Krugman argues that the issue is a crock: http://www.wws.princeton.edu/~pkrugman/oildollar.html
His argument looks right to me. max I'll plead ignorance and then speculate nonetheless: It seems to me that the "clash of currencies" is pretty one-sided. Though the Eurocrats would _like_ the Euro to be a world-class currency like the US$, it seems unlikely that they care about the issue very much. On the other hand, at this point, given its relatively high value and precarious position, the US elite probably cares a hell of a lot about the dollar and fear its fall with a vengeance. I think, however, that as far as preserving the value of the dollar is concerned -- by building up US military and geopolitical "full spectrum" dominance -- it's only one part of the puzzle. They want full spectrum dominance for a lot of different reasons, such as rolling back the campaign against land-mines, the call for carbon taxes, the defense of gay rights, etc., etc., etc. It's a little reminiscent of one story of the origins of the US civil war. The North's rulers didn't really care that much about the slavery issue (they had other fish to fry, such as protecting tariff barriers to help manufacturing). But the Southern rulers _really cared_ about the slavery issue. Since slaves were priced in a speculative market with inelastic supply & demand, any little move against "slaveholders' rights" (oops, I meant "states' rights") would cause massive capital losses for the slaveowners. So even if the North moved mildly & in a reformist way to deal with the problem (such as talking about compensating the owners after freeing the slaves) it could have a effect similar to the Dow hitting the floor has on the financial aristocracy. Jim -----Original Message----- From: Peter Dorman To: [EMAIL PROTECTED] Sent: 3/22/2003 12:25 PM Subject: [PEN-L:35927] Re: Clash of Currencies and the Iraq War I'm both happy and a bit embarrassed at the way this dollar-euro story is being picked up by the antiwar movement. I'm happy because the extreme vulnerability of the US payments situation is crucial to any analysis of the geopolitics of the current moment. Talking about this represents an advance in sophistication and perhaps preparedness for what may come. I'm embarrassed because the analyses that are floating around are highly flawed in their particulars and make it look as though our side is not very together. I think the fault may lie with us lefty economists; we who have been studying this for years should be writing about it, but instead we are leaving it to folks who are trying to figure it out on the fly... Peter Carrol Cox wrote: >This article by Geoffrey Heard is one of the better I've seen on the >war. This URL takes you to the printer-friendly version. > >Carrol > >http://slash.autonomedia.org/print.pl?sid=03/03/20/1330253 > >
