Niall Ferguson: Dollar Is Doomed, U.S. Empire Over

Niall Ferguson did an excellent interview with Aaron Task on Tech Ticker this morning. He touches on many of the long-term secular points that I have detailed. Ferguson addresses the historical comparison of the UK vs the USA. He thinks the U.S. dollar is essentially doomed and that it represents the end of the U.S. empire as we know it. You can read my detailed analysis here.

Part 1:

Part 2:

Part 3:

Comments

[Living4Divi...:]

Graham and Dodd Investor - You are also correct, they DID run out of U-boat commanders. This is because many of the U-boat commanders wound up in Davy Jones Locker. :)


On Oct 20 06:56 PM Graham and Dodd Investor wrote:

> The Germans didn't lose the U-boat war because they ran out U-boats.
> They lost the U-boat war because they ran out of experienced U-boat
> commanders (from World War I).
>

Oct 21 01:20 PM

[Plant the s...:]

Brick,
I am encouraged by the very modest uptick in capacity utilization over the past 2 months. But I do share your concern about the degradation of skills and human capital as the short term unemployment stretches to a long term unemployment problem.
Something needs to be done to retrain or remploy these people before they become the permanent free riders and hold back the economy, I agree with Bill Gross's concern on this point.
On Oct 21 11:12 AM bricki wrote:

> I think that the view that the devaluation of the American dollar
> means the fall of America is cart before the horse. The strength
> of the dollar derives from the productivity of the US economy, not
> the reverse.
>
> Yes it is quite the case that our fiscal house is not exactly in
> order. However that is not a unique occurrence in American history.
> It has indeed happened several times that the dollar has had to be
> devalued, taken off the gold standard and so forth. During the 19th
> century there were cases where we even ran completely out of gold
> and had to borrow some.
>
> Other empires have also gone through crises of this nature and done
> fine.
>
> The issue here is that we have poor capacity utilization. Unless
> that is reversed we will lose significant productive capacity. That
> will be hard to recover.

Oct 21 01:20 PM

[Living4Divi...:]

Bob - I may not agree with all your points, but your comment was well-written and well supported point of view

Niall Ferguson has no crystal ball, but he offers a very plausible version of the future. This "future" is by no means a certainty, the course of events can be changed by taking different actions now.

Likewise, the pollyannas who say "The US and the US Dollar will be back to its former boom days" Offer a plausible but less likely version of the future.

No one has a crystal ball. If they did, they'd be the wealthiest person on the planet.

On Oct 20 05:49 PM bob adamson wrote:

> As a Canadian observer of the US situation and in anticipation of
> direr predictions and recriminations concerning current trends in
> US society as others post comments to this article, I suggest that
> the analysis by Dr. Ferguson should not be viewed as portending imminent
> and unavoidable doom for the US. Beyond doubt the US faces serious
> difficulties and the way forward is not clear or easy. That said,
> all the mature and emerging economies face uncertainty and challenge
> and the large majority of them see it to be in their interest that
> the US succeed in meeting its challenges. While there will be much
> debate between nations on the details and the best road forward and
> a certain amount of jockeying about for advantage, most appear prepared
> to work together at the long and difficult task of economic recovery
> and see the necessity that the US continue to be a prime player in
> these efforts.
>
> Like the UK before it during the 70 or so years following the Franco-Prussian
> War, the US will continue to be the first among equals (even though
> the emphasis in that phrase will be somewhat more on the ‘equals’
> part) for the foreseeable future. There is no reason why its citizens
> should not remain economic, cultural and political leaders; only
> that others will (as they should in a better world) share these roles
> to a somewhat greater degree. There are many examples (Venice, the
> Netherlands, France etc) of nations which have continued to flower
> and whose citizens have continued to prosper and grace the world
> with their insights and accomplishments after losing unchallenged
> predominance as a world power.
>
> No nation can expect to be far and away the undisputed preeminent
> economic, social and political world power for all time and the US
> position during the 30 years following WW II was in large part a
> reflection of the centuries long eclipse of China and India, on the
> one hand, and the impact of the two World Wars on Europe and Japan,
> on the other. It is not a sign of moral decay or a just cause for
> recrimination or falling into a funk that other nations will increasingly
> share in some measure the prominence and relative prosperity that
> the US enjoyed in the immediate post WW II period. History will judge
> the US (and its people will prosper or decline) on how wisely the
> US gives and shares leadership in the world and deals with its own
> internal economic, social and political issues in the future; not
> on whether it was able to cling to the trappings of some imagined
> preeminent world status.
>
> There will, naturally, be much debate about what the US should do
> to recover from the current recession and play its optimal role in
> the immerging new economic order. I’ll conclude with two suggestions.
> They are not conventional and your not necessarily expected to agree
> with either the premises of conclusions. The point is simply the
> there is much to reconsider.
>
> First, the US dollar has been the world’s reserve currency since
> 1946 and, despite its many current problems, it is by no means clear
> that there is a substitute waiting in the wings to take its place.
> It remains the currency of account for international trade even though
> it is increasingly losing its standing as the undisputed measure
> of value (a trend that has its roots in the 1970s). Other nations
> accept (even if they will complain about it) that the US cannot resolve
> its share of the current debt bubble crisis without monetizing some
> portion of that debt. In short, the US, the UK and some other countries
> will have to engage in some currency devaluation but, provided this
> is done in a considered and organized manner over time in concert
> with all affected countries this need not end the US dollar role
> as the premier reserve currency or hurt the US economic position
> (it may in fact help the position). It must, however be seen to be
> a necessary part of a fair and responsible effort to place the global
> economy on a sound footing. In short, no one should expect the US
> to retrace the mistakes of the UK in the 1920s in its misguided defense
> of pre-war value of the Pound.
>
> Secondly, the US employment remuneration model developed in the 1940
> must be rethought. By this I mean the pattern first developed in
> the auto manufacturing industry whereby employers became the primary
> source of health insurance, retirement income and other benefits
> for US workers. Some might argue (as was done by many during the
> GM reorganization last winter) that these benefits should be radically
> reduced or ended. Arguably his would be a mistake and it would be
> much better economically as well as socially if the national and
> state governments took on a significantly larger share of this benefits
> provision load from business, funded these matters through taxes
> and offered these benefits generally to citizens.
>
> This would place small and large companies on a level playing field
> in the competition for employees, promote greater labour mobility,
> improve employee and citizen moral, allow management to focus more
> on their core business plan and remove the advantage that foreign
> companies from mature economy nations have (their labour costs are
> lower insofar as the benefits component is concerned). Obviously
> there is a tax cost for this and the challenge would be to find efficient
> and effective ways to design and administer these programs (and ensure
> that an appropriate share of these costs are covered by personal
> and not business taxes) so that this shift creates a net economic
> benefit. The difficult political case would have to be made for significant
> tax increases but, if that could be done to support military spending
> during the Cold War and beyond, this should not necessarily be seen
> as impossible provided a sound case can be made.
>
> Contrary to conventional thinking on both the left and right in North
> America health and retirement income need not be simply employment
> issues to be shaped through employee/employer negotiation with winners
> and losers. There are sound business reasons for considering the
> shift described above and the alternative of only increased labour
> strife and grinding down employment benefits costs is self defeating.
> North America (Canada as well as the US) risks being left behind
> as other nations develop better business models concerning remuneration
> and benefits through employment. We focus now on the off shoring
> dimension of this issue but, arguably, the cheap labour challenge
> is a temporary phenomenon.
>
> Clearly many will argue against the two suggestions just outlined.
> So be it. The key is that there be an opening of thought and not
> a narrowing of the options considered. My fear is that in our impatience
> and relief now that the immediate crisis has passed we will neglect
> to ask the deeper questions and make the difficult structural measures,
> some of which I suggest earlier in my comments. This would be tragic.

Oct 21 01:30 PM

[bob adamson:]

untrusting investor –

The Netherlands model and the Swiss model both are quite successful and share many of the features you find attractive. Both, as I understand it, establish a firm public policy framework respecting the nature and scope of health care and health care insurance that must be available to their citizens (and government funding for low income citizen coverage) but leave it to private insurers to actually offer health insurance; that insurance having to be made available by each insurer to all prospective customers at the government established rates and services coverage.

As you say, Dutch insurers attract customers by offering enhanced coverage and service at the fixed rates. The Swiss model precludes insurers from offering medical insurance for profit.

In a very broad sense, one can almost say that the Swiss and Dutch have devised successful ‘public utility’ frameworks for the funding and delivery of medical services and have done so in ways that encourage useful competition and diversity. I may personally like the Canadian or Taiwanese models but that is a reflection of the history in which I grew up.

From my perspective, the point to be drawn from these two models is there are middle ways between the private sector free market, on the one hand, and a government bureaucracy, on the other, and these can be conceived of in any country, in accordance with its traditions, provided one is not too constrained by ideological constraints.

bob adamson


On Oct 21 03:36 AM untrusting investor wrote:

> Bob,
> We would suggest you look at the Netherlands model and what they
> have done with their healthcare system. PBS/Nightly Business Report
> did a short interview/mini-documen... on it. It looked very impressive
> and very cost effective as well. And for the Americans, who are often
> opposed to "government programs", the Netherlands program is 100%
> run by the private insurance companies there, has 100% citizen coverage,
> and is relatively cheap ($160/month/person) for basic coverage. It
> also has many other impressive qualities from the short documentary,
> not the least of which is a comment by one of the Dutch insurance
> company CEO's who comments "we can't compete on price (all offer
> basic insurance at the same price), so we compete on service quality,
> consumer satisfaction, doctor satisfacton, etc." ... now wouldn't
> all Americans (and Canadians) love to have a system like that. They
> compete on the things that really matter to everyone's benefit, including
> the insurance companies. That is the LAST thing that happens in the
> US under the present system.

Oct 21 01:42 PM

[bob adamson:]

Mr. Wrixon –

I think you misunderstood my first comments to this article. I agree that the US faces serious challenges and, as a citizen of another country, don’t presume to tell citizens of the US that they must do this or that to respond to those challenges. I simply make the point that there the future need not be one of US decline (although other nations will also rise in prominence) and that it can be a good future for all concerned. Other than that, I suggested that the US needed to take innovative measures of its own choosing to stabilize its economy and currency and simply illustrated that point by outlining two proposals (which I choose deliberately to be ‘outside the box’) to encourage discussion and creative thinking.

bob adamson


On Oct 21 03:32 AM Dave Wrixon wrote:

> You are deny the seriousness of the situation. America is going to
> lose it global dominance and even sooner than Ferguson states. The
> US is a long way from being globally competitive. It may have attracted
> capital in Real Estate and Retail markets, but unless it can do the
> same for productive industries many of which need to be low tech
> as well as high tech, then you are in serious trouble. To do this
> Companies have to be competitive, workers need to be competitive
> and so do Governments. Taxes need to be low but not on a condition
> of ballooning deficits. Because of the blatant mismanagement and
> impending interest rate rises, the Federal Government needs to cut
> its debt even in the face of a looming recession. Workers will not
> only have to pay more taxes either directly or indirectly, but they
> will have to do it from a wage packet that that is going to shrink
> significantly in buying power. OK, some of this will be achieve through
> dollar depreciation, but that will mean a huge hike in energy cost,
> and it is likely that Federal Government will have to start taxing
> fuel in line with other major economies. But even this will not be
> enough. Many workers if not most will see wage freezes and more wage
> cuts. Only by doing this do you have a cat in hell's chance of retaining
> sufficient investment capital for companies to compete. It is, however,
> much much more likely that the US will become a source of investment
> capital for every other economy in the World as the Dollar "carry
> trade" develops. If that happens, with currency controls the economy
> will plummet and the Government will be unable to service it debts
> because it tax base will have shrunk too far.
>
> In the short, the American Century was last century. This one is
> going to prove really tough. Even if you act now and act decisively,
> it may already be too late to turn the situation around with a complete
> meltdown. And the there is a yet no serious debate on what needs
> to be done, let alone the formation of the political will to implement
> a solution. Too many Americans think that Obama is either doing fine
> or needs to do much more of the same. It is the Road to Hell. Did
> I mention the education deficit that will take a generation to turn
> around?

Oct 21 02:03 PM

[Angel Martin:]

I don't expect either to pass, based on INtrade current forecast, and my own estimate. I think health care has almost zero chance of passing. Cap and trade might pass, but it could be unwound if global warming proves bogus.


On Oct 21 10:20 AM tripleblack wrote:

> [quote Angel Martin] If I see any large new social programs implemented
> under circumstances of near bankruptcy, it would be a sign of accepting
> decline and trying to manage it. As such, it would be a huge sell
> signal for the $US. [quote]
>
> I agree. The Federal Government is now reviewing several major new
> programs that fit that bill to a "t". Though the wrangling is drawing
> out, and allowing the markets some breathing room for the time being,
> Health Care and Cap & Trade are both moving through Congress,
> and likely to see passage, with results that will make the analogy
> to the UK you mention stronger.
>
> I expect passage of these massive social programs to have a negative
> effect on the markets, with the effects spread out slightly since
> Health Care will hit first (probably starting early in 2010 with
> the passage of the legislation, but spread out over the next 4 years
> or more until the program actually takes hold and is installed).
>
>
> Cap and Trade, which directly impacts the entire economy of course,
> will have a greater impact and earlier, as those gauging its likely
> passage move pre-emptively to position themselves. This will follow
> closely on the heels of the Health Care bill, compressed by the political
> pressure wave created by the 2010 Election cycle which will be a
> trip line for major legislation. Should Cap & Trade fail to gell
> before the politicians flee Washington to campaign for their jobs,
> Cap & Trade will sit, waiting.

Oct 21 02:13 PM

[tunaman4u2:]

When people are fearful, buy... greedy, sell...

That worked in March with the market and banks....

It WILL work again with the anti-USD panic, crowded trade right now

Oct 21 02:16 PM

[bob adamson:]

Living4Dividends –

I agree with you that these are questions to ponder and think in new ways about. It is a time for cool heads, innovative thoughts and timely but not dogmatic or premature conclusions. As a foreigner I think the US will come out of this fine but it will be a long and sometimes difficult process. There are no quick fixes but there is also no assured doom by any means either.

bob adamson


On Oct 21 01:30 PM Living4Dividends wrote:

> Bob - I may not agree with all your points, but your comment was
> well-written and well supported point of view
>
> Niall Ferguson has no crystal ball, but he offers a very plausible
> version of the future. This "future" is by no means a certainty,
> the course of events can be changed by taking different actions now.
>
>
> Likewise, the pollyannas who say "The US and the US Dollar will be
> back to its former boom days" Offer a plausible but less likely version
> of the future.
>
> No one has a crystal ball. If they did, they'd be the wealthiest
> person on the planet.
>
> On Oct 20 05:49 PM bob adamson wrote:

Oct 21 02:19 PM

[Lexy:]

I believe the inference was "financial" empire and not in the context of an imperial power in the classic sense.

On Oct 20 11:58 PM Teutonic Knight wrote:

> Wait a Minute, Professor Ferguson, did you say "American Empire"?
>
>
> The video reminds me of a related good read from another British,
> Professor Bernard Porter's "Empire and Super-Empire" where it would
> perfectly illustrate such profound, absurd and outdated Anglo-Saxon
> views of the United States of America.
>
> The notion of an "American Empire" is a cold case in history, akin
> to an Ultimate Mystery - An Empire that never was. Unlike the illustrious
> Roman Empire which at least had the Five Good Emperors (and Hadrian
> was a Standout, kicking in the Hadrian Era), the Americans are either
> an ultimate hypocrisy, or an God-ordained benevolence to Mankind.
> Toward the end of the 19th Century, President McKinley was pursuing
> his expansionary policies while Mark Twain adamantly advocated anti-colonialism
>
>
> We took over the Phillippines after a brief and brutal war only to
> giving it up after some 50 years, and now we are saddled with a 20
> plus-year wait backlog of would-be immigrants from that now independent
> country .
>
> In short, we are forever caught in that giant space of indecision
> - to be, or not to be - An Empire!
>
> Admittedly, we had been in rapid decline, economically, politically,
> and morally (my view) ever since the sixties, and the two mainstream
> political parties are now in a state of decay.
>
> As for the Chinese? Well, only the fools would think that they are
> our friends, and we theirs. Since our involvement of their Civil
> War in 1949, and continuing to this date as I write, you could well
> count on that hegemony tug of war between these two powers.
>
> America is still a bit of a mystery to me as a foreign-born person.
> It is perhaps the hardest country to be understood in the history
> of all mankind.
>
> Teutonic Knight

Oct 21 02:33 PM

[Lexy:]

I would be careful not to underestimate this adversary. China is the midst of the fastest, most prolific military modernization in the history of the world. They are licensed to build Sukhoi fighters, and they have made several notable improvements that have surprised top engineers at several Russian design bureaus. We would be foolish to engage them in naval littoral warfare, e.g. the defense of Taiwan, as they have developed an anti-carrier ballistic missile for which we have no countermeasure. I would argue that the notion of a carrier battle group as the centerpiece of a power projection strategy is Jurassic mainly due to the advent of AIP-equipped diesel subs.

Just fyi, we stopped building battleships when the Germans bombed Pearl Harbor.


On Oct 20 07:03 PM Steve Pasq wrote:

> China will become more important in world affairs over the next few
> decades but only by degrees. The China/Brazil alliance is still in
> the chump change category. Chinese workers may be sophisticated enough
> to build furniture and cell phones but space stations, battle ships
> and drones are made in the USA and by the time China figures those
> things out we will be on to something that obsoletes them.
>
> Americans are also pretty good at financial innovation and I will
> predict that the US will refashion the dollar into the world currency
> that China wants to buy--into say "mega dollars" and then let the
> Chinese exchange their "ancient dollars" for the new currency at
> a 10-1 rate. Everyone's happy.

Oct 21 03:12 PM

[Tony Daltorio:]

If America is not an empire, then why do we have our troops all over the globe, poking our nose into everybody's business in many places where they are not needed and are resented?

FYI - This poster is constantly waving the flag and hates everything non-American - attacking Europeans, Chinese and all those other "fur-ners".


On Oct 20 06:28 PM Tony Petroski wrote:

> Dr. Ferguson is a typical British wet and he belongs in the safe
> confines of Harvard although he apparently is infecting Annapolis
> as well.
>
> 1) America isn't an "Empire." Thus, we don't suffer as we have to
> pull back from our "global committments" and get tired of doing the
> defense work of the Japanese and the Europeans.
>
> 2) We will emerge from the Carter Administration II also known as
> our normal dose of Democratic malaise.
>
> 3) The Chinese are a fine and creative people, but aircraft carriers
> and nuclear submarines cost lots of money. We'll see how their infrastructure
> spending holds out as they attempt to become a regional power.<br/>
>
> 4) The Germans never were able to become a naval power even though
> the Bismarck was a marvel as it sank under the waves. The German
> U-Boat was a menace to shipping, but there were only so many of those
> they could produce before they too were at the bottom of the ocean.
>
>
> 5) All Americans know not to trust the word of anyone named "Niall,"
> again, see earlier comment on the British wet.

Oct 21 03:25 PM

[Truth teller!:]

For Dollar bears this article is a must read:

"Last week, the global currency markets were rattled by the detonation of what some analysts saw as a monetary nuclear bomb of cosmic proportions.

A report in a British newspaper claimed sensationally that Gulf oil-producing states were in secret talks with China, Russia, Japan and France to end the pricing of oil in US dollars and move to a basket of currencies.

Such a move, which would tie in with long-nursed concerns about a weakening US dollar and the pile-up of excessive US government debt, would (if confirmed as true) signal the beginning of the end of the dollar's status as the preferred currency of global trade (or the global 'reserve currency').

The report was denied by all the principal players, but given these uncertain times, it sounded plausible to many, and the dollar fell in response. Countless other doomsday scenarios for the dollar abound, and not a day passes without some over-the-top hyperbolic pronouncement by 'dollar bears' about the 'coming collapse of the dollar'.
click here

The perception that even the US administration, skating on thin ice economically and politically, seems to favour a weak dollar to rebalance its economy has amplified the bears' growls. Yet, the conspiracy theories about the imminent erosion of the dollar's status as reserve currency and the emerging alternatives are wide off the mark and low on economic and realpolitik wisdom.

'Reserve currencies' do not come about as a result of political negotiation among a few players, in the way the British newspaper report implied; they come about organically over years, perhaps decades, on the strength and financial depth of the underlying economy, the convenience of using that currency, and the network effect of many others using it.

One economist likens it to using the Windows operating system for your computer; sure, it's expensive and has bugs, and sure there are freeware alternatives, but it's more convenient to use Windows because 'everyone else is using it'. And like Windows, reserve currencies enjoy an 'incumbency advantage': unless a new currency can demonstrate that is offers vastly superior benefits, it cannot dislodge the entrenched one.

The choice of a reserve currency also comes with an implicit bargain: the underlying economy has to run trade deficits and current account deficits to provide liquidity to the rest of the world.

It must also open itself up to the risk of seeing hostile governments or traders short-sell your currency for political or economic reasons, as is happening with the dollar today. Not everyone wants that responsibility and the headache: just ask China, which is clamouring the loudest for a change from the dollar standard.

Most of the 'dollar bear' growls you hear today are motivated by power politics or profits. In China's case, its concerns over the dollar have forced US policymakers to tone down their rhetoric on China's currency manipulation and its human rights record.

Similarly, the most extreme 'death to the dollar' chants come from 'bullion bulls' who expect to gain from higher gold prices when the dollar weakens. Every uptick in the price of gold in US dollars is celebrated, despite the fact that against other currencies like the Australian dollar, gold prices have actually fallen over the past six months.

Even in India, it's true that gold prices have appreciated about 45 per centsince their recent low in October 2008. But over the same period, the Sensex has returned 70 per cent, which puts the 'gold rally' in perspective.

All this is not to say the dollar won't weaken in the short term; it will. And over time, as other economic powers rise and US' share of the global economy shrinks, other reserve currencies could organically emerge.

But the only ones who are profiting from short-term volatility driven by market hysteria of a 'dollar collapse' are dollar bears and bullion bulls who are looking to make jackasses of us others."

Source: www.dnaindia.com/opini...

Oct 21 05:09 PM

[User 357705:]

Very interesting what a year will do. Last year a few were saying USD is finished and Duhmerica is a has been. Those that did were flamed and banned from SA. These days it appears that there is a consensus that in fact USD is toast and Duhmerica is going down in flames. Yes, there are many who still are drowning in the kool-aide but its good to see many more who aren't. Too little too late however.

Oct 21 06:32 PM

[Dave Wrixon:]

Hmmm. Another distortion of history perhaps, like the famous American capture of the enigma machine?


On Oct 21 10:29 AM Living4Dividends wrote:

> Graham and Dodd Investor - actually, the Germans lost the U-Boat
> war because the US invented new techniques and technology for finding
> and destroying the U-Boats. Spotter planes, sonar and improved convoy
> techniques spelt the end of "Das Boot"

Oct 21 06:32 PM

[Liz:]

"Free market" ... what a joke.


We have a two-tiered banking system:


1. If you're a small bank and you make a mistake, you go bankrupt.

2. If you're a big bank and you make a mistake, Uncle Sam declares you a "systemic risk" and writes you a check for your trouble!


On Oct 21 12:24 PM Commercial Mortgage Loans wrote:

>
>
> We are seen as unserious right now; unserious about defending western
> (free market, free people) values, and unserious about our fiscal
> situation.
>

Oct 21 09:24 PM

[swissfrank:]

The Germans lost the U-Boat war for many reasons. Easily the most important was the success of Bletchley Park decrypts of Shark, the enhanced security Enigma code. This was a British, not an American deal. Shark intercepts meant rerouting convoys away from submarine 'wolf packs'. Long periods of being nable to read Shark corresponded to periods of high, near critical shipping tonnage loss.

Other factors in the story include the arrival post 1943 of longer-range planes able to accompany convoys for more of the Transatlantic crossing (this was the USA) and as usual some pretty crazy decisions by Hitler not to give more support to Doenitz for the campaign.

But without the Shark intercepts, it would have been a close thing.


On Oct 21 10:29 AM Living4Dividends wrote:

> Graham and Dodd Investor - actually, the Germans lost the U-Boat
> war because the US invented new techniques and technology for finding
> and destroying the U-Boats. Spotter planes, sonar and improved convoy
> techniques spelt the end of "Das Boot"

Oct 22 01:29 AM

[Dave Wrixon:]

Unfortunately, the Plausibility is highly dependent on the Gullibility of those doing the analysis, and there is no shortage of that.


On Oct 21 01:30 PM Living4Dividends wrote:

> Bob - I may not agree with all your points, but your comment was
> well-written and well supported point of view
>
> Niall Ferguson has no crystal ball, but he offers a very plausible
> version of the future. This "future" is by no means a certainty,
> the course of events can be changed by taking different actions now.
>
>
> Likewise, the pollyannas who say "The US and the US Dollar will be
> back to its former boom days" Offer a plausible but less likely version
> of the future.
>
> No one has a crystal ball. If they did, they'd be the wealthiest
> person on the planet.
>
> On Oct 20 05:49 PM bob adamson wrote:

Oct 22 03:17 AM

[Dave Wrixon:]

And you sort of forgot that British invented Radar and handed it to the Americans on a plate not as much as brass cent in Royalties.

On the positive side for the US, without them there would have been no ships to protect, but much of the operation seemed to involve handing over British Gold Reserves.

Of course none of us could have won the War without John Wayne. He was everywhere.


On Oct 22 01:29 AM swissfrank wrote:

> The Germans lost the U-Boat war for many reasons. Easily the most
> important was the success of Bletchley Park decrypts of Shark, the
> enhanced security Enigma code. This was a British, not an American
> deal. Shark intercepts meant rerouting convoys away from submarine
> 'wolf packs'. Long periods of being nable to read Shark corresponded
> to periods of high, near critical shipping tonnage loss.
>
> Other factors in the story include the arrival post 1943 of longer-range
> planes able to accompany convoys for more of the Transatlantic crossing
> (this was the USA) and as usual some pretty crazy decisions by Hitler
> not to give more support to Doenitz for the campaign.
>
> But without the Shark intercepts, it would have been a close thing.
>

Oct 22 03:23 AM

[Dave Wrixon:]

The truth is the Gulf States have a plan to pool their currency similar to the Euro. Originally there were six but Oman pulled out and Dubai spat its dummy out over proposals to base the central bank in Riyadh, but Kuwait, Bahrain and Qatar appear to be committed. OK, that might sound like Saudi and a bunch of small places. but the move is nevertheless highly significant.

All the currency are currently pegged to the dollar. There would be no point forming a common currency if there was not an intent to float freely against the dollar. That would seem to suggest that in future oil will be price not in Euros as has been suggested but in an extension of the Saudi Rial. This effectively means that the days of oil being priced in dollars is rapidly coming to a close. Who knows, perhaps they will all start pricing in the Saudi currency, float their individual currencies for a bit and then fix them at something close to market value?

However, it clear that is the beginning of the end of commodities being priced in dollars, even if they are still quoted in Chicago that way. The reality is that pricing is going to switch over to be a bit of a mish mash. In areas like oil where sellers have control, pricing is likely to be done in the currency of the seller. Gas in Europe will certainly be priced in Rubles. The prices of more competitive commodities will probable end up as a mixture of Euro and Yuan depending which buyers has more power. Airlines will probably settle for the Euro because of Geography. Gold may well still be priced in US Dollars as they are likely to become a major seller.


On Oct 21 05:09 PM Truth teller! wrote:

> For Dollar bears this article is a must read:
>
> "Last week, the global currency markets were rattled by the detonation
> of what some analysts saw as a monetary nuclear bomb of cosmic proportions.
>
>
> A report in a British newspaper claimed sensationally that Gulf oil-producing
> states were in secret talks with China, Russia, Japan and France
> to end the pricing of oil in US dollars and move to a basket of currencies.
>
>
> Such a move, which would tie in with long-nursed concerns about a
> weakening US dollar and the pile-up of excessive US government debt,
> would (if confirmed as true) signal the beginning of the end of the
> dollar's status as the preferred currency of global trade (or the
> global 'reserve currency').
>

Oct 22 03:38 AM

[wavelength:]

It is true that the British acheived some great breakthroughs at Bletchley Park and did indeed crack some of the German ciphers. However, the Germans also used many "one-time codes" that could not be broken. The big break actually occurred because a German U boat commander allowed his code book to be captured. It is believed he was afflicted with a conscience and so deliberately let it fall into Allied hands. Perhaps we could take up the themes of "conscience", "betrayal" and "treason" in trying to understand the current actions of the Fed and the Whitehouse. The Empire is falling from within and the policies being embraced have a demonstrable track record of failure. As Angel Martin has pointed out, this is not an ideological argument - it is an historical one.

Oct 22 10:36 AM