Senor Barborito wrote:

Zebco Fuckface wrote:

Senor Barborito wrote:

Written at 1PM after an all-nighter:

First off, this article is associated with some of the indymedia community in some way, which is twice as bad as slashdot, so procede with skepticism. Fortunately the author seems about 1 billion times saner than Noam Chomsky, which is vaguely approaching sanity. The language is still heavily pro-left.

http://www.ratical.org/ratville/CAH/RRiraqWar.html

Thanks to the heavy amount of number-crunching I did for that one oil-statistics post, I can tell you without even blinking that his numbers for amount of oil in the world/various nations for the last few paragraphs are dead fucking on. I don't know enough about macroeconomics (I messaged a friend at Goldman-Sachs for his opinion, reply forthcoming hopefully) to say much about the top 3/4s of the essay, but this seems like a good explanation as to why the war. The bottom 1/4 of the article is true, or some statistics people at both OPEC and the US DOE have some explaining to do.

Synopsis: OPEC is teetering on the brink of shifting from the US dollar to the Euro. The Euro has gained 17% against the dollar recently, and Iraq's conversion of the world's second largest supply's worth of petro-dollars into petro-euros may be the tip of the spear of a larger movement if we don't act now. The widely-publicized (hit mainstream media) CIA involvement in attempting to back a coup against the democratically elected Venezulan President was an attempt to prevent exactly this conversion in the world's 4th largest oil supply. Iran, the world's 3rd largest, is strongly considering such a move - and the widespread civil unrest in Saudi Arabia means the #1 source of oil (roughly equivalent, off the top of my head, to Iraq, Iran, and half of Venezula's put together) might also convert if the House of Saud fell.

The end result of this would be an international run on the dollar, dropping its value 20-40%, and the Great Depression all over again here at home. The article suggests the current war is a power grab by the oilmen controlling the US government to prevent this economic collapse.

The funny thing is, all of a sudden this has made me sort of pro-war for entirely selfish reasons. The destruction of the American economy is all well and good after my ability to get medication is no longer tied directly to it - but this is not the case now nor for the next few years at least.

Assuming this is the reason behind the war - and if you look at who is for/against the war internationally, you'll notice the article's thesis lines up DEAD THE FUCK ON besides making a whole lot of sense in general - I kinda wish we'd been told outright. "Folks if we don't win this war we're all going to starve in an economic collapse that makes the Great Depression look like the Dot Com Boom." Considering this analysis comes from the side that hates Bush & crew . . . well fuck.

--SB

This is painful to write, as you've obviously put a lot of thought into it, but that article is complete horseshit. No economist would take it seriously.

He doesn't understand the role of currency. A 20-40% decline in the dollar would have little or no effect on the real US economy; foreign trade simply isn't a big enough component of GDP (12% or so), and we've had declines that big before with no ill effects. It looks like he's applying the currency-run model of 3rd world countries to the US, and there's just no basis for that; the only reason the 3rd world is vulnerable to currency crises is that, basically, due to their past history of defaulting a lot, and currency peg/devaluation crises, people expect them to do it again. The US does not suffer from these expectations.

As an illustrative example, look at the following passage, quoted approvingly:

He said that the United States dominates other countries through its currency, noting that given the superiority of the dollar against other hard currencies, the US monopolizes global trade. The lawmaker expressed hope that the competition between euro and dollar would eliminate the monopoly in global trade.

Repeat after me: currency is simply something you exchange for real-world goods, and to first order only those goods matter. For various technical reasons, the US gets a benefit of maybe .2% of GDP from our status as the world's reserve currency, but that's it.

The US does not "have a monopoly in global trade." For example, the EU exports more than we do, but we import more than EU does. Does that sound like a monopoly to you? Check out this table; note that the US only does 12% of the world's total merchandise exports, and 19% of the world's total merchandise imports. The numbers for services are comparable.

I'm not even sure what the hell he's talking about with competing currencies. If you want to understand what he's sort-of implying here, a self-reinforcing run on the currency, pick up a copy of Krugman's The Return of Depression Economics.

I got a few-page response back from my Goldman friend while I was sleeping and although I can't parse much of it, the bulk of it is:

a) this area is his specialty
b) in the short-term, the article is wrong because the G8 *NEEDS* to keep the dollar strong
c) if the article was right, why aren't we bombing Switzerland [I'll have to point out that Bush has a vested personal interest in petro-dollars next time he's on]?
d) Germany and Japan are FAR more export-dependent than we are, and this article really applies more to third-world countries than first
e) in the long-term, however, the article is quite probably correct

IOW it'd be an interesting analysis if it wasn't being applied to our current situation. I'll see if a gentle reminder of the administration's vested interests changes his answer - he's in some areas as far-right as I am left and tends to forget those things.

Unfortunately he forgot to answer my 'is it OK if I post your response' question at the end, so I'll wait until I see him online again and ask before posting the full text. I'd say it was informative but the man makes me look like a mewling kitten in econ to the extent I do to him regarding tech.

--SB