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Friday, January 13, 2006

Iran and Venezuela: How they threaten American stability

Am taking a break right now, while finishing up a client's website. And while perusing through the news I found this article at the Washington Times (disclaimer: they ain't my favorite news source) about Hugo Chavez, the president of Venezuela. He's proposing starting-up a "Bank of the South" that would provide loans to countries in South America, as a direct competitor to the U.S.-directed International Monetary Fund.

Herein is the real reason why Chavez is so thoroughly despised by many among America's political and financial leaders, and it has nothing at all to do with Chavez's leftist inclinations: Chavez is moving the lower half of the Western Hemisphere out of Washington's control. Bear in mind that several countries south of us have become financially depleted over the past few decades: obviously from corrupt leadership but plenty of it has to do with these countries being in perpetual hoc to foreign interests. That Argentina's government took out such outrageously large loans so recklessly is inexcusable: for that alone, the people of that country and others should have had their "leaders" strung up from the nearest telephone pole by their circular reproductive units with piano wire. But the IMF should never have granted the loans to begin with. IMF's behavior in all of this has been like a bartender who keeps the beer coming even though the customer's obviously had too much to drink. They should have known that there'd be nothing but trouble coming out of this, absolutely must have been aware of what kind of characters they were trusting this money with, but they kept sending the dough down south anyway. The ineptitude of these countries's leaders guaranteed that there was no way the loans could be reasonably repaid: it became loansharking on a grand scale. And over time this is how a lot of countries in South America came to be controlled - however indirectly - by governments thousands of miles away.

So now with Argentina's debt paid off, Venezuelan president Chavez is actively taking steps to make sure that U.S.-led interests won't be financially dominating his region any longer. Say what you will of Chavez: between this, and financing a new South American news network to compete with U.S. media, he is fostering a kind of independence for South America that hasn't really been known in modern times. And this time there's no cut in it for the politicians in Washington and their financial backers. No wonder Pat Robertson wants to kill the guy: Chavez is going to cut off a reliable influx of money toward his neighbors north of the equator.

But whatever Venezuela is doing right now is nothing compared to the threat posed to the United States by Iran... and it has nothing to do with possible nuclear weapons. That's just a pretext tossed out to the American people to distract them from the real reason why the warhawks are now trying to drum up support for an attack on Iran.

For the longest time now, the global oil trade has been done with the U.S. dollar. And that's about all that's really propping up the dollar right now: American money has become such a fiat currency that without the circulation of dollars through oil commodities, there is scarce little reason for other countries to keep using the dollar for much of anything. It's scary, but true: American financial stability is dependent upon the value of the dollar as the sole unit of exchange on the oil market. If another currency starts getting used, it will devalue our dollar significantly. And so far nothing has threatened - or been allowed to threaten - our hold on that.

But now Iran is positioning itself to finally break the U.S. grip on petro-currency.

This coming March, Iran will start up its oil bourse. For the first time oil trading will not be done in dollars, but with another currency: the euro. Remember not so long ago when the European Union was first getting the euro started, and how almost worthless it was? Under Iran's plan, other countries will begin paying for oil on its bourse in euros, drastically increasing that currency's value. The U.S. dollar meanwhile - either incrementally or almost immediately - will be dumped as the de facto unit of exchange... and will certainly suffer an incomparable loss in value. If you think inflation is bad now, you ain't seen nuthin' yet...

Does anyone really think that in the face of this kind of financial threat, that the holders of power in the United States won't try something to stop Iran from going through with its bourse? Call me overly-suspicious, but it wouldn't surprise me one bit if it turned out that one of the - if not the - real reasons we invaded Iraq three years ago was because Saddam Hussein had moved the trade of Iraq's oil off the dollar and onto the euro. Iraqi oil was again being bought with the U.S. dollar just a few months after we took over the place. If Iraq was deemed to be even that much a threat to western financial stability - to whatever a degree it was - what is going to happen when Iran attempts the same thing... only far bolder in design?

If this were all a game of chess, it would seem so classic: the king is caught between the knight of the south and the rook of the east. The pawns and pieces are almost exhausted. And there is very little that the United States can do at this point to stay out of checkmate. Between the growing financial independence of Latin America and the possible undercutting of its monetary value by a mid-east enemy nation, the United States faces a severe failure of its economic and foreign policies almost entirely across the board.

The thing of it is, America didn't have to have been caught in a pincer like this. But we've traded away so much of our industry to other countries, and left so little for ourselves... what else is there left, but to practically expect that our "leaders" will lash out in vain desperation?

This is the kind of thing that I think about, when I'm not working on something else.

Okay, break's over. Time to get back to designing that website.


Anonymous said...

Mr. Knight, I just joined Triadblogs recently and clicked onto your site by chance. It will become a habit as I appreciate someone who is aware of the world beyond his backyard. I become quite upset sometimes when young people get excited about the little snowballs when the avalanche is tumbling towards them. A few weeks ago the little gasoline tax was outraging people who were bithely unaware of, and couldn't care less, what Washington had done to them with the pork laden Transportation Bill. And, now the House has approved and sent to the Senate a budget cutting bill that will greatly reduce funds to programs essential to North Carolina. Oh well it was spitting in the wind because I am sure no one read it. Entitled "Much Ado About Nothing" Much http://triadblogs.com/BrendaFayBowers/ I apologize that I am not the writer you are, but I do stumble along.

Chris Knight said...

Hey Brenda,
I just left a note on your blog. I like yours a lot, 'specially yer take on education here in Guilford County :-) Thanks for the kind words and good lady you are QUITE a writer!! Well I think so anyway :-)

God bless,