How valid is the "War for Oil" Argument?

[alexruiz]

Originally posted by: charrison

Originally posted by: Helenihi

Originally posted by: glugglug
The most plausible theory I've seen is this one that the war is not about the oil itself, but the currency the oil is traded in. (Providing stability to the dollar because other nations must have Dollars rather than Euros to buy oil).

I don't know how this became trendy to float around as a reason for the war, but it's simply not realistic. Paul Krugman, one of the world's top economists, had a short article as to why it was bunk.

http://www.wws.princeton.edu/~pkrugman/oildollar.html[/q

linked

Glad someone took the time to debunk that foolish thought.

Thanks for the link, you gave me what I wanted to see (well, part only, ). However, he is completely IGNORING the commercial balance. In previous posts I stated strongly that the "Euro vs Dollar" has nothing to do with "how much" you have here or there, it is about "how strong" your currency is compared to the other. The trend or crisis is not immediate.

He is totally ignoring the fact of the EXCHANGE RATE, as he only talks about the currency used for the transactions. His model works ONLY if the exchange rate stays fixed, but that doesn't happen. In fact, if the "standard" currency changes, the devaluation of the former standard leads to make the deficit bigger without spending a dime more. The key lies on how much the deficit becomes once onother currency is used as reference.

I am honestly surprised for the oversimplistic explanation he gave, and a little stunned for his reluctance to touch the exchange rate as the key issue. He has an excellent perception of the global numbers, but forgot to think outside the box.... maybe because he never thought that a conversion involving exchange rate would be necessary. He gave a half truth only.

Thanks anyways

Alex

PS. By the way, in his oversimplistic model he also forgot to mention that if most of those dollars abroad are returned to their issuing country, they cause inflation (3%-4% according to his numbers). The issuing bank has then to withdraw them from circulation, thus losing effectively 3%-4% of buying power. Now, involve the exchange rate and we got something.

 

[charrison]

Originally posted by: alexruiz

Originally posted by: charrison

Originally posted by: Helenihi

Originally posted by: glugglug
The most plausible theory I've seen is this one that the war is not about the oil itself, but the currency the oil is traded in. (Providing stability to the dollar because other nations must have Dollars rather than Euros to buy oil).

I don't know how this became trendy to float around as a reason for the war, but it's simply not realistic. Paul Krugman, one of the world's top economists, had a short article as to why it was bunk.

http://www.wws.princeton.edu/~pkrugman/oildollar.html[/q

linked

Glad someone took the time to debunk that foolish thought.

Thanks for the link, you gave me what I wanted to see (well, part only, ). However, he is completely IGNORING the commercial balance. In previous posts I stated strongly that the "Euro vs Dollar" has nothing to do with "how much" you have here or there, it is about "how strong" your currency is compared to the other. The trend or crisis is not immediate.

He is totally ignoring the fact of the EXCHANGE RATE, as he only talks about the currency used for the transactions. His model works ONLY if the exchange rate stays fixed, but that doesn't happen. In fact, if the "standard" currency changes, the devaluation of the former standard leads to make the deficit bigger without spending a dime more. The key lies on how much the deficit becomes once onother currency is used as reference.

I am honestly surprised for the oversimplistic explanation he gave, and a little stunned for his reluctance to touch the exchange rate as the key issue. He has an excellent perception of the global numbers, but forgot to think outside the box.... maybe because he never thought that a conversion involving exchange rate would be necessary. He gave a half truth only.

Thanks anyways

Alex

PS. By the way, in his oversimplistic model he also forgot to mention that if most of those dollars abroad are returned to their issuing country, they cause inflation (3%-4% according to his numbers). The issuing bank has then to withdraw them from circulation, thus losing effectively 3%-4% of buying power. Now, involve the exchange rate and we got something.

And here lies the problem, this article about war over oil and the Euro is too simplistic of a model.
There are many things that make the Euro/Dollar strong and many things that make the Euro/Dollar weak. There many advantages to have a strong/weak Dollar/Euro. This article only looks at one particular aspect of this macroeconomic problem and trys to draw a valid conclusion.


This is just not possible.

 

[CaptnKirk]

More Bush & Oil info

 

[Moonbeam]

NY Times today has an article talking about the hurry to establish rule in Iraq so the oil can flow. No WMD and the people are talking about organizing to throw us out by force. Bush, the Supermind.

 

[jhu]

of course oil was part of the consideration. we "need" oil. it wasn't just to liberate the iraqis otherwise we'd have gone into angola, sierra leone, and libya.

 

[LunarRay]

Originally posted by: Moonbeam
NY Times today has an article talking about the hurry to establish rule in Iraq so the oil can flow. No WMD and the people are talking about organizing to throw us out by force. Bush, the Supermind.

Bush should have stayed in baseball where success is measured at something over 30% on one side and wins and losses on the other... you just point out and stick with the better measure..

 

[0roo0roo]

Originally posted by: RossGr
Ask a yourself this simple question, would we have invaded Iraq if there had been no oil?

Since we have lived with a not so nice dictator 90miles off of our coast for nearly 50yrs I think the answer is obvious.

How long would we have allowed Fidel Castro to remain in power if Cuba had had even a small oil field?

we made a promise to the russians not to invade they in turn would take the damned missles out.

remember we were on the brink of nuclear war? lol


u don't need to go to war for oil just look at frances ton of oil contracts with saddam. all you have to do is bend over and any dictator will oil u up good