Money for old rope
Why should the US make nice to Europe?
Here's why. The news that Russia is pricing its oil in euros might not at first glance seem all that important. But read the piece.
America funds its extravagant lifestyle with a huge national debt. It's able to do this because everyone wants dollars. Dollars are the bedrock of the world's economy. They're what we all rely on to make our exchanges. The enormous size of the US economy means that we can believe that it will always be there, buying our goods, creating wealth, basically being reliable as a consumer of last resort, with money that you can trust.
Pricing basic commodities in currencies other than the dollar sends a message. It says that the US economy is not so important. If many countries follow the Russian line, and do so for other commodities (although it should be noted that oil is far and away the most important commodity in the world market) then the European economy will become the world's backstop. America will find that its debt is not so sustainable (because it will not find others so willing to buy its currency, which will have become less useful), and there will be upheaval in its domestic economy (not least because some of its advantage in trade deals -- which stems in part from the deals' being struck in its own currency -- will have been lost.
This is a simplified version, of course, of a complicated matter. But it should be noted that one of the things that Iraq did that very much pissed off the Bushistas was to ask for his money for oil in euros.
posted by Dr Zen @ 6:23 pm
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