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Whodunit? Sneak attack on U.S. dollar - Yahoo! News

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Whodunit? Sneak attack on U.S. dollar - Yahoo! News
Description
It began with a thinly sourced but highly explosive report Monday in a British newspaper: Arab oil sheiks are conspiring with the Russians and Chinese to quit using the dollar to set the value of oil trades — a direct threat to the global supremacy of the greenback.

Is it true? Everyone from the head of the Saudi central bank to U.S. officials scrambled to undercut the story, but no matter.

With the U.S. economy on the ropes and America by far the world’s biggest debtor, investors aren’t feeling as secure about the dollar as they used to. And the notion of second-tier economies ganging up on Uncle Sam didn’t sound so far-fetched.

So the piece by Robert Fisk of the Independent shocked currency traders around the world and almost instantly sent the value of the U.S. dollar spiraling downward and the price of gold skyrocketing to an all-time high, as a hedge against a weakened dollar.

The website drudgereport.com quickly amplified the impact of the story with a headline atop the site: ARAB STATES LAUNCH SECRET MOVES WITH CHINA, RUSSIA, FRANCE TO STOP USING DOLLAR FOR OIL TRADING ...

So who wanted dollars diving and gold rising? In other words, who is Fisk’s source, and why did he or she want to tank the dollar? It’s the global currency version of the old Washington parlor game of speculating on the real identity of Deep Throat.

No one knows.

But one thing is for certain: With the price of gold jumping to $1,048.20 per ounce, traders who moved early enough stood to make millions.

So in government circles in Washington, speculation immediately centered on gold traders: With the skyrocketing price of gold, they’d be the biggest beneficiaries of the article.

Fisk’s story itself isn’t much help in solving the mystery — it is sourced vaguely to “Gulf Arab and Chinese banking sources in Hong Kong,” and it included one blind quote, attributed to “a prominent Hong Kong broker.” That doesn’t narrow down the pool very much.

The story doesn’t name any officials who had allegedly participated in the secret meetings involving the Arab states. It didn’t say where the meetings occurred or when. Other than saying the plan is to stop using the dollar by 2018, there was precious little detail to the account.
Original URL
http://news.yahoo.com/s/politico/20091008/pl_politico/28091

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  • Public Comments

    • JDP JDP
      2 months ago


      FUD again, aided by "conservative" blogger Drudge. Remember when "conservative" actually meant something? ... like really being "conservative" about what one said and did ... so as to "serve the truth".
      Financial and Economic Global Crisis, Finance & Economics, Mauro Magnani's FINANCIAL TWINE, Money and Investing, *Changing America?

    • Tony Wang Tony Wang
      2 months ago


      There's a reason to be concerned about the dollar losing its reserve status, and it's fueled by jokers like Drudge and Michele Bachman.

      The dollar is unlikely to lose its reserve status any time soon, because there aren't any really good alternatives. What's it going to be? The euro? Growth in the Euro zone is expected to lag that of the United States. The pound isn't a good alternative. The yen would be, if Japan was showing any growth. The yuan isn't allowed to float freely, so that can't be it, and the world generally won't want to give a currency that's controlled by a bunch of brutal thugs who bill the family of those they kill for the bullets used in the execution.

      So it's going to be the dollar for now. But the United States does need to get its financial house in order to keep it that way.
      Finance & Economics
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