Petrodollar Power

Dear all,

I took a break from updating my blog due to the rapid changes in the financial world in reality I could not keep up and as I write Merrill Lynch have ousted CEO Stan O’Neal due to the bank’s horrendous exposure to the sub-prime crisis writing off an incredible $8.4bn with more to come. Both Merrill Lynch and USB warned of more losses and with Citigroup not exposing true losses I feel we are in for more shocks and senior heads at these banks to go. However don’t shed a tear for these high paid execs O’Neal is reported to walk away with more than $200 million (£97million) in company holdings and retirement benefits. He will be remembered for the biggest losses in the Bank’s history. Market reaction to O’Neal’s departure was shares closed up 1.33 cents at $62.47 as investors’ awaited further news on O’Neal’s successor.

Remember some week ago I wrote about the dollar’s woes? Well the US and the World economy are in for more shock, the dollar is at a 26 year low against sterling (£) with £1 worth $2.066 and rising especially with the Fed undecided on how much to cut this week’s interest rate. I see a further 0.25% cut and more dollar losses, Canadians are having a good time also as the loony is at a 47 year high against the dollar, you may well ask what’s going on, well the Bush administration’s handling of the economy is at the heart of the problem all this free spending, the funding of the Iraq war, military hardware procurement a government living beyond its means. If it was an individual he would be declared bankrupt. Now the most worrying aspects of this is the rise of economic strength in China, the Far East and the Middle east. The Middle East with all that oil revenue will now begin to shape economic events they will challenge the industrial west. This challenge will be led by six states of the Gulf, Saudi Arabia, The UAE, Kuwait, Qatar, Oman and Bahrain they have enjoyed the fastest and prolonged expansion for almost 30 years. The driving force is Oil from $24 a barrel in 2002 to $93 a barrel in 2007. Over the past 5 years GDP has risen to a heady 5.6 percent and is still expected to expand faster to around 5.9 per cent in 2008.
The region’s annual GDP is $735billion and they have the upper hand with huge oil reserves and demand from USA, Europe India and China they will seek to change world economics. The bad news for the USA is that these states are already disposing of dollar assets; Kuwait has already abandoned its dollar currency peg. What does this mean? Well as the dollar continues to weaken hundreds and billions of dollars will flow out of the Gulf and seek a safe haven in Gold, other commodities and the Euro. The Gulf States will then be able to acquire corporate stakes in the UK and the rest of Europe this would transform these Arab states from a petrodollar power into a global hub betting its future on investment, trade and services.

Who say’s money does not talk? King Abdullah bin Abdul Aziz al Saud the custodian of Saudi Arabia flew into London this week the first time in 20 years. His entourage a whopping 830 people on five 747’s
The British government has long been moaning about Saudi Arabia’s human rights record but with the king in town they can forget all that a sell him fighter warplanes, weapons and much more in deal worth millions of pounds and British jobs.

On closing just how many of us are paying attention to all this global problems? Wars rumours of wars, financial meltdown, this message was taken from a trader’s chat room I visit every now and again to see how they see the markets.

by fletchrrr 14 hours ago
The world is also coming to an end sooner than one would think.
On that note, bye for now.
E-Money