Following the central bankers meeting in Doha this week its clear they are all enthusiastic and confident in the 2010 unified Gulf currency, known as the ‘Dinar’. The expected time frame for the single currency is on the extreme side of optimism, (also note, I am very skeptical that a single currency will be adopted in the first place). There are many obstacles that must be overcome before discussing a unified currency. The Gulf, although neighbors, do not share the same political veiws, economic reform or civil freedoms, among many other factors that will be of prime importance to the unification of the currencies.
6 Responses to “Why the single Gulf currency will not happen…”
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First off I love your blog, I am not so hot with finance so I rely on your blog to keep me up to date. But I agree with you on this, GCC countries can not agree on basic views which I believe would hinder them in making monetary calls.
It’s true that the single Gulf currency will not happen in 2010.
It will happen next week or next month.
OPEC cannot stop arguing that speculation is the cause of the present level oil prices. (1) (2)
I am not even a dwarf on the international power scene and I am not able to analyse all the forces which are influencing the price of oil.
I do however know that:
In normal times, the effect of the speculator on oil prices is to level them off. (3)
In normal times of plenty, when oil prices are low, the speculator by buying up and storing oil causes them to rise. (3)
In normal times of lack of oil, when oil prices are high, the speculator sells and causes prices to fall. (3)
The effect on him is to earn profits.
This is not villainous; on the contrary, the speculator performs a valuable service. (3)
Yet instead of honouring the speculator,
OPEC is reviling him,
thereby forgetting that prohibiting oil speculation has the same effect on society as preventing squirrels from storing up nuts for winter – it leads to starvation. (3)
Why is OPEC doing this?
Could the US dollar and the imminent pricing of oil in Honest Money
be the answer?
Ivo Cerckel
NOTES
(1)
Oil slips from record, Saudi says supplies ample
Reuters
Thursday April 10 2008
http://www.guardian.co.uk/feedarticle?id=7452896
SNIP
OPEC ministers will attend an industry gathering in Rome later this month, but are not expected to call a meeting there to review output policy. Members of the cartel argue SPECULATORS are driving up prices, and say an extraordinary meeting before the scheduled September meeting is not needed.
(2)
Oil steady at $110 on dlr, Saudi; China supports
Fri 11 Apr 2008, 6:10 GMT
By Felicia Loo
http://africa.reuters.com/wire/news/usnSP169323.html
SNIP
Ali al-Naimi, oil minister for top OPEC producer Saudi Arabia, on Thursday shrugged off calls from consumer nations to boost production, saying that supplies were adequate and record prices were not due to a lack of oil. [
Saudi Arabia, the world’s top crude exporter, will supply a little more oil to one of its Asian customers next month, but shipments to at least three other lifters will be unchanged, refinery sources said on Friday. [
The cartel will attend an industry gathering in Rome later this month, but are not expected to call a meeting there to review output policy.
Members of the cartel argue SPECULATORS are driving up prices, and say an extraordinary meeting before the scheduled September meeting is not needed. (Editing by Ramthan Hussain)
(3)
Walter Block, “Defending the Undefendable”, New York, Fleet Press Corporation, 1976, p. 175
OPEC is changing its argumentation.
Now it says that the dollar is causing the oil speculation.
Opec cuts output despite west’s pleas
By Carola Hoyos and Javier Blas in London
Financial Times, April 12 2008 02:52 |
http://www.ft.com/cms/s/0/95bf9db2-0819-11dd-a922-0000779fd2ac.html
SNIP
Oil used for heating is also likely to find fewer buyers in the coming months as the western hemisphere’s winter comes to an end, Opec ministers argue. The weak dollar is also attracting speculators into oil, driving up the price, they say.
OPEC is again changing its argumentation
and
is now arguing that it is paper oil contracts which bring the price of oil UP.
High oil prices in recent months are due more to financial market developments than fundamental growth in demand, Mohammad Alipour-Jeddi, OPEC’s head of petroleum market analysis, told the International Monetary Fund’s steering committee yesterday. The higher prices have coincided with a falling dollar and rising speculation in paper oil contracts, he said. (1)
More than four years ago, I explained the mechanism of paper GOLD contracts as follows:
“Knowing that more than 90% of the counter parties would be satisfied with a settlement of the contract in paper money, or the conversion of the obligation of the hedge fund into an obligation in paper money which involves only money and does therefore not influence the demand for physical gold, there just needs to be enough gold available to fulfill the demand of the next real gold buyer. Only to be repeated again and again as the paper system produced another lower value for each new buyer/ owner. Eventually, bringing gold to its plateau price today.
“ This gold market is a completely free market in the sense that the supply of those contracts is almost unlimited and is only limited by on the one hand nine times the gold, which can be mined and by on the other hand the costs of mining under which the price of paper gold cannot (be allowed to) fall. The contracts have therefore been offered to anyone who was prepared to conclude such wagers concerning gold price movements and it was not difficult to sell three wagers that gold would decline for every wager that gold would rise.” (2)
Paper gold contracts bring the price of gold DOWN,
Paper oil contracts would bring the price of oil UP.
I can not but explain this flagrant contradiction than by concluding
that oil is in the process of being priced in Honest Money,
nay, in the process of being priced in gold.
Ivo Cerckel
NOTES
(1)
OPEC sees softer oil demand, committed to stability
Sat Apr 12, 2008 10:45am ED
http://www.reuters.com/article/hotStocksNews/idUSWAT00932420080412
(2)
With Chinese Freegold from a reserve currency to a world standard
Done on Siquijor, on August 29, 2003
Published on Tuesday 02 September 2003, 22:48
http://www.free-europe.org/blog/english.php?itemid=56
To repeat,
since Aristotle, there is a logical law or law of thought
which is known as the Principle of Non-Contradiction (PNC).
Contrary to what many authors ague,
this is a law of thought and not a law of reality.
Reality is not submitted to the Principle.
Thought is. (1)
The Principle says that
it is impossible to be and not to be
at the same time
and in the same respect.
In Aristotle’s words:
It is, that the same attribute cannot at the same time belong and not belong to the same subject and in the same respect; we must presuppose, to guard against dialectical objections, any further qualifications which might be added. This, then, is the most certain of all principles, since it answers to the definition given above. For it is impossible for any one to believe the same thing to be and not to be, as some think (2)
By constantly changing its argumentation,
OPEC is displaying that there is something amiss in its thought.
Ivo Cerckel
NOTES
(1)
Fernand Van Steenberghen, (F-X De Guibert, ed.), “Philosophie fondamentale”, Longueuil, Quebec, Editions du Preambule, 1989, p. 296 note
Contrairement a ce qu’affirment beaucoup d’auteurs, ces principes sont
des lois logiques ou des lois de pensee comme telle
ET NON des lois de l’ordre reel
(2)
Aristotle, ‘Metaphysics’, IV, 3, 1005 b 19
http://etext.library.adelaide.edu.au/a/a8m/
Could it really be for tomorrow, Monday?
From The Sunday Times
April 13, 2008
US banks Citigroup and Merrill Lynch reveal fresh $15bn loss
Wall Street and Broadway street signs in New York city
Iain Dey
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3671568.ece
SNIP
CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more.