Thu
Sep 20 2007
03:03 pm

The dollar continues a steady pace downward. The greenback and the loonie are now at parity.

That whooping sound you hear is our very own metulj, now that the Euro is now worth 1.4x what the dollar is worth.

Topics:
Russ's picture

Petroeuros

OPEC will start taking contracts valued in Euros within the next 2 years

I read somewhere recently that the Iranians have already started doing this on a small scale. It isn't OPEC-wide, though.

If the oil trade becomes valued in euros instead of petrodollars, our currency will take a major dive; the main thing preventing a move to euros among oil traders is the sheer number of foreign governments holding all those trillions in dollar-denominated US debt. The Chinese et al. don't want the value of their investments to tank overnight, so any sudden rush to move the oil trade to euros would likely face some pretty stiff resistance (at least for a while).

Over the long term, though, if we don't do something about the budget deficit and the trade deficit, that migration starts looking more and more likely.

As you said, metulj, "Gulp."

(UPDATE: I should have bothered to read Sven's link first, which said pretty much the same thing. Never mind.)



~Russ

R. Neal's picture

Link... Private-equity firm

(link...)

Private-equity firm the Carlyle Group said Thursday it sold a 7.5 percent stake in its management operations for $1.35 billion to an investment arm of the government of Abu Dhabi, setting up a potential initial public offering.

Expect more of this. Lots more.

Sven's picture

Dean Baker has now hit the

Dean Baker has now hit the trifecta; he warned about the stock bubble, the housing bubble and the dollar bubble 10 years ago.

And in this instance, there really is a case to be made for blaming the Clenis.

Brian A.'s picture

Question on $1.40 "benchmark"

From an AP story:

The U.S. currency also plummeted to a new low Thursday against the 13-nation euro, which traded above $1.40 for the first time since it was introduced in 1999. The euro rose as high as $1.4098 Thursday before falling back to $1.4076, up from $1.3964 late Wednesday.

The $1.40 level has long been viewed as a key benchmark in terms of driving the euro toward becoming a reserve currency of choice - a position long held by the now-weakening dollar.

What's the significance of $1.40 here? Why $1.40?

Brian A.
I'd rather be cycling.

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