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Oil is up, and this time the dollar is down
Michael R. Sesit Bloomberg News via IHT
Oil is up and the dollar is down. If the petroleum part of that relationship doesn't change significantly - which looks unlikely - the currency piece probably won't, either.

For three decades, the correlation between two of the world's most important prices was strongly positive, with oil and the dollar rising and falling in tandem.

Petroleum is bought and sold in dollars. That meant that as oil prices climbed, so did the global demand for dollars. And the appetite for dollars grew even larger during recurrent oil shocks, as rising risk aversion prompted investors to seek safety in U.S. Treasury securities.

The U.S. currency was also buoyed by the inclination of oil-exporting countries to invest their sale proceeds in dollar-denominated securities. When they spent the funds on goods, they usually bought American.

But since early 2002, the correlation between oil and the dollar has been negative. When oil rises, the U.S. currency falls.
(24 September 2007)

Iraq Oil Deal Gets Everybody's Attention
Michael A. Fletcher, Washington Post
The oil deal signed between Hunt Oil and the government in Iraq's Kurdish region earlier this month has raised eyebrows, in no small part because it appears to undercut President Bush's hope that Iraq could draft national legislation to share revenue from the country's vast oil reserves. Making the deal more curious is that it was crafted by one of the administration's staunchest supporters, Ray Hunt.

Hunt, chief executive of the Dallas-based company, has been a major fundraiser and contributor to Bush's presidential campaigns. He also serves on the president's Foreign Intelligence Advisory Board, putting him close to the latest information developed by the nation's intelligence agencies.

If Hunt is signing regional oil deals in Iraq, critics ask, what does he know about the prospects for a long-stalled national oil law that others don't?

Since the deal was made public, it has drawn the ire of the Iraqi national government, which has called the agreement illegal.
(24 September 2007)

Naomi Klein Debates Alan Greenspan
Amy Goodman, Democracy Now via AlterNet
Naomi Klein goes head to head with Alan Greenspan on the Iraq war, Bush's tax cuts, economic populism, crony capitalism and more.
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AMY GOODMAN: As the credit crisis continues to grow and the US dollar hits a new low, we turn today to the former Chair of the Federal Reserve, Alan Greenspan. Alan Greenspan headed the central bank in the United States for almost two decades. He was first appointed to this position in 1987 by President Ronald Reagan. Greenspan retired in January 2006, after deciding the fate of national interest rates under four different presidents. Dubbed "the Maestro," he was widely regarded as one of the world's most influential economic policymakers. He has just written a new 500-page memoir; it's called The Age of Turbulence: Adventures in a New World.

Alan Greenspan joins us now on the phone. And in our studio we're joined again by journalist Naomi Klein, author of The Shock Doctrine. We welcome you both to Democracy Now! Welcome, Alan Greenspan.

ALAN GREENSPAN: Thank you very much. I'm delighted.

AMY GOODMAN: It's good to have you with us. You worked with six presidents, with President Reagan, with both President Bushes. You worked with President Ford, and you worked with Bill Clinton, who you have called a Republican president; why?

ALAN GREENSPAN: That was supposed to be a quasi-joke.

AMY GOODMAN: Talk about it.

ALAN GREENSPAN: Well, Clinton?

AMY GOODMAN: Yes.

ALAN GREENSPAN: Well, I stated that I'm a libertarian Republican, which means I believe in a series of issues, such as smaller government, constraint on budget deficits, free markets, globalization, and a whole series of other things, including welfare reform. And as you may remember, Bill Clinton was pretty much in the same -- was doing much that same agenda. And so, I got to consider him as someone -- as he described it, we were both an odd couple, because he is a centrist Democrat. And that's not all that far from libertarian Republicanism.

AMY GOODMAN: About how much would you say you agreed with him?

ALAN GREENSPAN: On economic issues, I would say probably 80 percent.

AMY GOODMAN: And what about President Bush?
(25 September 2007)
How does Amy Goodman do it? The intellectual level of her programs is so far above the rest of broadcast journalism, dominated as it is by superficiality and propaganda. Perhaps conservatives like Greenspan find her interviews a worthy challenge. -BA

What Would William Appleman Williams Say Now?
Thomas McCormick, History News Network (HNN) - George Mason University
The work of the late William Appleman Williams constitutes the most comprehensive and sophisticated critique of American foreign policy offered during the last half century.

...In the giddy triumphalism that followed the end of the Cold War, the power of Williams's ideas seemed to wane.

...With American empire no longer hiding behind the verbal veil of globalization, Williams's work has suddenly reacquired relevance not always evident in the decade since his death. Recognizing this, a number of his former students—and, in turn, their students—found themselves discussing and speculating what William Appleman Williams would say now about the current state of affairs.

... let me offer eight such propositions that I think Bill Williams might have advanced for our consideration today.

...Fourth, Williams would have stressed the centrality of oil in current foreign policy. He would not do so in a single-cause way; contrary to his critics, Williams was never a narrow economic determinist. But he still would have seen the oil issue as crucial—partly because of the economic value of the oil itself, but more largely because of the geopolitical clout over others made possible by control of oil. The struggle for oil is, of course, one that is a century old. But that struggle has, for several reasons, reached a new and critical phase.

Few new major fields have been discovered since the early 1970s, and predictions are that oil production will peak in the next five to ten years and decline sharply thereafter. More to the point, oil companies believe those dire predictions and have commenced a renewed search for new reserves. But Big Oil, however, has not been a prime mover pressuring the American State to aggressively act in its behalf. The giant multinationals, by and large, are fairly content with their relationship to the Saudis and to OPEC and anxious that war not upset the stability of their arrangements. The push really comes from the independent oil companies like Occidental, Unocal, Murphy and Kerr-McGee and from the Texas-based oil service companies tied to them, like Halliburton, Baker Hughes and Bechtel. As their U.S. holdings decline, they have looked elsewhere and sought to influence U.S. foreign policy in ways not seen since the Eisenhower days and the oil depletion allowance. And they have found ready ears in this administration and its aggressive policies in Iraq, Iran and Central Asia.

There is also an abiding fear that without its U.S. control of the oil market, OPEC may in the medium-term start pricing its oil in euros. Iraq had already done so—which was one of its great sins—but there is strong talk that OPEC will eventually follow. If that happens, Japan and China will have to start cashing in their massive dollar reserves for euros in order to meet their immense energy needs; that in turn would send the value of the dollar plummeting and bring the U.S. economy—highly vulnerable because of its fiscal and trade deficits—to its knees. Finally, control over oil provides the likeliest leverage for the United States to reassert its hegemony and geo-strategic dominance. This is not a new variable, but it is one that has never been as decisive as now. Western Europe, Japan, China and India are highly dependent on the Middle East for their energy needs. With the United States as uncontested power in the region, those nations would have a far greater incentive to defer to American rules of the game on other matters of global concern. They would be far more inclined to accept American dominance rather than continuing to find ways to limit it.

Fifth, Williams would have characterized the current period not as the triumph of conservatism, but as the degradation of conservatism. ...

Sixth, Williams would have seen the current stress on preemptive empire and military solutions as a manifestation not of American omnipotence, but of American decline. In his view, empires at their zenith tend to prefer imperialism on the cheap—informal empires that eschew formal colonies and protectorates and use their economic and ideological hegemony to exert their will.

...Empires on the make and empires in decline, however, are not satisfied with the status quo and are more inclined to alter that status quo aggressively through force and formal protectorates (nation-building is the current euphemism). ...

Mr. McCormick is Professor Emeritus of History at the University of Wisconsin-Madison and author of America's Half-Century: United States Foreign Policy in the Cold War and After (Baltimore, 1990). Input for this piece also came from former Williams and Williams-influenced students...

This article was first published in Passport, the Newsletter of the Society for Historians of American Foreign Relations (SHAFR) and is reprinted with permission.
(24 September 2007)