Another one bites the Dust: Australia turns nose up at the dollar

It appears the jig is up America, your chickens are coming home to roost. Australia is the latest nation to opt out of the dollar in trade and now will conduct trade in the yuan. This is just another nail in the coffin for the dollar as we know it.

Brazil, South Africa, even Japan are getting out of trading exclusively in dollars. But what do we do about it? How do we keep these latest traitors, these damn barbequing Aussies from going through with this? Do we convince the American people kangaroos are secretly hiding dirty bombs in their pouches and are training to enter the US and set them off?

The problem is more and more nations are trading amongst themselves without the dollar. We can’t just attack the entire world. OR, maybe this (sic) IS THE PLAN? Why else are we spending the same amount in military expenditures as the rest of the world combined and refusing to make any cuts to it?  

And here all along you thought these wars over the last 30 years were for freedom, fighting terrorism, nukes and/or WMD’s. Wars are a win-win for America. It keeps the population always at war, thus easier to manipulate. It promotes growth for so many sectors in private enterprise (especially banking) and above all it protects American hegemony. From the end of the cold war to Kuwait to Iraq and soon to be Iran it’s all been single pieces in a larger puzzle – the petrodollar. From the Federal Reserve Bank of New York:

 The recycling of petrodollars into the U.S. financial markets has supported activity here by allowing for higher consumption and investment spending than otherwise would have occurred. The concomitant cost has been a further expansion of the U.S. economy’s already sizable net international liabilities.

As we enter the golden age of globalization, we must accept the old proverb to be true; for whatsoever a man soweth, that shall he also reap.

American companies wanted to establish markets and dominate the globe with its dollar and to a large degree it has; OPEC still uses the dollar but the rest of the world isn’t down with it anymore. In doing so, American business and its government have built and educated the world in finance and trade. Now they are turning around to see who has been dangling the strings. And they don’t like it.

As we turn each page of history we see empires rising and falling. Nobody has stood the test of time. It’s been a good run America but the grip we’ve had on the world is loosening. When the dollar starts to tumble it will trigger a REAL economic catastrophe and the rest of the world knows it; 2008 wasn’t that long ago in the history books.

This will have a direct impact on our debt, trade deficit, standard of living… basically EVERYTHING and ANYTHING “uniquely American”.  

Kangaroo court of sanctions verdict: War

  (Image from: The Nation.com)

Add another log (or two) to the fire. India, Russia, Turkey, China, Japan, South Korea and now Pakistan and Australia are all continuing to trade with Iran despite US sanctions passed on through on December 31, 2011. A similar set of sanctions was set in place by the European Union on January 23 of this year. This resulted in a move by Tehran to stop sending crude to both Brittan and France.   

Iran, who is a member of both the Nuclear Non-Proliferation Treaty and International Atomic Energy Agency feel they should be able to pursue Nuclear power for domestic purposes, whether that is true or not is anyone guess and is totally irrelevant, as far as we are concerned here in the states.

As we have heard ad nauseam, the sanctions were put on Iran based on their developing nuclear weapons program going online and posing a threat to destabilize the region. Iran says it’s for peace, the US doesn’t believe them and because of that, the west led by the US, continues to escalate toothless sanctions on Iran.

Iran has taken a progressive approach to combating sanctions from the West, thus the new sanctions put in place on New Years eve 2011 come across as a either a gross miscalculation by our intelligence (where have we seen this movie before) or our State Department (again, same movie, same script… different actors) in dealing with the supposed weakness or Iran; its inability to make enough Gasoline.

Tehran has used multiple tools to soften the blow of sanctions well in advance. First, there was the 2007 Gasoline Rationing Plan put into place by President Ahmadinejad. Three years later, in 2010, came a massive reduction of subsidies on gasoline, resulting in a quadrupling of price overnight across the entire nation of Iran, prices went from 0.38 cents per gallon to $1.44.

All the while, Iran's dearth of refining capacity (that the sanctions were thought to have been targeting) and the need to import 40% of their gasoline was being addressed and dramatic changes were being implemented. Iran has spent and will continue to spend billions on modernizing their current refineries while putting into motion the building of seven new refineries. As a contrast, the  US hasn’t built a new refinery in 36 years (that plays a big role at what you pay at the pump).

Here we have Iran looking to build seven refineries in the next few years. This will not only allow them to supply their own oil, it was also give them more economic freedom as they will not have to subcontract out the refinery process of raw crude to other gulf nations. Iran went from importing 40% of its gas five years ago to now just 5% coming way of importation.

With all this development and concentration on energy independence; Iran is posed to be a net exporter of Gasoline by 2015. That is a rather dramatic turnaround in just a few years time and a testament to the Iranian’s diligence and prudence on addressing their achilles heal.

Let’s get back to that script and movie theme once again. It was the buildup in 2002 to the Iraq invasion that the US (after multiple sanctions on Iraq and refusing anything outside of the fact that Iraq had WMD’s) went to war to hold up UN sanctions despite that fact that the UN never approved of the war in the first place. Then, shortly after the invasion, the script was flipped to "giving the citizens democracy" or "freeing them from a big mean dictator". Or was it that "he supported terrorists"? I can’t remember the order for excuses as they were then, as they are now, in dealing with the new posterboy for dollar interference... totally irrelevant.

The bottom line is this. We go after them with sanctions and they ultimately don’t work. There is only one other alternative; Iran will get a taste of what both of its neighbors got. Like Iraq, this isn’t about Nuclear weapons. It is about oil. However, above all, this is about protecting the petrodollar. Iran has made all the right moves and either we are severely underestimating them or it’s just a big dog and pony show for the inevitable. Either way, regardless if its Obama or Romney or Santorum… Iran is next.