The Dollar under threat from Saudi Arabia

[Gromit]

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

http://www.telegraph.co.uk/money/main.jhtml;js essionid=1UJXUX45BFVNZQFIQMGCFFOAVCBQUIV0?xml= /money/2007/09/19/bcnsaudi119.xml

Is the US economy faltering, and will that have a knock on effect in the UK?

[stokemaveric]

it always does gromit as the old saying goes.....if the us sneezes the uk catches a cold..........give it 6-12 months and there will be a recession in this country..........then what will all the migrant workers do?lol

[Theland]

I honestly believe there will be a crash on the scale of the 1930's. It will start in the U.S. and flash across the world in no time. What we are seeing now are just the birth pangs of the inevitable.

[jake-the-peg]

Saying that we catch a cold if the US sneezes has become a bit of a cliche.

It can't be that true otherwise we wouldn't be getting $2 to the pound right now!

An adjustment in this wouldn't be that bad though, such a high exchange rate makes oil cheaper but our exports more expensive and US companies are less likely to invest in the UK whilst the pound is so strong

[stokemaveric]

youir last paragraph sssums it up in 1 jake.we might be getting �2.00 for a dollar NOW but what about in the near future?

[China Doll]

Did not your man who predicted the recession in the 1980's predict the same thing will happen again soon as we've learnt no lessons?

I thought he was on breakfast telly saying that relatively recently?

Wonder if this fits in with that?

I've asked more questions and not answered any... Sorry about that!

[jake-the-peg]

Well you know predictions with vague time limits are pretty easy.

I can predict a major air crash and as soon as one occurs say "there you go I told you so!"

See the Daily Mail they've spent about the last 7 years predicting an imminent house price collapse.

I'm not quite sure of your point Stoke - are you suggesting that the pound will drop in relation to the dollar or continue to climb?

And which do you think is preferable?

[kwicky]

Mervyn King, BofE today said the � unlike the $ was strong and did not need to follow it at every turn. Geo Bush has ruined the finances of your country with his war actions in Iraq and Afghanistan costing hundreds of billions of dollars. His rhetoric has made both Russia and China invest heaviily in new weaponry and will take decades long after he has gone to rectify it. Both these two powerhouses are intent on moving away from the dollar standard and others are likely to follow. So my advice is to get your money out of dollars and into another currency!

[Gromit]

Thought this was quite interesting....

"Iran's real threat to the US and its economy is that, in defiance of the US administration, it is attempting to establish an oil 'bourse' (exchange) in March of 2006 which would enable oil to be traded in euros. This would move oil sales away from their usual denomination in dollars and would, it is argued, undermine the American currency with grave consequences for the US economy. This internet-based debate is reminiscent of what occurred before the invasion of Iraq when several observers, myself included, hypothesised that Saddam Hussein's decision to sell Iraqi oil in euros was perhaps one of the reasons the US wanted "regime change". The US decision after the invasion to return Iraqi oil sales to dollar denomination and to convert back into dollars all Iraqi foreign currency reserves, which had been in euros prior to the war, was certainly entirely consistent with this theory."

http://www.energybulletin.net/12463.html

[jno]

haven't heard anything about an Iranian oil bourse recently, Gromit; they're struggling with economic problems themselves (as well as their standoff with the west over nuclear power), so this may be on the back burner, possibly simmering over a feeble fire of twigs.

[neo.]

The Saudis shud start investing in nuclear bunkers