The leadership vacuum in the world is going to have serious consequences. In the comments on my recent post about artificial stupidity, I had a friendly disagreement with my friend Bob on the merits of the G. W. Bush presidency. To say the least, I am not of fan of Mr. Bush. However, let me say that under Bush the world did have a leader and a bad leader, in my opinion, is far better for the world than having no leader, which is where the world finds itself since Barack Obama became President.
The consequences of a leaderless world are playing out before our eyes. The chaos in Syria and Iraq and the Middle East in general as well as the chaos in Ukraine and all the finger pointing and sanctions and counter sanctions are the direct result of President
Zero’s Obama’s leadership from behind policy. This kind of chaos has the potential of leading to world war. (Think energy. Think Europe. Think about the coming winter.)
There is another leadership crisis in the world that may take center stage before the crisis discussed above gets totally out of hand. I’m talking the artificially designed leadership of the US Dollar in world finance establish by the major central banks back in 1971. The dollar’s defacto position as the world’s reserve currency has benefited the United States in many ways; not the least of which has been our ability to borrow on world markets at low interest rates. It has also given the Federal Reserve and the US Treasury powers over the financial institutions of other nations that are often not in their best interests.
It’s no secret that Russia and China, as well as, Brazil and India have been chipping away at the dollar’s hegemony by doing business with each other and with other countries in their own currencies, thereby avoiding the foreign exchange fees of converting to dollars. This has been particularly true when buying and selling oil _ attacking the petro-dollar. Now, as reported by Zero Hedge, it looks like some of America’s “friends” may be willing to join the BRICS in a war on the dollar. A piffle over fines placed by US on European (French) banks led to united front against the imperialist behavior of the US didn’t stop there, but allowed pent-up feelings over the hegemony of the US dollar to spill into the open:
A member of the European Central Bank by the name of Noyer had this to say about the ramifications of a fine placed the French bank, BNP:
… increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar
… A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi.
… We must not forget that it took decades after the United States became the world’s largest economy for the dollar to replace the British pound as the first international currency.
Sounds like rats will be living the sinking ship, USS Dollar.
Then the CEO of the giant French oil company, Total, had this to say:
“There’s no reason to pay for oil in dollars, he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.
Lastly, the Zero Hedge article has this quote from a Bloomberg interview with French Finance Minister, Michel Sapin:
“We sell ourselves aircraft in dollars. Is that really necessary? I don’t think so,”Sapin says, adding “I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade.”
“We can avoid the exchange rate risk, and that’s always useful. We can diminish financing costs in pricing more in other currencies,” Sapin says.
“This is not a fight against dollar imperialism,” Sapin says.
Hmmm…., if it’s not an attack against dollar imperialism, why would the Fiance Minister raise the point at all?
G-20 meetings ( the next one is in November) usually do not grab the attention of folks on Main Street. However, this next meeting may have some fireworks and they won’t be for Uncle Sam’s benefit. They may not actually declare their independence from the dollar, but they may give a kick to the ball that is already rolling in that direction.
Well, that’s what I’m thinking. What are your thoughts?