The EU consumer pays in real dollars, around, $29 per barrel of oil, monthly average from last summer. If the dollar continues its decline the price will be near E20.
The American consumer is paying around $40 per barrel oil monthly average. This week $49 per barrel.
No there is not magic or shadowy deal. It is just a simple conversion of currencies.
While the administration and everybody plus its brother, continue to make claims of a strong dollar policy. The dollar is declining at record levels. Reality and narrow-minding are not great friends.
If the dollar continues its decline, and the forecast now stands have a dollar worth 50 Cents of Euro. Can you imagine, the dollar .50 cents of Euro! The Volvo-driving-cheese-eating-French and its Europeans comrades will be paying $20 oil while loud mouth French-trashing-people and its friends on currency-pegs will be paying around $43 per barrel of oil.
In the near future it does seem possible, unless something gets seriously done, that rides to Sunday Church will have to be part of the Park & Ride system.
Someone needs to start to take stand and kick butt, to tell the truth about the economic situation.
The elected folks, specially, those in Washington; need to be send packing in the next election, no questions who no questions for what. I do not mean republican elected folks but also democrats. Sending packing means to elect any challenger in large enough numbers that they get the message to wake-up, and do other than pilfering peoples assets.
The interesting part here is, while the dollar is losing value against the Euro, no one seem to really care much; eventually, the EU will have to stop the floating of dollars at such discounted prices.
Basically, the dollar will be sold by Wal-Mart, if wisely done they might even make a profit from selling dollars, next holiday season retailers might advertise the dollar as a “closeout out, all dollars at 70% off.” “Sell today, big discounts.”
As we are aware where there is bad news we need to have good news somewhere.
The good news: the cycle needs to reverse; the bad news: “or else”
In an open market economy, strong currencies are sign of healthy and strong economy; weak currencies are a sign of weakened economies and declining influence.
Cycles in currencies of imperial powers have the tendency to lose a substantial amount of value at the most minimum resistance from outside. It is not a new event, Spain lost the value of the ducat after 500 years at its hegemonic decline their currency conversion would be the equivalent of 1/1000 to the original coin. The most recent example is the English Empire in the 1950’s. When the League of Nations sent a message to London with a very simple text: “imperialism is over, reform before we intervene” England went in free fall from India to Zimbabwe. As the “freed” colonies started their own currencies the crown direction, since then, declined in a consistent basis, today the British pound buys 1/3 of what used to buy 60 yeas ago this decline is a natural cycle of adjusting not the currency but the behavior of those controlling their currency.
Today the decline of the US dollar is in the same path, the most alarming situation is the fast and sudden decline. There is a belief of disparity economic strengths between the European and US, the reality is different. There is not such pronounced disparity. The exception is the incremental decline from US employee standard of living versus European employees. The intrinsic economic differences are not so large that is what is worrying some prominent analysts. The fallacy is catching up with reality. Some of this disparity comes from energy policies and blind acceptance of policies that do not address the reality of society.
Pumps and dumps
The equation for the oil producers is simple but includes the inclusion of high-risk lack-of-discipline of from the US Budgets disparities. The Oil rich solution, sell more oil in Europe, a market that is growing at 15% in currency terms, sell the strong euros to buy US bonds, and hope for the best, while getting pay by the American tax payers in fair interests. In that case US productivity needs to grow larger than the cost of the interests sent abroad or else!
YOU DECIDE!
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