Wednesday, December 16, 2009

Scotland's Special Relationship

Yep, it's very comforting cosying up to the US. I mean ok - wars on terror, torture and rendition flights and the like is all part of the downside of having a Big Man on your team. However when the mighty $ talks everyone listens. And with a Big Man like that Britain can strutt around lording it up on the world stage. Think of those benefits before you go off into the independence sunset..

That was then.

In today's Telegraph we read:

Gulf petro-powers to launch currency in latest threat to dollar hegemony

What are those pesky Arabs talking about? Oil gets sold in $s, so everyone needs to buy $s if they want oil and so that creates demand for $s and so the price of the $ is held up. With all the US hardware in the region bossing everyone around, the Arabs wouldn't dare, no?

The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts.

..Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

..The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.

"The US dollar has failed"? Seems all that money printing by the US Fed isn't impressing anyone. Waow, what's gonnie happen in the playground when Britain's Big Man is expelled? And Brown has been printing even more. No Big Man and sterling devaluation, gulp..

It seems that the reasons for staying in the union are melting away like snaw aff a dyke..


Bob said...

I must admit I doubt if they would ever manage to get a united currency going. The Gulf Co operation Council seems to bicker all the time over the most mundane subjects. They still have 3 day waits at border crossings for each others goods lorries. Every country has it's own method of customs despite so called common agreements. Try going from Saudi to Bahrain to Dubai. Each country has different rules for foreigners and fellow Arabs. The thought of them having a common currency is an oilpipedream.
And of course they are all wary of Iran so would you then have two oil currencies in the area as they wouldn't be able to agree anything with them. Saudi being the 'superior' Sunni to Iran's 'inferior' Shia.

Alex Porter said...

Hi Bob,

Interesting. The article mentions something like that. With all the probs the Euro is having sticking together, it's tough to see how the Arabs can co-ordinate.

Iran's shifting to the € but the € is looking very shoogley. The Chinese are making good moves to make the RMB a reserve currency but it's still some time off..

I dunno if some gold-backed currency would work. What's failing right now are 'fiat' currencies..

Who knows what will emerge. It seems that the $ is losing cred fast! What will fill the void?

Someone who discusses this on internet radio a lot is Jim Willie of and

Bob said...

Hi Alex
Yes all the fiat currencies seem dodgy now.
I checked out those websites you mentioned. Some interesting stuff. The max keiser site is my favourite. Lots of good info but funny aswell.