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Thread: The sky is falling

  1. #1
    Huge Member Brucelles's Avatar
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    The sky is falling

    Saudis may drop their peg to the Dollar

    Saudi Arabia owns about $800Bn dollars. These are essentially worthless pieces of paper that Saudi paid good money for in order to earn interest. However the 5% coupons don't cover the fact that the dollar has halved in value vs the Pound and Euro over the last 7-8 years. Since Bush in fact. However the fact that the Saudi Riyal is pegged to the Dollar insulates them a bit.

    So Saudi is losing money on it's dollars as they paid 800 Bn Pounds for them and now they are only worth about 400 Bn.

    Saudi also has a huge trade deficit, it imports nearly everything, and it often pays Euros or Pounds to do so. With the Riyal pegged to the Dollar this means that the cost of a British shirt has doubled since Bush. The cost of a Mercedes has nearly doubled. Inflation is painful.

    So Saudi is thinking about cutting it's currency's peg to the Dollar in order to save itself from financial ruin.

    This could well mean a dollar in free fall. If Saudi goes the Gulf will follow (except Iraq, which is an occupied country and would just get bombed again) and this will chime well with the creation of the Gulfo(™) which is the new single currency planned for the Gulf Cooperation Council (GCC) countries (The Arab Eurozone).

    So then the Arabs would have no protection from the massive loss they are facing from the Dollar's ruin. They would have to sell Dollars. Basically the whole Gulf would give back stacks of green paper and get back in return $3,500 Bn in real money. Money that the US has at the moment, to spend.

    Next step would be to start selling oil in Gulfos. Then the USA would have to face fuel prices doubling every few months as the Dollar slides into the merde.

    The only choice America would have if the Saudis did pull out of the dollar would be to raise interest rates in order to attract someone with $3,500bn to spare who would bail them out; and that won't be the Chinese. The Chinese are already threatening to use their "Nuclear Option" of pulling out of the Dollar if the US doesn't play nice.

    If Dollar interest rates rise, so will Euro and Pound rates and we will be looking at some serious crap happening. First the US lending market would be screwed as more and more loans were defaulted, then credit would get tighter and tighter leading to stagnation or probably even stagflation.

    Europe is insulated to an extent, but the drop in value of our extensive dollar holdings would hurt the bottom line and push our rates up too. We already have a credit squeeze, but it's going to get worse.

    Say hello to a lot of misery guys.

    (Thanks Evilmunky)
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  2. #2
    mutantbass head Lee H's Avatar
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    Re: The sky is falling

    Quote Originally Posted by Brucelles View Post
    Say hello to a lot of misery guys.
    Why? Am I due to get married?

    If oil does increase in price then this will have a knock on effect on other items again like food, due to higher transportation costs. However with bad crops this year and the threat of increased oil/fuel this would only mean that many things in the supermarket are going to probably increase in price by quite a bit.

    If this happens then some people are seriously going to struggle, but it could be a godsend as this might mean people would not be able to purchase all the luxury things they desire like cream cakes, sweets and other stuff like this. As such the prices rising on these might help lower the countries obesity levels and couple this with the threat of petrol prices going skyhigh, I can see a lot more people walking short journeys.
    Last edited by Lee H; 20-09-2007 at 12:07 PM.

  3. #3
    Huge Member Brucelles's Avatar
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    Re: The sky is falling

    The good thing is that oil price rises will rise way faster for the Americans than for us, and if the Arabs hold onto setting the oil price oin dollars we will actually get cheaper fuel (or at least slower increases).

    (Thanks Evilmunky)
    Eagles may soar, but weasels never get sucked into jet intakes.

  4. #4
    Mostly Me Lucio's Avatar
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    Re: The sky is falling

    I'd love to live within walking distance of work (e.g. within 2 miles or so) but trouble is thanks for that wonderful urban planning that puts industrial estates on the edge of town it's damned difficult

    Still, the economy is definately on the way down at the moment but at least there's plenty to time to try and do something to shore up your personal circumstances before it happens.

    I'm just off out to buy 100 lottery tickets for Saturday's draw

  5. #5
    its all clear now
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    Re: The sky is falling

    Thankyou Mr. Daily mail

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    Lovely chap dangel's Avatar
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    Re: The sky is falling

    ..speaking of which - can I just blame all the illegal imigrants?
    Crosshair VIII Hero (WIFI), 3900x, 32GB DDR4, Many SSDs, EVGA FTW3 3090, Ethoo 719


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    Seething Cauldron of Hatred TheAnimus's Avatar
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    Re: The sky is falling

    Quote Originally Posted by No.72 View Post
    Thankyou Mr. Daily mail
    que?

    This is a very real problem, the only question i would ask is what would they do with this money?

    If you're working on/near a rates desk you wouldn't be so stupid.
    throw new ArgumentException (String, String, Exception)

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