Implications of OPEC trading in Euros

[hypewaders]

William Clark (http://www.ratical.org/ratville/CAH/RRiraqWar.html) has long postulated that the invasion of Iraq had much to do with a perceived threat in Washington regarding petroleum trading. Being weak in economics, I'm appealing for an education in how a currency change in OPEC would affect the US. Is this another wild conspiracy theory, or is an OPEC switch to the Euro a likely and serious economic shakeup?

[Undecided]

It's a big deal for the US, very big deal indeed. If oil were being traded in Euros today, the prices of oil in the US would be astronomical. Since the US dollar is the standard currency (for now) price fluxuations are done with the US $. If it were done in Euros the US would lose the competitive advantage, and easily the international currency of choice would be the Euro. A even bigger worry for the US would be the anticipated Pan-Islamic currency that is currently being touted by Malaysia.

[ChildOfTheMind]

Ya... I concur, but basically I think the same, but kinda different

[hypewaders]

Coming back from time to time, I'm hoping that someone will address this, or critique it from an economics standpoint. From originally referenced link for this thread:

Although completely unreported by the U.S. media and government, the answer to the Iraq enigma is simple yet shocking -- it is in large part an oil currency war. One of the core reasons for this upcoming war is this administration's goal of preventing further Organization of the Petroleum Exporting Countries (OPEC) momentum towards the euro as an oil transaction currency standard. However, in order to pre-empt OPEC, they need to gain geo-strategic control of Iraq along with its 2nd largest proven oil reserves. The second coalescing factor that is driving the Iraq war is the quiet acknowledgement by respected oil geologists and possibly this administration is the impending phenomenon known as Global "Peak Oil." This is projected to occur around 2010, with Iraq and Saudi Arabia being the final two nations to reach peak oil production. The issue of Peak Oil has been added to the scope of this essay, along with the macroeconomics of `petrodollar recycling' and the unpublicized but genuine challenge to U.S. dollar hegemony from the euro as an alternative oil transaction currency. The author advocates graduated reform of the global monetary system including a dollar/euro currency `trading band' with reserve status parity, a dual OPEC oil transaction standard, and multilateral treaties via the UN regarding energy reform. Such reforms could potentially reduce future oil currency and oil warfare. The essay ends with a reflection and critique of current US economic and foreign policies. What happens in the 2004 US elections will have a large impact on the 21st century...

The `Dollarization' of national currencies is an integral part of America's Silk Road Strategy. The latter consists in first destabilizing and then replacing national currencies with the American greenback over an area extending from the Mediterranean to China's Western border. The underlying objective is to extend the dominion of the Federal Reserve System -- namely, Wall Street -- over a vast territory.
-William Clark Revisited - The Real Reasons for the Upcoming War With Iraq:
A Macroeconomic and Geostrategic Analysis of the Unspoken Truth (http://www.ratical.org/ratville/CAH/RRiraqWar.html#p4)

I would like to hear a credible refutation of these arguments. I'm also morbidly curious about what compounding failure in the Dollarization of world currencies would mean for American lifestyles.

[vodooeconomist]

*gets in Economics major mode* Ok, I'll try and explain this stuff in layman's terms.

"Otherwise, the effect of an OPEC switch to the euro would be that oil-consuming nations would have to flush dollars out of their (central bank) reserve funds and replace these with euros. The dollar would crash anywhere from 20-40% in value and the consequences would be those one could expect from any currency collapse and massive inflation (think Argentina currency crisis, for example). You'd have foreign funds stream out of the U.S. stock markets and dollar denominated assets, there'd surely be a run on the banks much like the 1930s, the current account deficit would become unserviceable, the budget deficit would go into default, and so on. Your basic 3rd world economic crisis scenario.

Two reasons Bush has gone to war in Iraq.

A) Preserve value of foriegn held US $. Since the dollar is so stable, lots of countries hold dollars in their reserves (in the form of cash money and bonds). And its stable because of high investor confidence in the stability of the dollar and the US. One reason (but not the only one) for this is that OPEC trades in dollars, making price fluctuations easy to compare. But if OPEC switched to Euros, countries would flush dollars from their reserves and replace them with Euros. Like the stock market, this massive sell-off of dollars would flood the market, causing its value to drop. And that would lead to economic havoc in the US (and eventually the world's) economy, unparalleled since the Great Depression.

B) Peak oil. Basically, the peak oil argument says that oil production exists on a bell curve. On the up-slope, oil is plentiful and easy to get at (and therefore cheap). But on the downslope, oil is hard to get at (with our current tech) and ergo expensive. The Peak Oil model is very pessimistic, and it says that we are already on the downslope, and that world oil supplies (that we can get at) will be exhausted as early as 2010. In theory, the Bushiosi control Iraq with a "government" that will sell oil cheaply to the US while the rest of the world experiences high oil/gas prices and general economic havoc. Personally, I am waiting to see more definitive evidence that would point either way on the topic.
See http://www.lifeaftertheoilcrash.net/Introduction.html

I am fairly sure about what I said about peak oil, but not as sure about the first part. I've only had intro Macro and Microeconomics... Intermediatemicro this fall!

[hypewaders]

This is a subject that a lot of people seem uncomfortable considering. With the EU already a larger economy than that of the US, it seems inevitable that Petroeuros are coming, and will apply a squeeze if not a crushing force upon the Dollar.

Peak Oil also seems to be a somewhat repressed subject, as if too depressing for many of us to consider seriously. I'm still learning, and haven't formed a clear opinion about Peak Oil. Thanks for the response, VE.

[vodooeconomist]

Funny thing happened to me today regarding the book "The Hidden Hand of American Hegemony: Petrodollar recycling and International Markets". I went out to Barnes and Noble to see if they had it in stock, and the woman at the info desk gave me a blank stare as she typed it into the search computer... And then stared at me again when it popped up as an actual book. I love being an Economics major :).

[hypewaders]

From what I have learned about the accepted model of Peak Oil, and that you have written, voodooEconomist, the Peak occurs around 2010 and is not depletion. The Peak Oil model doesn't speak of total depletion, or even refutes total depletion: Instead, it is postulated that there will always be billions of barrels of oil deep below us, being that it is a fundamental component of Earth's matter, but after 2010 the tide of fortune turns against the petroleum business because it becomes too expensive to bring to market at an acceptable price: Demand also surpasses supply from 2010 onward, also sending prices steeply higher, until at some not too distant point, the oil economy suddenly implodes without a replacement.

Critics of peak oil seem to be anticipating the miraculous invention of antigravity will suck oil up straws that are miles long, or a magical free energy that will squeeze oil out of shale, or a Derrick in Every Back Yard, would-be uppity Sheikhs in every detention camp, and a massive military empire that will make sure Americans get the Last Heapin' Helpin'. But that's all utter bullshit- widely accepted here in the USA- but nevertheless bullshit.

Combining this understanding of Peak Oil (and please refute it if you can), with PetroEuro conversion (also, refute it if you can), with Petrodollars as a primary underpinning to the US economy (an agreed given, I think), with general American govt and corporations increasingly unpopular globally (obviously), and with unprecedented national and personal debt in the US (ditto), it looks like the most reliable recipe for Trouble (with a very large capital "T") we have ever faced: Worse than 1929 Trouble.

I would like to hear from an economist, or budding economist, who can contribute to considerations I am seriously making, about getting my family's affairs in sufficient order to move away from the US if necessary and get a career established elsewhere, where a hydrogen economy can be expected to come online as or most quickly after the old economy crashes, because America's oil barons are going to run their country right over a cliff on the present course. I would prefer to make a move before a wave of American emmigrants becomes visibly imminent to everyone.

So come all you economists, and either allay my fears, or help motivate my escape.

[hypewaders]

OK now we have oil at $55 and climbing, months after the Saudis reassured America that they would boost output to hold the line for us, "No problem, my friend". But they haven't. While US is reassuring its public to relax, they're in good hands- while the Strategic Petroleum Reserve is being frantically added to like never before. Meanwhile OPEC is under unprecedented political and economic strain. If OPEC goes out like ENRON soon, we could witness the triggering of a series of mutually-resonant distribution interruptions. I am worried that in terms of Dollar-per-Barrel (more) and Euros-per-Barrel (less) there could soon come the implications of which I write. Yes? No? Maybe? So:

[guthrie]

If your looking for places to move to, I would recommend thinking about various points.
Such as:
1) what alternative sources of energy are there that could produce H2?
2) is there sufficient farming capability to feed itself?
3) Is it not too overburdened with natural resources, for being so tends to encourage an extractive economy and you end up like large parts of South American and Africa.
4) can you speak the language and like the culture?
Scotland would be a great place if I could be in charge of it for a few years.

There is of course the other point that so many dollars are held as loans that if they get called in the dollar goes by by and so does the world economy. A slightly different slant on it all:
http://www.commondreams.org/views04/1022-26.htm

Of course, seeing as economics is a form of magic and religion, it needent occur like the worst predictions, but then its unlikely to be as well as the good predictions say.
Ultimately you might be better off just moving to rural small town USA, and getting a smallholding. Then you can grow your own food and firewood and do other jobs to eke out a living.

[kmguru]

A few comments (coming late to the thread):

My next door neighbor just drilled his land for oil and now, they are setting up a pumping station. Which says there will be oil for sometime to come. So, if something happens, I am going to extend a hose from our yard to theirs! :D

We need to get serious about solar cells. That can free up a lot of oil for other use. Let the Chinese manufacture them, an we can import them cheap - that is better than importing all the toys.

Hydrogen from Borax is a viable solution for alternate energy. I suggest, all the public transportation use Hydrogen. The government can afford the initial investment.

Improve the nuclear energy technology. With a pallet based design and with new heat exchanger fluids with a double exchanger design, it can be made safe for a while.

Create a national or international prize for the first nuclear fusion engine....scrap all the outbound NASA space program to concentrate on fusion research....I bet you we could have one in 10 years.

[te jen]

You want a defense plan? Tell Lockheed Martin and General Dynamics and Consolidated Kill-bots that they are no longer in the weapons business, but in the energy business. They could really give a shit what they build so long as the money keeps flowing. Let the oil barons get their hooks in it, too - I'm willing to maintain an economic status quo in exchange for stability in energy production through alternative pathways. Stick the $500 billion annual defense budget into that project and see what kind of profits that generates - exportable technologies, full employment for your armed forces moving and assembling all that hardware, plus the salutary effects of ripping out and replacing all that carbon-based energy infrastructure. Bonuses include telling the Saudi royal family to go to hell and reversing the trade imbalance with China in less than ten years. Nobody even has to lose their toys - you just tell people that they have fifteen years to use up their gasoline-powered cars and then they have to switch. I'll bet you could even convert your '57 Chevy to run on hydrogen - it wouldn't be efficient but I think it could be done....

[wkirby]

Okay, i'm joining this conversation rather late - but i'll catch up quickly:

First I think that many of our fears with the EURO are somewhat unnecessary. Most of it is fueled because of the short term weak nature of the dollar. Don't forget that it was not too long ago that the dollar was probably too strong for our good! Our dollar isn't weak today becasuse the EURO, it's because of multiple factors that are cyclical and our economy will fix naturally. If you want me to elaborate, I can.

With a weak dollar you're finding people switching their short term holdings to the EURO, which is catching a European economy that is on a slight rebound from just a few years ago (remember when the Dollar was strong and Europe was struggling?). That's causing a lot of hysteria regarding what other groups will switch to the EURO.

Now lets look at OPEC and the possibility they would switch to a Euro based system. This would mean that they would prefer a newly made currency based on economies with history of poor monetary management, political unrest, failed and low-growth economies over a tried and rather true Dollar that has been shown to be properly managed with an economy that can support that management and grow out of shocks to it? It just doesn't make sense to me when so much of what OPEC does is price controls. They want to know exactly what they're dealing with. Sure it could happen, but I tend to think that we'll have decreased a dependency upon oil before that's ever a feasable issue.

That's all kind of confusing and certainly poorly written, but I think you all get where i'm going with it.

As far as oil itself goes - we'll develop out of our dependency. Sure we've been slow doing it, but that's because there's truly no need to be expedient about it. Believe me, as the price of oil rises the market will begin to find alternatives. Just watch the auto market evolve with hybrids over the next 5-10 years. It's just a start to the long run goal.

-Will

[wkirby]

I would like to hear from an economist, or budding economist, who can contribute to considerations I am seriously making, about getting my family's affairs in sufficient order to move away from the US if necessary and get a career established elsewhere, where a hydrogen economy can be expected to come online as or most quickly after the old economy crashes, because America's oil barons are going to run their country right over a cliff on the present course. I would prefer to make a move before a wave of American emmigrants becomes visibly imminent to everyone.

So come all you economists, and either allay my fears, or help motivate my escape.

I promise you that in down the road when you're much older you'll laugh when you read that. Alarmist and doomsday believers will lead you down a path of fear that has some rational reasoniong but carries it to the depths of lunacy. I suggest that everyone here pick up an economic history book - a good one, maybe even a textbook and just read how the problems we are dealing with today are so similar to problems of the past. The market works friends, just put it into perspective.

Voodoo - I see you're getting started down the economics path - good luck and trust me, it gets more interesting. Have you studied anything about the Jeffersonian economy?

-Will

[Shifty Russian]

Hey,

Joining the thread pretty late (how the hell I didn't see there was an economic section earlier, I don't know). A quick bit on the petro-dollars doing a Copperfield and turning themselves in to petro-euros. The effects would be quite nasty - I don't know if it would hit the dollar by 40% - but a 20% hit - would be very likely... How ever the change is sometime away - especially with Bush in Iraq. Given the potential dire results of change such making the PD's -> PE's from a global economic perspective... It's likely that this change would be held off for quite a while.


[quote="hypewaders"]

I would like to hear from an economist, or budding economist, who can contribute to considerations I am seriously making, about getting my family's affairs in sufficient order to move away from the US if necessary and get a career established elsewhere, where a hydrogen economy can be expected to come online as or most quickly after the old economy crashes, because America's oil barons are going to run their country right over a cliff on the present course. I would prefer to make a move before a wave of American emmigrants becomes visibly imminent to everyone.

So come all you economists, and either allay my fears, or help motivate my escape. ”
[/qoute]

I promise you that in down the road when you're much older you'll laugh when you read that. Alarmist and doomsday believers will lead you down a path of fear that has some rational reasoniong but carries it to the depths of lunacy. I suggest that everyone here pick up an economic history book - a good one, maybe even a textbook and just read how the problems we are dealing with today are so similar to problems of the past. The market works friends, just put it into perspective.

[...]

-Will


I concur with some of that. I wouldn't pack bags and just go unless it was written on the walssthat something was going to happen. No doubt something will... but not for a while.

A saying I picked up from www.dispair.com - a great site for any good cynic.

"If you're not part of the sollution, there's money to be made in pro-longing the problem"

how ever there's also...

"For every winner, there are dozens of losers. Odds are, you're one of them"

point? stick with what you know in the place that make you money... and of course look for growth in other areas of the world if you believe you can manage it.

Take care,
- Shifty Russian

[DubStyle]

First I think that many of our fears with the EURO are somewhat unnecessary. Most of it is fueled because of the short term weak nature of the dollar. Don't forget that it was not too long ago that the dollar was probably too strong for our good! Our dollar isn't weak today becasuse the EURO, it's because of multiple factors that are cyclical and our economy will fix naturally. If you want me to elaborate, I can.


if you dont mind, man, please do

if you go by the majority of whats posted on this site you would think the EU is going to own the US in every aspects of everthing "very soon"

id like to hear somone debunk that

[Undecided]

No that's China's job...

[kmguru]

OPEC will not switch to Euro simply because Saudi Arabia Royal Family is married to the Dollar. But EU could be bigger in Economy than USA on the GDP basis depending on how many countries join it. So what. Soon China and India will be up there too. Technically NAFTA could put North American block the same way - if Mexico can get their act together...

[Undecided]

I don't know if the dollar sinks way too low these countries especially malthusian Saudi Arabia may not be able to sustain the dollar.

[hypewaders]

If the recent Dubai Ports hubbub in the USA were to trigger a significant Arab divestment from the US economy, it will also hasten a conversion from petroDollars. Concurrently we have an antagonized Iran proposing their oil exchange Euros. Are American policymakers trying to hasten the end of the US Dollar's reign, or are they just inept?

[Billy T]

... Saudi Arabia Royal Family is married to the Dollar...No, they married the US military. The dollar (with any value still) is the bastard child of this union.

The marrage contract is simple: They stay on throne, avoid even pretense of democracy, etc. IF and ONLY IF they sell oil only for dollars.

[boppa]

Billy T ? Originally Posted by kmguru ... Saudi Arabia Royal Family is married to the Dollar... ? No, they married the US military. The dollar (with any value still) is the bastard child of this union. The marrage contract is simple: They stay on throne, avoid even pretense of democracy, etc. IF and ONLY IF they sell oil only for dollars. ---------------------------------------------------------------
---------------------------------------------------------------
funny how sadist insane wasnt a problem-UNTIL he wanted to deal in euros...

cue team america theme song here

http://www.stlyrics.com/lyrics/teamamericaworldpolice/americafuckyeah.htm


nooow....

iran said a year ago it wanted to do the same...

guess who is now in `team americas' sights??

same old excuses even (remember when iraq could destroy america within 45 minutes??the weapons of mass distraction?)

imho by the same rules the usa is using(nuclear preempt strikes)
if the iranians `actually' had nukes-
id be quite understanding if they `preempt'ed the usa's strike on them
by using the nukes on the usa

or does the preempt `rule' only apply to the usa??

:rolleyes:

[hypewaders]

Apparently, every improvization on the theme of empire results in shorter half-lives as the world's population incrementally gains awareness through history.

I expect things are going to get very turbulent as America's bluff gets called- as the fear of us is replaced by loathing- as our tantrums hasten our dishonor- and as our corporate sponsors of empire switch flags to the next players. Hold on to your hats, because the pace of history is about to get dizzying.

Here's hoping that once the half-life of empire is less than a generation, and once governments are popularly prohibited from selling out to megacorporations, a more widespread and enduring prosperity will emerge. For those left to enjoy.

[hypewaders]

On review I am puzzled by the assuredness of some in the power of market forces, and more specifically in the US economy. That is, that everything will chug merrily along because we have an inherently stable world standard. There are sterling examples to the contrary.

Is the Dollar's hegemony not founded in international goodwill? Is the Dollar not a leading "brand" of money, facing new competition? And is monetary brand-loyalty not tied to geopolitics?

[hypewaders]

Are these difficult questions?

[Billy T]

On review I am puzzled by the assuredness of some in the power of market forces, and more specifically in the US economy. That is, that everything will chug merrily along because we have an inherently stable world standard. There are sterling examples to the contrary.
Is the Dollar's hegemony not founded in international goodwill? Is the Dollar not a leading "brand" of money, facing new competition? And is monetary brand-loyalty not tied to geopolitics?three "yes" answers.

If you wish to understand better the origins of this "assuredness" take a look at my post in the "Most Powerful Empire in History" thread of History forum. There I show that Americans are only continuing a long heritage of Christian ignorance and arrogance under the leadership of GWB.

[hypewaders]

Come on, this is way more ignorant imperial policy than many intelligent Christians I know. Or intelligent politicians whose thoughts I have read.

These bastards are trying to wreck the ship. Why????

[Billy T]

Come on, this is way more ignorant imperial policy than many intelligent Christians I know. Or intelligent politicians whose thoughts I have read.

These bastards are trying to wreck the ship. Why????I have made 3 parts of your text bold. Please be more clear what you are talking about on these items. Your msg is too vague to have any meaning as it is.

[hypewaders]

"hypewaders"- that's me.

"this"- is the policy alluded to in the post immediately above, that I was responding to. You can often find conversational replies functioning in this way, that is without repeating all of your post which is, after all right above for reference.

"These Bastards"- also refers to your post, specifically the last 4 words.

Sorry for the vagueness. I only wanted to remark that present US foreign policy is severely damaging US interests abroad. What is motivating our leaders to so damage our global effectiveness and profitability, as they have done under this administration?

[Billy T]

...Sorry for the vagueness. thanks for the clarifications. I only wanted to remark that present US foreign policy is severely damaging US interests abroad. What is motivating our leaders to so damage our global effectiveness and profitability, as they have done under this administration?Glad we agree. I am only speculating on your question, but think it is the vested interest (profits for the few at the expense of the many.)

Same reason why tax payers contribute billions to a few large agri-corporations so they can pay more for the food they eat. Cargill is privately held, not even a stock company, so its take for not growing some crops etc. does not even get passed on to the wealthy few holding shares.

GWB was an oil CEO, and not a very good or bright one at that, so it is not too hard to manipulate him to make sure American tax payers pay Halliburton well, in no bid contracts, etc. It is the same oil/auto interest that have made the average US car a gas hog by keeping taxes on gasoline lower than in Europe etc.

The whole suburban infrastructure that has been built up in the US has assumed (despite the sure knowledge it is false) that cheap oil is God's gift to America. The neglect of public transportation, permitted the decay of the urban centers, flight to the suburbs (owing at least one car is essential) has made America much more vulnerable than any other country to the coming reality of expensive oil, placed America's economic survival in the hands of China et. al. who finance these oil imports and all the other deficits. (Americans are in net debt individually, on average, and much more so when their share, about $26,000 per head, babies included, of the national debt is considered, so there is no way they can help solve the problem. Years ago, one of my favorite cartoons was Pogo. He would frequently say: "We have met the enemy, and it is us.")

But to return more directly to your question: The wealthy will not get hurt in the collapse of the US economy they are causing. They are even today profiting by the decreasing confidence in the US dollar the debt and deficits are causing. That is, they are moving their wealth out of dollars and into commodities (Why price of all, oil included, have at least doubled in last three years. China is aiding this, but much of the demand is speculative hoarding. For example oil production still easily exceeds consumption when speculator’s demand is removed. Same is true of copper and all the metals that are so high in price now.)

I am not poor nor wealthy, but because I could see US dollar collapse coming three years ago, I moved dollar assets in to foreign ADRs and they have also at least doubled in the same time period. My holding in Brazil's oil company, PetroBras is up more than 6 fold, Sao Paulo's water company's ADR more than 5 fold. etc. Unfortunately, the average American is unaware of how badly he/she is being abused, loves his big Detroit monster and suburban home, etc.

Soon, when car is up on blocks because gas is too expensive to drive it and the housing bubble has ruptured to the extent his mortgage balance exceed the house value, he may realize he/she has been had by those who got their wealth out in time. It is not only GWB that the wealthy are manipulating for their advantage, increased wealth, etc. It is average Joe American, who still in ignorance, is confident every thing is swell.

[hypewaders]

Something doesn't quite make sense to me: Special interests evolved as creatures of the US Government, feeding on the immense bonanza of US federal revenue. It does not make sense to me that such organizations would conspire to kill the cash-cow. Government contracts are vital to major corporations. There is no government spending like the USA's on Earth- In fact there has never been in history.

So to manipulate for a fall, and to ruin one's best customer (Uncle Sam), seems irrational. During the last American crash of the late 1920s, many corporations imploded, and many wealthy people lost their fortunes right along with a suddenly vanished middle-class.

"The wealthy will not get hurt in the collapse of the US economy they are causing."

I agree that they have done well lately- see Exxon-Mobil's record earnings of late. But it seems to me that the competitive position of US special interests would be less lucrative if the entire domestic market were scuttled, and they resorted to competition with foreign corporations on foreign ground. On the present course of international affairs, corporations, products, and services with an overtly American flavor are becoming less and less attractive worldwide.

Assuming special or corporate interests- not transnationals but supranationals- that are working to destroy state economies do exist: Would such an evolution not result in the rapid destruction of their very financial habitat? It seems to me, having observed the relationships from afar, that big government and big business are symbiotes.

That's why the idea of transnational corporations sacrificing the US economy just doesn't add up to me. More plausible to me is the rationale that we are witnessing a panicked and botched attempt by captains of state and US industry, intended to keep the USA at the top of the geoeconomic heap, but that is having the opposite effect.

[Billy T]

Something doesn't quite make sense to me: Special interests evolved as creatures of the US Government, feeding on the immense bonanza of US federal revenue. It does not make sense to me that such organizations would conspire to kill the cash-cow. Government contracts are vital to major corporations. There is no government spending like the USA's on Earth- In fact there has never been in history.
All true, but no one, certainly not me, is expecting the US government to collapse, only the dollar. The government will in fact be more active than ever - very busy, running printing presses and collecting taxes in a desperate effort to pay it debts and current bills. Because of all the problems, their expenditure (particularly related to failed corporations defaulting on pensions, wide spread unenployment compenstion costs, Baby Boomers wanting to collect Social Security instead of pay taxes, etc.) will increase. Well politically connected firms will get even bigger, "no bid" contracts to help out. (Just like the current administrations efforts to get the private sector to take over parts of the medical insurance game etc.)

Certainly it makes no sense to kill the government as a cash cow. Do not worry about that or for the the well connected rich. The well-paced few will continue to milk the government more vigorously than ever. However that said, one must realize that that the current government functions mainly as a transfer agent. It does create some money (and more once they get the printing press running 24/7), but that is small potatoes compared to what they get by sticking their hand in your pockets.

As transfer agent, it takes money from the central 80% of the tax paying population and gives small part to the bottom 15% (that evil "welfare" you read so much about) and the majority of the tax income to the richest 5% (the oil depletions allowances, etc that permit your corporation to show a book keeping loss while raking in lots of money, farm price supports, more bombs needed, etc. but please do not call that "welfare for the rich," as I sometimes have. People will think you are being critical. :rolleyes: Trust me on this, I know.)

[Billy T]

...Assuming special or corporate interests- not transnationals but supranationals- that are working to destroy state economies do exist: Would such an evolution not result in the rapid destruction of their very financial habitat? It seems to me, having observed the relationships from afar, that big government and big business are symbiotes.
That's why the idea of transnational corporations sacrificing the US economy just doesn't add up to me. More plausible to me is the rationale that we are witnessing a panicked and botched attempt by captains of state and US industry, intended to keep the USA at the top of the geoeconomic heap, but that is having the opposite effect.While I can agree that some of the captains of state and industry have run the ship aground (Enron etc.) I think your fundamental error or oversight is the failure to recognize that once you have gotten every thing Joe American has and in fact have even his grand children so deep in debt to you that it can only be paid by printing press money it is time to move on to more fertile ground. It is sort of like the pre-fertilizer farming practice. Once the soil is exhausted, move on.

That is why the automotive industry is closing factories in US and building them like crazy in China. etc. Effectively they have realized that Joe American is flat broke, deep in debt and that there is no more blood they can drain from him. (Poor ignorant Joe does not realize it yet, but is growing suspicious because his job just was exported and he cannot find a new one.)

The typical Chinaman, in aggregate is with great ability to spend (not even debt yet! - less than 1% even have credit cards) All the international banks also recognize that China has a very long way to go before they and the wealthy few will destroy it for there benefit - at least a 100years run of more enrichment for the few.) Eventually these self interested, powerful few will repeat the procedure they have perfected on America and destroy China too, but that is far in the future.

[hypewaders]

That seems an iteration of the Marxist rejection of market economies, Billy T- which is to assert that market economies are constructed to impose a self-destructive environmental and social process after which the robber-barons move on to their next prey. To me this has always held some truth, until it gets into grand conspiracies about international wealth-sucking elites that are hoodwinking our governments, and all of the world. Whenever it comes down to defining these elites, some sort of stupidity like racism or xenophobia often creeps in, and that's where I lose interest. Specifically who is conspiring to destroy the Dollar, then?

I'm not convinced that there is something inherent in any market economy that inevitably leads to depletion, decline, recession, depression, etc. I'm not convinced that the political community, for its many faults, is ignorant of the intents of industry, or of the super-wealthy. Each of these expend much time courting/getting to know each other... and crossing the increasingly blurry lines from the corporate to political worlds, to the point where I suspect that they are inextricably intertwined in personas and vision.

Acknowledging your scenario suggesting the host government is not politically destroyed by the financial elite, but instead reduced to an economic shell: This process does not seem as lucrative as would be maintaining stable markets, considering the expensive growing pains on entering new markets entailing immense cultural and political differences. Surely a stable, upwardly-mobile middle class such as the USA enjoyed in the early Postwar era was easier pickings than going to China now, regarding returns on investment. I don't see China welcoming foreign ownership of national assets. Why not clean up our own back yard?

Perhaps you are suggesting that no economic system is sustainable, or that capitalism preys on hapless nations both weak and strong. In some long-term view over eons I can agree, along the lines of general entropy. But in real-time, the rationality of what is being deliberately done by US leadership escapes me: US policies precipitating the end of the US Dollar as world standard still do not seem a profitable or rational goal for those most directly controlling our economy.

Which brings me to another perhaps naiive suspicion: That nobody is at the economic wheel; that economics remains an embryonic proto-science, still offering no reliable answers to important questions about the future.

[Billy T]

That seems an iteration of the Marxist rejection of market economies, Billy T- which is to assert that market economies are constructed to impose a self-destructive environmental and social process after which the robber-barons move on to their next prey. To me this has always held some truth, until it gets into grand conspiracies about international wealth-sucking elites that are hoodwinking our governments, and all of the world. Whenever it comes down to defining these elites, some sort of stupidity like racism or xenophobia often creeps in, and that's where I lose interest. Specifically who is conspiring to destroy the Dollar, then?Again you are reading into my text thngs that are not there. I too do not believe there is any "grand conspiracy" nor am I making any rejection of the "market economy" - In fact it is why china is doing so well. China is just now fully accepting it, realizing that many of their state enterprises are terribly inefficient. For example, only in the last few years have they allowed westerners to enter the banking field, which previously lent money to state enterprises to keep them from collapsing, saving jobs etc despite the loans having no chance of ever being repaid. China is finally realizing the benefits of "destructive creation" letting some of the state enterprises go under freeing up the workers and capital for more productive tasks etc. Some banks are even writing off the worst of the losses, as they should have years ago.

China is entering the phase of capitalistic development that the US had more than a century ago, when the "robber barons" built America, it railroads, steel mills etc - a period of great industrial growth. I don't know, but bet if the GNP growth percentage of 1850 were known, it would be like China's today - a double digit value.

There is no conspiracy. Just the actions of millions of individuals, like me, who see that the US is too deep in debt and growing deeper in debt every year, so we try to protect ourselves from the eventual collapse and those very actions only hasten the day it happens. It is not just the investors, but more fundamentally it is the US society (the "now generation" especially) that has thus far found willing lenders to permit them selves to live far beyond even their current means, much less their means when things turn sour and they have lost their job, then their house to the bank etc.

I do not know if this birth, growth, maturity and death cycle is inherent in capitalism or not. I would hope that the environmental movement could change the capitalism's current fundamental assumption from "Must grow or die" (which is obviously going to collapse someday on any finite planet) to one of "Must leave the Earth to the next generation in healthier condition than we received it from our parents, or at least no worse." If capitalism can be transformed to focus on stable sustainable improvements, especially in energy use*, instead of ever growing requirements of irreplaceable fossil fuels, then there is at least the possibility "that it need not contain the seeds of its own destruction."
--------------------------------(if presed for time skip this footnote. It maily relates personnel history related to fusion energy)
*Currently that means great increase in energy efficiency and conversion to solar energy - not photo cells but things like alcohol and biodiesel for ALL mobile liquid fuels, well run regulated base load nuclear fission power, hydro electric and wind (disguised solar) power where feasible, even some tidal and river current power.

Some day that may mean fusion power, but not very soon, I fear. When first armed with my new Ph.D. in physics (and a dissertation related to plasmas) I was hired more than forty years ago by JHU/APL to join four others in the relatively new CTR group (Controlled Thermo-nuclear Research). The US navy was paying us, and did so for about 10 years. Then the group was dispersed.

The navy uses APL as a "knowledgeable trusted agent" to help them keep contractors honest and from wasting the Navy's money. APL has done this job very well for many major Navy systems. The Navy's ideas, and ours too at the time, was that in about 10 years the Navy would be letting a contract for the first fusion powered aircraft carrier and they wanted APL to have some hands-on experience. They did not expect our small group to do anything significant, and in this, we did not disappoint them. ;) Finally they and we all realized that fusion power was decades away, if ever it was to come, and they stopped supporting the group.

As I know, or at least once knew, something about all this, I am inclined to think that: Yes a large Tomak type machine like the international reactor now being designed for a French site, I think, may be able to make net energy if all goes very well, but it is a very long way from there to economically affordable power as most of the cost of power is the capital, not the fuel. (Free fuel would possible knock about 10% off your coal-fired plant's electric bill - hydro electric is "free fuel" already.) I just cannot see how a low energy density volume, complex vacuum systems, super conducting coils, radio active tritium handling equipment, neutron shielding, etc and a complex heat-exchange closed-loop steam boiler can economically compete with a high energy density flame, a brick chimney and a simple steam boiler in producing a product that is mainly capital cost.

…That nobody is at the economic wheel; that economics remains an embryonic proto-science, still offering no reliable answers to important questions about the future. You are right about that, unless Adam Smith’s “invisible hand” is “somebody” - the problem is there always are a some very strong hands near or in the government who (like almost all others) are looking out for Number 1, in most cases.

[quadraphonics]

Just the actions of millions of individuals, like me, who see that the US is too deep in debt and growing deeper in debt every year,

While the total dollar size of the US debt is pretty impressive, it is not that huge as a portion of the American economy. See here for a ranking of countries by public debt as a percentage of GDP:

http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

Some of the countries that rank higher than America include France, Germany, Italy, India, Japan and Belgium; hardly what I'd call sinking ships. Incidentally, Brazil is not too far behind the US in terms of debt (50% GDP instead of 65%), so you might consider moving again if you're really that worried about high debt.

Then again, examining a map of countries colored by external debt:

http://en.wikipedia.org/wiki/Image: Debt.PNG

one quickly notices how well-correlated debt is with living standards. So perhaps countries with low debt aren't so attractive after all... Far from being a sign of decline, large debts indicate a country has become rich. After all, nobody would loan them these huge sums if they weren't convinced they'd be repaid.

[Billy T]

While the total dollar size of the US debt is pretty impressive, it is not that huge as a portion of the American economy....Again thanks for the references. No disagreement with anything in your post, but I would like to point out a difference between US and Brazil and generally call your attention to the fact that you are 100% right -it is the expectation that the debt will be repaid which makes the lenders lend, so you must consider more than the level of debt - the net income, with which to pay the debt, is important too.

Because of its negative net income, US is adding to its debt at almost the trillion dollar/ year rate and it already is at 65% of GDP.

Brazil is reducing its debt (by about $10 billion last year, I think, as that was the trade SURPLUS). Brazil paid off entirely its debt to the IMF. Its debt, in terms of GDP is 23% less than the US and headed downward, not up as the US's is.

Thus I think I am safer economically here, except for the fact my Social Security is paid in dollars, and they may become nearly worthless before I die. (US government has promised to keep them “inflation corrected” but I think there will be many such promises that are empty words when the going gets rough.)

If you agree, and want me to look around for you, - find some nice 100 acre farm, with one or two houses on it, you can buy for $60,000 just let me know. Typically it will come with a man (and his wife/ kids) whose garden and fruit trees will keep you well feed, but you must now pay him the minium wage which is now R$350 / month - I sold my farm three years ago. Then his monthly wage was less than US $100s, but he was so honest, hard working etc. that I usually paid him that despite the fact other owners did not like this upward "wage pressure" on their "serfs."

A couple of years ago, you could have gotten it for $40K or less, but that was back when a dollar would buy 3 Brazilian Real. Now it only buys about 2.10R$.

The dollar has not dropped that much against most currencies, so I conclude many people are thinking the Brazilian Real is the place to hold excess cash. This flux of dollars into Brazil is a Real* problem. Government is buying dollars up as few want them, but this puts Reals in the public hands so to keep inflation under control these circulating Real must be attracted into savings or someway taken out of circulation.

Because Brazilians have had so much inflation a few years back, it is hard to persuade Brazilians to save, instead of spend. Thus the real interest rates (adjusted for inflation) are the world's highest, about 14% per year. (Central Bank uses “inflation targeting.“) This world’s highest interest of course just makes the flood of dollars coming to Brazil increase. - It is a problem no one knows how to solve. Brazil is now “energy self sufficient“ (80+ % are all cars now sold can run on locally produced alcohol.), so Brazil is now a net exporter of oil. This is not is not helping with this "problem" either.

I can easily live on just the interest I recieve from money in the bank, which I moved to Brazil when I could get almost 3R$/ US$.

If you are interested, better buy that Brazilian farm now. - It will cost more next year, especially if you are trying to buy with dollars. When I bought mine about 12 years ago, during the rapid local inflation, the seller wanted dollars for his mattress and thus there were no currency conversion costs. No one wants dollars here now and that is a US problem that will soon be more universal.
-----------------------------------------
*both meanings intended

[quadraphonics]

Because of its negative net income, US is adding to its debt at almost the trillion dollar/ year rate and it already is at 65% of GDP.

Well, to get the growth rate of the debt as a percentage of GDP, you also have to include the growth rate of the GDP. The actual plot is here:

http://en.wikipedia.org/wiki/Image:National_debt_as_a_%25_of_gdp.jpg

While it is high by the standard of the past few decades, it doesn't look to me to be on the verge of any large upheaval. The last 5 years look better than the early 1990's, to be honest... Within a few years we'll stop dumping money into Iraq, the Bush tax cuts will expire, and we'll pay down the debt for a while. Then we'll come up with some new reason to borrow trillions of dollars. Hopefully it'll be something everyone can enjoy next time, like a Mars mission or a space elevator...

[Billy T]

Well, to get the growth rate of the debt as a percentage of GDP, you also have to include the growth rate of the GDP. The actual plot is here:

http://en.wikipedia.org/wiki/Image:National_debt_as_a_%25_of_gdp.jpg

While it is high by the standard of the past few decades, it doesn't look to me to be on the verge of any large upheaval. ...Thanks for ref. - All of wikipedi was down a few minutes ago but will be back soon, so they say.

Some info from today's Sao P. paper that may interest you:

Brazil will repay $20 billion of external debt this year. Included is the 6.6B of Bradies, some (or all? - not clear in the report) not due until 2024. $3.7B has already been repurchased, but it cost 4.2B due to the premium.*

Last year Brazil's remaining 15.5B due the IMF was paid off. The foreign reserves are now 54.8B and after this year's pay down the government's total foreign debt will be only 65B. Despite its history, Brazil is now only two steps away from "investment grade", and many of the larger firms here now are "investment grade." Brazil should join them in less than a year. The domestic debt is not so pretty. IMHO, the local interest rates, (world's highest in real terms), will drop significantly prior to the October elections and some (hopfully not double digit, but only close to 8%.) inflation will result and help "pay" some of the uncorrected domestic debt. (Poor people who can finally buy that new washing machine, etc. tend to vote for the PT, the workers party, even if every new day there is a new PT scandle. I.e. Lula will be relected.)

A few days ago I read that Venezuela has or soon will (I forget) also pay off all its Bradies prematurely. This is, of course just, the vehicle used to "recycle "petro-dollars, but both B&V are adding to the flood coming out of coffee cans and mattresses, (I think - I am not an expert on all this, in fact am entirely self taught, but I read and think. - I often foresee 10 things to far ahead of when 7 happen and finally learn 3 never will, but it has been profitable, anyway.)*
----------------------------------------
*(A few years ago I wanted to buy some Bradies when they were at 0.53 of face, but I did not know how to do it. - still do not. Only bonds I have ever bought were in 10K amounts via "treasury direct" or series EEs from banks. The EEs I bought about a dozen years ago, just before the 6% floor guarantee offer was ending, I held until their maturity in Dec 2004, when I foolishly cashed them ALL in. -I should have accepted the much lower post maturity rate for a month and put half into 2005's taxes. Not only did my error bump my marginal tax rate up, but also made most of my Social Security taxable. - Live and learn, but must it always be the hard way? :mad:

Overall, I can't complain. All my ADRs have all at least doubled in three years and some are up four fold! I foresaw the rush to emerging markets well and also understand that the drop in dollar, if it occurs as I am expecting, will still increase their value. Much more rapidly than if I were a local buyer of these companies. ADRs are a great, very efficient, essentially zero cost, dollar hedge for me, living in Brazil.

I am set up now so I do not care what the dollar does. - A philosophy I have followed for more than 40 years. For example, when buying my electric power from BG&E, as graduate student, I held their stock and did no care what the PSC did about their rates. May not get rich this way, but you sure sleep well, and there is usually enough left over to take some fliers, to make things interesting. For example:
I listen to small drug companies presentations at industry conferences (Amazing what you can do with internet when retired and organized.), read their releases, try to understand if they may have a "magic bullet" or not in the pipeline, etc. I spotted sRNAi early and jumped in. - IMHO, they are going to fix most genetic diseases and hit all solid cancers hard with their "small molecule RNA interference" approach. They have solid IP on this also. Wish I had bought more.
Eyetech also impressed me, but they have been eaten by OSIP and worse is one of the big guys is claiming better results for treating server retinal problems. ("Wet" Macular Degeneration - Rich people will pay $1000 every couple of weeks for an injection in eye to not go blind, so even though still hard to make these magic bullets, it has big profit potential.). Eyetech's drug, is the only one currently FDA approved and is a well aimed rifle, where as the bigger guy's approach to interference with excessive retinal vascular growth (iVEGf) is more like a shotgun, likely to hit targets you do not want too, so I am staying with the stock I got in OSIP when they "merged" Eyetech in. Only a few side-effect deaths can sink a stock, and FDA may not approve for years because of this "shot gun" approach. Anyway it has been fun to learn the details of these new drugs. I knew even less about RNA mechanisms etc than economics but now am not very ignorant in either field.)

[hypewaders]

$75 a barrel has now compelled the Bush Administration to reverse flow into the SPI, and dump crude on the market.

Please note the first letter in SPI is "strategic". For strategic reasons, the SPI was just dipped into. B-but relax, folks, the decider has decided and we need not worry.

If they are this psycho at $75, they could go failed-state at $100 because the curves these bunglers are flirting with turn steep.

[kmguru]

With oil prices going up and up, how is Europe doing? I think the first few countries to have trouble is the most advanced countries like Germany, France and UK...as prices of everything go up.

[Stryder]

Well the prices are usually dependant on the Refining Plants. Simply if the US prices rise, The US starts purchasing abroad at cheaper prices, which of course increases demand, which decreases supply, which in turn increases prices.

Simply put it's all a giant mathematical vector that can very easily be avoided, however such companies like profit therefore they don't like to avoid such problems.

[hypewaders]

"however such companies like profit therefore they don't like to avoid such problems."

But these problems include losing goodwill. The petroleum industry is becoming unpopular, because they are not perceived as taking good care of their customers. That's just fundamentally bad business, and doesn't make rational sense.

What makes rational sense is that there is an incipient crisis of supply that petroleum cartels fear and anticipate (but will not publicly discuss) and they are presently making a panicked grab for all they can while they can.

[kmguru]

Oil and Gas market is a controlled market. There is no such thing as supply and demand. That only works in a free market economy. We know, because in the course of our business, we came across two suppliers who are willing to sell us diesel at lower than market price as they are small time producers who have signed long term contract with wholesellers before the oil price went up. Well, we contacted a few mid size buyers and they said - no deal, they will get into troble with their primary suppliers.

[hypewaders]

"Oil and Gas market is a controlled market"

True, but without control of supply, there is no control. Supply is slipping out of the control of corporations like Exxon-Mobil, and potentially beyond the control of cartels like OPEC if there comes a sea change- For example, mideast and S. American alliance shifts, leading to Euro trading, Yuan trading.

[hypewaders]

Bro Can U Spare a Dime / See Change?

You should, because it is accelerating now.

[kmguru]

Bro Can U Spare a Dime / See Change?

You should, because it is accelerating now.

I agree. But it will not be apparent till 2008. There comes a time when a single straw will break the camel's back. But a child, a lawyer or a politician would not know that - because they do not have the right education to understand the science behind it.

In the world of very large compressors that compress gas to send it in the pipeline at high pressure, if the flow drops to below a certain level, then the compressor goes on a surge condition that can break appart these monster machines. That is called the region of instability. We are getting there....

[hypewaders]

But the singularity (high-noon) of destructive resonance is unknown- Just to make it interesting.

[kmguru]

It can be known, if one has the time to model the scenario with say a thousand key parameters that interact with each other. A neural net may be the right tool for such a model. However to get the exact point (your high noon) one has to understand the psychological aspects of humans and add the neuro-economic model which is difficult to do.

[hypewaders]

But like any disaster, at least we'll all see it in the instant that it first shockingly disrupts our personal and common plans, hopes, lives, etc. Somehow that's not such comforting thinking... which is what I increasingly find myself groping for when I think on the future of my country.

[Billy T]

It can be known, if one has the time to model the scenario with say a thousand key parameters that interact with each other. A neural net may be the right tool for such a model. ...You are "blowing smoke" "slinging jargon" etc. I began to recognize this when you claimed to be advising the Chinese, had the solution to the controlled fusion problem, were negotiating with the oil majors, etc.

In this case you are recommending "neural networks" and they can do amazing things, BUT they are not programed. Instead they are provided with a large "training set" to learn on (and of course the "answers" to each of the training set problems.) The larger the parameter space (thousands you said) the larger your training set must be. I am not an expert on neural nets, but if the net is to cope with 1000 potentially different and independent parameters, then probably a minimum of 1,000,000 different examples of the parameter sets with the "out come" of each are required for training up the neural net to a reasonable performance level on a new input set of parameters (not one of the training sets) for the net to be reasonably good at predicting the "out come" for that set of parameter inputs it was not trained on.

The basic nonsense and ignorance in your suggestion, your "smoke blowing" in this case, is the fact that the Earth and humans living on it have never been thru this global energy crisis type of situation before. You do not have a 1,000,000 example cases of known input parameter sets with associated known out comes to train the neural network on. You do not even have one! Neural networks are totally impossible to apply to this unique problem - nothing to train them on.

Go back to saving the world by perfecting a next generation fusion reactor this weekend or jet off to India to help them with their nuclear reactor problems. I am not impressed by your many claims of expertise. I only see smoke.

[hypewaders]

"PetroEuro" is being uttered again (http://www.bloomberg.com/apps/news?pid=20601087&sid=azY26ubt4eqQ&refer=home)(only by Iran and Venezuela, we are told) and I think it's increasingly in a context I tried to touch on earlier in this thread:

"Is the Dollar's hegemony not founded in international goodwill? Is the Dollar not a leading "brand" of money, facing new competition? And is monetary brand-loyalty not tied to geopolitics?"

Along these lines, I'm concerned that the most staunch OPEC defenders of PetroDollars (mot notably the Sa'ud dynasty) may be going further and further out on a perilous political limb over this. Kuwait and the Emirates are already slipping out of Dollar orbit. Maybe it's not just cold economics, but also political self-preservation, as identification with the USA is smelling more and more like old fish in Mideast perceptions.

Major US media desperately plays this issue down, but it stills seems one of the largest and wobblyest elephants in the room.

[S.A.M.]

Don't the Sauds have a lot of investments in dollars? They won't do anything until they've covered their asses.

[kmguru]

The pressure on Dollar really comes from the Germans who have not forgotten the WWII and their dream of the Master of Europe. If you can not win via Sword, win via the Money.

[S.A.M.]

The pressure on Dollar really comes from the Germans who have not forgotten the WWII and their dream of the Master of Europe. If you can not win via Sword, win via the Money.

Whats the role of the Germans? I would have thought the Japanese to be a more likely candidate, Asians are more entrenched with notions of honor and revenge.

[kmguru]

Whats the role of the Germans? I would have thought the Japanese to be a more likely candidate, Asians are more entrenched with notions of honor and revenge.

The euro's origins lay in the Maastricht Treaty (1991), an agreement among the then 12 member countries of the European Community (now the European Union)—United Kingdom, France, Germany, Italy, Ireland, Belgium, Denmark, The Netherlands, Spain, Portugal, Greece, and Luxembourg—that included the creation of an economic and monetary union (EMU).

Behind the scence, it is the Germans who pushed it, not the United Kingdom. UK is fine with their Pound and well connected with USA. They would not do anything to undermine Dollars or USA.

[S.A.M.]

Sounds more like common business sense, the Germans are always pragmatic about financial matters and possibly saw no reason why they should not promote a currency that would give them something for nothing.

After all, their economy was in greater need of assistance, what with war debts and recompense, not to mention consolidation of East and West Germany.

[kmguru]

You are "blowing smoke" "slinging jargon" etc. I began to recognize this when you claimed to be advising the Chinese, had the solution to the controlled fusion problem, were negotiating with the oil majors, etc..

I can understand your problem. You want to be the "all knowing" person in this forum. I have no problem with that. But accusing someone you do not know as "blowing smoke" just shows your ignorance. Rather than thinking in the negative terms, why not think all the statements are true and ask questions for things you do not understand?

I was in China during the early 80's on behalf of a large US multinational. At the time the Chinese just opening up their market. It was not difficult to advise them as that was what they asked for. What is so impossible about that? May be for the Brazillian companies?

As to controlled fusion, I happen to be a part of the advisory team at University of Utah. Again, in America, we do have the education and technology to think ahead.

Again, I worked for Exxon, have done projects for Chevron, Phillips66, Amoco, because I am an engineer. What is wrong with that...it is not as if it is rocket science! And I have done rocket science for NASA. Since the inception of Sciforum, I have been consistent in what my avatar is and is not. If you can only read!

Attacking my avatar in this respect is not only bad manners but plain stupidity.

In this case you are recommending "neural networks" and they can do amazing things, BUT they are not programed. Instead they are provided with a large "training set" to learn on (and of course the "answers" to each of the training set problems.) The larger the parameter space (thousands you said) the larger your training set must be. I am not an expert on neural nets, but if the net is to cope with 1000 potentially different and independent parameters, then probably a minimum of 1,000,000 different examples of the parameter sets with the "out come" of each are required for training up the neural net to a reasonable performance level on a new input set of parameters (not one of the training sets) for the net to be reasonably good at predicting the "out come" for that set of parameter inputs it was not trained on.

I do not really want to write a book here. If you would have read most of my posts, you would know that I suggested for members to read both "A new kind of science" and "On Intelligence". If you would have read at least those two books, you would deduce how to design a proper neural network. It is not really that difficult.

The basic nonsense and ignorance in your suggestion, your "smoke blowing" in this case, is the fact that the Earth and humans living on it have never been thru this global energy crisis type of situation before. You do not have a 1,000,000 example cases of known input parameter sets with associated known out comes to train the neural network on. You do not even have one! Neural networks are totally impossible to apply to this unique problem - nothing to train them on.

This would not be your classic neural net. The word is used liberally since using the word "Artifical Intelligence" will create the vision of robots going haywire. I really do not want to insult your intelligence, but if you have done any programming in Prolog in the past, and understand how the brain works - even the basics, you will understand. And if not, ask questions rather than blaming others for your lack of understanding. It is hard to teach old dogs new tricks, perhaps because the neural networks are fixed/satic by your present age?

Go back to saving the world by perfecting a next generation fusion reactor this weekend or jet off to India to help them with their nuclear reactor problems. I am not impressed by your many claims of expertise. I only see smoke.

In a forum like this, in case you have no idea how to interact, the Avatar can be a separate entity from self with its own claims of expetise. The expertise can be easily vetted by other experts in those fields. An avatar can manifest multiple expertise, simply because, behind a single avatar there can be multiple persons that do have those expertise. My avatar can be a doctor and an engineer at the same time, because behind that avatar there can be my brother taking part who is a doctor. and so on....

If you do not know that, you are behind...way behind!

[hypewaders]

Mideast Dollar divestment is on the agenda for discussion at the Doha Gulf Cooperation Council Summit next month (http://www.bloomberg.com/apps/news?pid=20601087&sid=aeQ4SZngQ.kY&refer=home). Saudi financiers seem to hold controlling shares in the US Dollar and economy. US leadership will have limited options in forestalling a collapse if they are double-crossed by them. The Saudi regime could be better off to make a break for it now, even while their public signals are saying the opposite.

[S.A.M.]

I can't imagine the US would just sit back if they did revalue their currency.

[hypewaders]

What could we really do about it under present circumstances? We're in the same position as the British when the Sterling Standard died.

[kmguru]

Saw on the net:

Consider that our goods and services become cheaper to export, and all of a sudden look more attractive to consumers in other countries whose currencies are rising against the dollar. The protectionism drum will be put in the closet.

Enter China and India, where there's a rising middle class that between the two countries is more than 300 million people, which is about equal to the total population of the United States. All getting ready to spend money - on U.S. stuff - and traveling to the U.S. on vacation. What's wrong with that?

To be fair, let's consider the worst-case scenario a dollar crash.

The economies whose currencies are at the other end of the seesaw, particularly the euro and the yen, would find their exporters suddenly being priced out of U.S. markets. The interest yields demanded on American Treasury bonds could jump sharply higher, as the Chinese and Japanese central banks and Middle Eastern oil-producing countries insist on higher yields to compensate for the greater currency risk.

Yet a crash of that sort looks unlikely.

Since the major lenders to America are official institutions in Asia and the Middle East, they have significant leverage in slowing the dollar's weakening state. They would only hurt themselves if they became panic sellers, so it is hard to see why they would do so.

A fairly steady fall is much likelier than a plummet.

[whitewolf]

Kmguru, I heard that point of view; however, even with that factor in mind, sales are down this fall by a greater percent than expected. Everyone is predicting recession will start in mid- or end of 2008.

Edit: all we can hope for is a decline in use of oil in as near future as possible, or a fancy bombing of Iran, or a complete boycott of Iran.

[kmguru]

Normally the market corrects itself. Disasters do not strike that often. But when they strike, no one would have predicted that. For example, if there is a massive Earthquake and San Francisco falls in to the Ocean, some will say, oh! we told you that would happen, but not when!

Predicting disasters is very difficult because there are forces that counter balance until tipping point is reached. Think about Iraq and those people who died. Did anyone thought that USA will come after Sadam and those civilians will die or the country will be devastated?

If the US economy collapses, no one will see it coming, because the market is based on hype and trust like you trust your banks to have your money when you need it. But the hindsight will be 20/20. So you hedge your bet and go on life because, there is nothing you could do and the problems are systemic.

But the collapse is coming that is because USA can not sustain its economy, since USA is no longer the top producer. When? I bet 2012 when China eats Taiwan.

[Billy T]

It can be known, if one has the time to model the scenario with say a thousand key parameters that interact with each other. A neural net may be the right tool for such a model. ...You are confused about "neural nets." (I prefer to call them "connection computers", but lost that battle years ago.) It is true, as you imply, that they are very good at rapidly processing (parallel processing) a very large number of variables, but they are totally useless in the application you are suggesting as there exists no "training set." Connection computers are not programmed, but learn from many examples of the typical problems and are given during this training period the "correct answer." Then after "trained" on this training set, they are capable of giving the "correct answer" to a new, never before seen, set of the imput variables.

It is difficult to imagine a problem that connection computers are LESS capable of solving than determing when peak oil (or hypewader's "high noon") or ANY ONE TIME EVENT. Not only is there no training set, but in this case, even the one event's "correct answer" not known.

[Billy T]

... As to controlled fusion, I happen to be a part of the advisory team at University of Utah. Again, in America, we do have the education and technology to think ahead....
Attacking my avatar in this respect is not only bad manners but plain stupidity....I do not think Un. of Utah has very much standing in the controlled fusion problem. If memory serves me correctly their main contribution is the very discredited "cold fusion" idea. Did you advise them on this? :D

I worked on the controlled fusion problem for more than 15 years back in the early days. The US navy started (funded) our small group at the Applied Physics Lab of JHU as the navy intitally expected to place an order for the first fusion powered aircraft carrier at about the end those 15 years. Everyone intitially thought that by 2000, producing electric power by coal would be nearly phased out. We had a lot to learn about instabilities in magnetically confined plasmas. Personnaly, I have come to the conclusion that fusion power will not be economically competive for at least 300 years.

I have no idea what your are talking about in "attack your avatar." Certainly that would be stupid. I do not even "attack people" as a general rule, but if they exhibit great lack of understanding in their posts that may mislead others(as in your comments about using neural networks* to investigate peak oil, "high noon," which are clearly one time events with no training set available - see my prior post for more details) then yes I attack the ideas that are stupid.

In one of your earlier posts you claimed: "to be advising the Chinese, had the solution to the controlled fusion problem ..." but you seemed to have deleted this obvious nonsense now as It no longer appears in this thread (except as quoted in your post 58). If you have a solution to the controled fusion problem, it is extreme selfness to not tell the world of it. - Millions of dollars are currently being waisted in the international effort to discover what you claim to already have. Is it little wonder that I think you are mainly "blowing smoke" and exhibiting your ignorance about several things, including most recently: neural networks*?
-------------------
* Clearly you have never made even a simple Hebbian neural network and do not have the slighest idea as to how they work or are used. I have made many different connection machines (all but one were of course simulated in a programmed or Von Neuman type computer.)

[Billy T]

Don't the Sauds have a lot of investments in dollars? They won't do anything until they've covered their asses.Their "asses" are not entirely exposed. They have been buying Euros - part of why the Euro is at all time high against the dollar. (Probably have buying gold also as it has had quite a run up recently.)

Saudi Arabia did not following the recent US rate reductions - first time that has ever happened - and that alone led to speculation that they might be planning to cut the link of their currency to the dollar. (I posted this development somewhere at the time.) Now it is becoming much more clear that this will very likely happen. I honestly do not know what this will cause. Read:

"...The dollar earlier fell after the Gulf Cooperation Council, which includes Saudi Arabia, United Arab Emirates and Qatar*, said yesterday members will discuss a proposal next month to change their fixed exchange rates to the dollar. The case for a revaluation will be presented to heads of state in a summit in Doha, Qatar, on Dec. 3-4, Secretary General Abdul Rahman al- Attiyah told reporters yesterday in Riyadh, Saudi Arabia. ..."

19 Nov from:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSgc7qfzK.tI&refer=home

------------------------
*Six mid-east oil exporting nations will discuss the cutting of their dollar links at this meeting as the first paragraph of the above link notes. Perhaps they are thinking "there is strength in numbers." - I.e. the US can not invade them all as it has in the past when one (Iraq) started selling oil for Euros.

[hypewaders]

Billy T: "I.e. the US can not invade them all as it has in the past when one (Iraq) started selling oil for Euros."

We can't effectively invade even one, because such naked imperialism has no traction anymore. Iraq may have been the last self-defeating gambit of American empire, precipitating a Mideast re-alignment away from the dangerous stigma of partnership with the USA.

[Billy T]

...We can't effectively invade even one, because such naked imperialism has no traction anymore. ...Good observation. Hell the US ability to control world events has fallen so low under GWB that US cannot even control the Pakistani dictator the CIA set up (over throwing the elected government in the name of democracy of course) now!

[kmguru]

I have no idea what your are talking about in "attack your avatar." Certainly that would be stupid. I do not even "attack people" as a general rule, but if they exhibit great lack of understanding in their posts that may mislead others(as in your comments about using neural networks* to investigate peak oil, "high noon," which are clearly one time events with no training set available - see my prior post for more details) then yes I attack the ideas that are stupid.

Every event that happens is a one time specific event. But people spend billions to predict those events.

You chose to read/quote only half of my post. The full post is as follows:

It can be known, if one has the time to model the scenario with say a thousand key parameters that interact with each other. A neural net may be the right tool for such a model. However to get the exact point (your high noon) one has to understand the psychological aspects of humans and add the neuro-economic model which is difficult to do.

I never said, I advised the Chinese on controlled fusion. That is stupid and the Chinese did not have fusion reactors. I may have said something about control of nuclear reactors - your garden variety, which is true.

I have not said anything that will mislead our humanity saving scientists in this forum. You are getting old and you think people who are having fun in the forum are going to use this information and do brain surgery. It is like those adults and people like you who start fights as spectators in a entertainment wrestling match and think the fights are for real (not a show!).

and here you are:
Dark Visitor was written as a recruiting tool for the hard sciences. I am a retired professor and very concerned that the western world is now in the process of losing scientific leadership to hard working, studious Asians, as it has already lost technological leadership and many good jobs. I don't want my grandchildren to have only "non-exportable" jobs like cutting some one's hair or selling fast food, etc.

You can not have scientific leadership, if you stay "15 years back".

Oh well....we will discuss neural net another time in another thread

[Billy T]

...You chose to read/quote only half of my post. The full post is as follows:

It can be known, if one has the time to model the scenario with say a thousand key parameters that interact with each other. A neural net may be the right tool for such a model. However to get the exact point (your high noon) one has to understand the psychological aspects of humans and add the neuro-economic model which is difficult to do. ...You know so little about neural networks that you fail to even understand when I explained why neural networks are totally incapabable of dealing with ANY ONE TIME EVENT which is unique. (I.e. when there is no "training set" such as year of "peak oil" prediction or "high noon" as someone called it.)

Also you do not seem to know that neural networks can be better than humans in dealing with "psychological aspects." For example, one neural net was trained on many years of bank loan history, but not all of it. The characteristics of the potential borrower, including psychological questions such as: Do you think lying is always wrong?", etc. as well as the years at current job, salary, etc. were the inputs to the net. The frequency of delenquency and probability of default was what the neural net was to predict (and of course given in the training set sub cases). The part of the bank's history NOT used in the training was then the input to the neural net after it was trained up to high level of performance on the training set part of the actually history. Each of these loan decision is a "one time event" but there are thousands of quite similar ones - totally different for the prediction of peak oil's "high noon" - that is a unique event no neural net can be used to predict. If you still can not understand this difference, - I give up.

Surprize: the neural net was slightly more accurate in predicting the observed (historical) performance of the borrowers than the bank's human officers who had granted the loans had been. Despite this result, I think the bank continued to rely mainly on the humans to grant future loans. The neural net had the advantage that the looks, skin color, or hidden relationships of the borrower (a cousin or pretty single blond lady) had no influence up on its decision. (Race was not one of the inputs to the neural network, - that would have been illegal, but was a clear factor in the decisions as many studies* have shown when a human is making a loan application from another human seated on the other side of a table.)
--------------------
*These studies usually use black and white character actors who give exactly the same answers (usually in different randomly selected branchs of the same bank on the same day). They also exhibit the same "character" of the person they are pretending to be, (for example, a rough truck driver trying to finance the purchase of a new truck etc.) and the blacks are much less likely to get the loan.

[kmguru]

We use SPSS Neural Net to analyze in real-time, fraudulent internet transactions. So, I understand the application very well. You do not seem to understand the psychological aspect of economy that is now called neuro-economics. That is understandable, since you do not know the difference between a Saudi sheik and the president of Iran Mahmoud Ahmadinejad.

[Billy T]

We use SPSS Neural Net to analyze in real-time, fraudulent internet transactions. ...That is interesting. What was the training set?

[hypewaders]

There goes OPEC's 2nd-largest producer (http://uk.reuters.com/article/oilRpt/idUKDAH83366720071208).

It's happening- Iran has converted to Euros. Y'all ready for this, America?

[Billy T]

There goes OPEC's 2nd-largest producer (http://uk.reuters.com/article/oilRpt/idUKDAH83366720071208).

It's happening- Iran has converted to Euros. Y'all ready for this, America?Nothing on this has appeared at Bloomberg. Perhaps it is not true? But if it is, I bet in less than two weeks, Venezuela does the same.* I think US gets about 1/3 of it oil from Venezuela, but that is from memory and may be wrong or perhaps only refer to the imported oil the US uses.

I will be embarasing, to say the least, if GWB has to buy Euros to pay for the oil imports the US needs. The NIE report, stating Iran killed its primative nuclear weapon program in 2003, could not have come at a worse time for GWB and the neocons itching to start a new war in Iran.
-------------------
*Oil is "fungeable." Thus, even if currently US imports none from Iran (I suspect that is the case) the economic impact is almost the same as if it did.

[hypewaders]

"Nothing on this has appeared at Bloomberg."

Heads in the sand. Edit: (not really) (http://www.bloomberg.com/apps/news?pid=20601072&sid=a5Oy9GTZZWrA&refer=energy)

"The NIE report, stating Iran killed its primative nuclear weapon program in 2003, could not have come at a worse time for GWB and the neocons itching to start a new war in Iran."

Heads up: The NIC (http://www.dni.gov/nic/NIC_home.html), cognizant of the dangers unfolding, have stood up to moderate a notoriously reckless White House.

[Billy T]

"Nothing on this has appeared at Bloomberg."
Heads in the sand. Edit: (not really) (http://www.bloomberg.com/apps/news?pid=20601072&sid=a5Oy9GTZZWrA&refer=energy)...Thanks for the correction and link, which was there yesterday and I did not have my computer when it appeared. I only looked for it on 7/12/07, after your post.

[kmguru]

There goes OPEC's 2nd-largest producer (http://uk.reuters.com/article/oilRpt/idUKDAH83366720071208).

It's happening- Iran has converted to Euros. Y'all ready for this, America?

And quickly USA tried to pacify Iran by saying Iran stopped its nuclear bomb program two years ago. Surprise ...surprise...

Stupidity knows no bounds...

[hypewaders]

Gentlemen and Ladies, it's time we continued this conversation. For future reference, oil is now $120/bbl. Earlier in this thread, I was Chicken Little for insinuating that was only the beginning at less than half of that. How about it?

I ran.
I raq
Go back
U crack

Heads up
Something's falling-
Could it be an empire?

[hypewaders]

In Other Words,

I-FITE (Implications of Former Iraq Trading in Euros)

Eurofight with me, yuri sonovabitch.

:huh:

Just read William Clark, if you never got around to it- the factors remain, but are aggravated.

[S.A.M.]

So any bets on the $200 oil barrel? One year?

[John99]

It's a big deal for the US, very big deal indeed. If oil were being traded in Euros today, the prices of oil in the US would be astronomical. Since the US dollar is the standard currency (for now) price fluxuations are done with the US $. If it were done in Euros the US would lose the competitive advantage, and easily the international currency of choice would be the Euro. A even bigger worry for the US would be the anticipated Pan-Islamic currency that is currently being touted by Malaysia.

The price is the price. Would not matter if it was traded in beads.

[hypewaders]

"The price is the price."

The price is more than a pound of flesh, when it comes to Uncle Sam's fat ass*. Further Petrocurrency conversion can collapse the US Dollar. The USA may not have enough friends to stop it, if Europe gets cheeky.

* not you, S.A.M.

[S.A.M.]

I see three possible situations:

1. the ECB will stop being a money grubber and moving all the investors from the measly 2% of the US to the 5% of the EU by dropping some of their interest rate.

2. The feds will cough up some more interest deductions, albeit reluctantly to 1.75% (how low can they go before committing hara kiri?)

3. The sheikhs will worry about inflation enough to yield some more petro for the dollar, hence depressing the price.

Thats the good stuff. Anyone want to volunteer the possible bad stuff?

[hypewaders]

The bad stuff, which is really going to happen is that the Fed won't have enough takers soon on financing the deficit. Giant Sucking Sound fails to express how big this will be, how much it will suck, and how much we're going to hear about it :(

[Asguard]

um the greedy bastards will cut production to one barrel per country per year and see how high the price can REALLY go?:p

[hypewaders]

In Arabic, they say "on your Head" to that.

In other words, denying uncoal Sam his customary drink will bring much violence. Just of the thought of it already has, because he's a belligerent gasoholic.

[Asguard]

i do have to say there is a limit to how many times the US can invade. Eventually the world would take action against them because they cant hid ALL there oil wars. if they were to invade the intire middle east coincidently after the middle east cut production SOMEONE would wake up this time

[hypewaders]

Aren't you Autralians ready to join the USA in a few air raids in Iran, just for old times, mate?

It could be With-Us-or-Against us when the GWOT (http://usmilitary.about.com/od/medalsanddecs/l/blwotmedals.htm) gets redder than orange (http://usmilitary.about.com/od/medalsanddecs/l/blwotmedals.htm) near election-time.

[Asguard]

HA, this time we have a LEFT(ER) wing goverment who is already pulling the Australians out of iraq. How many other goverments do you think will want to lose there jobs for US oil?

[S.A.M.]

I'm wondering what they will cook up close to the elections. :eek:

[hypewaders]

Quds Force Sabotage of Victory in Iraq, AntiSemitism, Terrorist Camps, Iranukes (WMDs) and the long-overdue next terrorist attack within the USA. In other words, business as usual.

[Kadark]

I'm wondering what they will cook up close to the elections. :eek:

Intensifying the scrutiny against Iran's "weapons of mass destruction".

A devastating attack against Tel Aviv organized by Mossad.

[hypewaders]

Mossad does not murder Jews.

[Kadark]

Wanna bet?

[John99]

Quds Force Sabotage of Victory in Iraq, AntiSemitism, Terrorist Camps, Iranukes (WMDs) and the long-overdue next terrorist attack within the USA. In other words, business as usual.

No more flying for you and no more anemone for Asguard. That is fine with me.:)

[kmguru]

Yesterday, I talk to my liquid gold seller for the car. He said that the oil price will drop in the next 3 months, then go up again and then drop a little. That is what he heard from this supplier. But long term prospects are unknown. He siad that India and China are digging for coal that could change the dynamics.

I think, until the hydrogen and plugin hybrid systems kick it, not much is happening. It takes 6 years (3 to 4 years in China) to build a nuclear power plant to support the plugins.