal Reserve to print money and foster easy credit policies,
which will eventually result in higher interest rates, inflation or both.

So the printing presses are spewing out more dollars, which are being
collected by China, Japan and others. And those countries are showing signs
of concern that they have too much of their foreign exchange reserves tied
up in our currency. Likewise, certain other nations are evidencing a
declining interest in accepting the dollar as a medium of exchange. It was
in October 2000 that Saddam insisted that Iraq's oil be paid for in euros.
But now Russia wants payment for the energy it exports in rubles. Venezuela
and Iran insist on euros. Kuwait has recently unpegged its dinar from the
dollar in favor of a basket of currencies.

The dollar has indeed shown symptoms of its decline in popularity during
the Bush years. The dollar has weakened against the euro, gold, copper and
other hard assets and currencies. When Bush came in office, for example,
you could get .987 euros for every dollar. Now you can only get 75. You
could say that at $65 per barrel, oil is getting more valuable... or you
could say the value of the dollar has declined as measured by oil.

Mainstream economists seem to agree that best-case, the dollar will
continue a stately decline, but in a world where the United States has lost
so much respect, where we continue to flood the world with dollars and
borrow to finance our consumer habit, we could find that one of those
sharp, depression-inducing discontinuities occurs--like, say, a run on the
dollar.

We are continuing to import 60 percent of the 20.6 million barrels of oil
we use daily. And though the size and stability of our economy is likely to
insure a demand for the dollar at some level, oil that anyone can buy for
hard currency may be getting scarcer. Governments have begun to do deals
aimed at taking oil off the market for their own account -- deals like the
ones China has done with Angola, Brazil, Iran, Nigeria, Venezuela and
Sudan. South Korea has just announced it will follow suit.

If our military cannot secure oil by force, and if oil is destined to cost
us more and more of a declining currency to buy what is available, then
"brand USA" is in trouble. When Bush leaves office, this country
will have to begin the difficult task of reversing some very bad trends in
the military, fiscal, monetary and energy areas. The pollution of his
legacy transcends mere politics."


Adam

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